--------------------------------------------------------------------------------


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


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


                  For the quarterly period ended March 31, 2000

                                       OR

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


                           Commission File No. 1-10588


                                INTELLICALL, INC.
             (Exact name of registrant as specified in its charter)



             Delaware                               75-1993841
  (State or other jurisdiction of       (I.R.S. Employer Identification number)
    incorporation or organization)


                            2155 Chenault, Suite 410
                              Carrollton, TX 75006
                    (Address of Principal Executive Offices)

                                 (972) 416-0022

              (Registrant's telephone number, including area code)



Indicate by check mark whether the  Registrant (1) has filed all reports 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.


         Yes   X                                      No
             -----                                       ----

Indicate the number of shares  outstanding of each of the issuer's  classes of
on stock, as of the latest practicable date.
                                                            Outstanding at
            Class                                           April 14, 2000
------------------------------                              ---------------
  Common Stock $.01 par value                                 13,080,894

--------------------------------------------------------------------------------


<PAGE>



INDEX

INTELLICALL, INC.

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

     Item 1.  Financial Statements

                  Balance Sheets at March 31, 2000 (Unaudited) and December 31, 1999............1

                  Statements of Operations for each of the three month periods
                   ended March 31, 2000 and 1999 (Unaudited)....................................3

                  Statements of Cash Flows for each of the three month periods
                  ended March 31, 2000 and 1999 (Unaudited) ....................................4

                  Notes to Financial Statements (Unaudited) ....................................5


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


Part II.          Other Information

     Item 1.      Legal Proceedings ............................................................17

     Item 6.      Exhibits and Reports on Form 8-K..............................................17


     Signatures   ..............................................................................18
</TABLE>




<PAGE>


INTELLICALL, INC.
UNAUDITED BALANCE SHEETS


ASSETS
(in thousands)
<TABLE>
<CAPTION>

                                                                                          March 31,      December 31,
                                                                                            2000              1999
                                                                                            ----              ----


<S>                                                                                      <C>               <C>
Current assets
     Cash and cash equivalents ........................................                  $   582           $   694
     Receivables, net of allowance for doubtful accounts
          of $820 and $764.............................................                    1,488             1,455
     Inventories, net..................................................                    2,701             3,088
     Receivables from related party, net ..............................                    1,137             1,258
     Deferred tax asset................................................                    1,500             1,500
     Other current assets..............................................                      215               157
                                                                                         -------           -------
        Total current assets...........................................                    7,623             8,152
Fixed assets, net......................................................                      861               980
Investment in unconsolidated subsidiary................................                    1,739             1,835
Other assets, net......................................................                      586               637
Assets of discontinued operations......................................                      482               513
                                                                                         -------           -------
     Total Assets......................................................                  $11,291           $12,117
                                                                                         =======           =======








See notes to financial statements.
</TABLE>


                                      -1-
<PAGE>


INTELLICALL, INC.
UNAUDITED BALANCE SHEETS (Continued)


LIABILITIES AND STOCKHOLDERS' EQUITY
(in thousands, except share information)
<TABLE>
<CAPTION>
                                                                                     March 31,            December 31,
                                                                                        2000                   1999
                                                                                        ----                   ----

<S>                                                                               <C>                     <C>
Current liabilities
     Accounts payable..........................................                   $    1,398              $   1,798
     Advance payment received on sale of  assets...............                        1,000                     --
     Accrued liabilities.......................................                          782                    610
     Current portion of long-term debt ........................                        3,130                  2,630
                                                                                  ----------              ---------
     Total current liabilities.................................                        6,310                  5,038
Long-term debt ................................................                        6,621                  6,557
Deferred gain on sale of assets................................                          730                    730
Other liabilities..............................................                           50                     50
Liabilities of discontinued operations.........................                           78                     80
                                                                                  ----------              ---------
      Total liabilities........................................                       13,789                 12,455
                                                                                  ----------              ---------
Commitments and contingent liabilities.........................                           --                     --
Stockholders' equity (deficit)
     Common stock, $.01 par value; 20,000,000 shares
          Authorized; 13,080,894 and 13,080,175 shares issued,
          Respectively.........................................                          131                    131
     Additional paid-in capital................................                       61,486                 61,486
     Less common stock in treasury, at cost;
          24,908 shares........................................                         (258)                  (258)
     Accumulated deficit.......................................                      (63,857)               (61,697)
                                                                                     -------              ---------
          Total stockholders' deficit..........................                       (2,498)                  (338)
                                                                                  ----------              ---------
                                                                                  $   11,291              $  12,117
                                                                                  ==========              =========



See notes to financial statements.
</TABLE>

                                      -2-
<PAGE>


INTELLICALL, INC.
UNAUDITED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

<TABLE>
<CAPTION>


                                                                                        Three Months Ended
                                                                                             March 31,
                                                                                     2000                    1999
                                                                                     ----                    ----

<S>                                                                              <C>                       <C>
Equipment sales..................................................                $    929                  $  4,831
Cost of sales and revenues.......................................                   1,052                     4,269
                                                                                 --------                  ---------
Gross profit (loss)..............................................                   (123)                       562

Selling, general and administrative expenses.....................                   1,468                     1,805
Provision for doubtful accounts..................................                      19                      (246)
Research and development expenses................................                     328                       224
                                                                                 --------                  ---------
Operating loss from continuing operations........................                  (1,938)                   (1,221)
Gain on sale of stock............................................                     111                        --
Other income.....................................................                      26                         9
Interest income..................................................                      27                        61
Interest expense.................................................                    (335)                     (469)
Equity in the loss of unconsolidated subsidiary..................                     (51)                     (358)
                                                                                 --------                  --------
Loss from continuing operations..................................                  (2,160)                   (1,978)
Loss from discontinued operations................................                      --                      (251)
                                                                                 --------                  ---------
Net loss available to common shareholders........................                $ (2,160)                 $ (2,229)
                                                                                 ========                  =========
Basic and diluted net loss per share from continuing operations                  $  (0.17)                 $  (0.16)
                                                                                 ========                  =========
Basic and diluted net loss per share from discontinued
operations.......................................................                $     --                  $  (0.02)
                                                                                 ========                  ========
Basic and diluted net loss per share.............................                $  (0.17)                 $  (0.18)
                                                                                 ========                  ========
Weighted average number of basic and diluted
     shares outstanding..........................................                  13,056                    12,029
                                                                                 ========                  ========



See notes to financial statements.
</TABLE>







                                      -3-
<PAGE>


INTELLICALL, INC.
UNAUDITED STATEMENTS OF CASH FLOWS (in thousands)
<TABLE>
<CAPTION>

                                                                                               Three Months Ended
                                                                                                     March 31,


                                                                                             2000               1999
                                                                                             ----               ----


<S>                                                                                     <C>                   <C>
Cash flows from continuing operating activities:
     Net loss from continuing operations........................                        $  (2,160)            $  (1,978)
     Adjustments to reconcile net loss from continuing operations to net
        Cash provided by operating activities:
        Gain on sale of stock...................................                             (111)                   --
        Depreciation and amortization...........................                              234                   407
        Provision for doubtful accounts.........................                               19                  (246)
        Provision for inventory losses..........................                               95                  (103)
        Equity in loss of unconsolidated subsidiary.............                               51                   358
        Changes in operating assets and liabilities:
            Receivables.........................................                              (54)                3,271
            Inventories.........................................                              292                   731
            Receivables from related party, net.................                               70                    60
            Other current assets................................                              (58)                   73
            Notes receivable....................................                               --                    92
            Accounts payable ...................................                             (401)                  877
            Accrued liabilities.................................                              172                    25
            Other...............................................                               10                   (18)
                                                                                        ---------              --------
                Net cash (used in) provided by continuing operating activities             (1,841)                3,549

Cash flows from investing activities:
     Capital expenditures.......................................                               --                   (25)
     Capitalized software.......................................                               --                  (316)
     Cash received on sale of stock.............................                              200                    --
                                                                                        ---------              --------
                 Net cash provided by (used in) investing activities                          200                  (341)

Cash flows from financing activities:
     Borrowings on notes payable................................                              500                    --
     Advance payment received on sale of stock..................                            1,000                    --
     Net repayments on line of credit...........................                               --                (2,811)
                                                                                        ---------              --------
                Net cash provided by (used in) financing activities                         1,500                (2,811)

Net cash flows from discontinued operations.....................                               29                  (388)
                                                                                        ---------              --------
Net (decrease) increase  in cash and cash equivalents...........                             (112)                    9

Cash and cash equivalents at beginning of period................                              694                    16
                                                                                        ---------              --------
Cash and cash equivalents at end of period......................                        $     582              $     25
                                                                                        =========              ========


Supplemental cash flow information:
  Interest paid.................................................                        $      20              $    120
                                                                                        =========              ========
Supplemental non cash flow information:
  Conversion of debt to equity..................................                        $      --              $    510
                                                                                        =========              ========



See notes to financial statements.
</TABLE>


                                      -4-
<PAGE>


INTELLICALL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS



NOTE 1 - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

         The accompanying unaudited financial statements,  in the opinion of the
Company's  management,  contain all material,  normal and recurring  adjustments
necessary to present  accurately the financial  condition of the Company and the
results of its operations for the periods  indicated.  The results of operations
for the interim periods  reported are not necessarily  indicative of the results
to be experienced for the entire year.

         These unaudited financial statements should be read in conjunction with
the  financial  statements  and notes thereto  included in the Company's  Annual
Report on Form 10-K for the year ended December 31, 1999. Significant accounting
policies  followed by the Company were  disclosed in the notes to the  Company's
Annual Report on Form 10-K. The year-end  balance sheet data included within was
derived from the audited financial  statements,  but does not include all of the
disclosures required by generally accepted accounting principles.

         Business:  Intellicall, Inc. ("Intellicall" or the "Company") designs,
engineers,  manufactures and sells pay  telephones and retrofit kits, parts and
intelligent  network  platforms in the United States and internationally.

          Creation of ILD Telecommunications,  Inc.("ILD"): On May 10, 1996, the
Company entered into an agreement with certain  investor groups to create ILD, a
new  long-distance  re-sale  and  operator  services  company.  At that time the
Company  transferred  ownership  in its  wholly  owned  subsidiary,  Intellicall
Operator Services, Inc. ("IOS"), to ILD.

          As of March 31, 2000 and December 31, 1999,  the  Company's  ownership
percentage in ILD was 30.0%.

          On January 4, 2000 the Company was notified by ILD of its intention to
redeem Intellicall's interest in ILD's Series B preferred convertible stock. ILD
is to redeem 5,000 shares for $100 per share plus accrued and unpaid  dividends.
As of March 31, 2000,  ILD had  remitted  $.2 million to the Company,  redeeming
1,487 shares of the Series B preferred convertible stock and becoming current on
all accrued and unpaid  dividends.  As a result of the transaction,  the Company
recorded a $.1 million gain on the sale of the stock to ILD.  Proceeds  from the
sale were used for general operating purposes.

          On April 11, 2000 the Company sold to Banca del Gottardo the Company's
remaining  ownership  in ILD,  exclusive  of 6,239  shares of Series A preferred
convertible  stock  the  Company  is  required  to  hold  pursuant  to  the  ILD
Organization Agreement (See Note 8).

          Software Development Costs:  Effective January 1, 2000 and as a result
of the impairment  charge on capitalized  software costs recorded by the Company
on December  31,  1999,  the Company  decided to expense as incurred  all future
costs related to the development of software products for payphone equipment.

          The amounts of software development costs capitalized for the quarters
ended March 31,  2000 and 1999 was zero and $.3  million.  The Company  recorded
zero and $.2 million of software  amortization  expense for the  quarters  ended
March 31, 2000 and 1999. $.1 million of software development costs were expensed
as incurred during the three months ended March 31, 2000.

                                      -5-
<PAGE>


INTELLICALL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS



          Reclassifications: Certain prior year amounts have been reclassified
to conform with the current year presentation.


NOTE 2 - SUMMARIZED INCOME STATEMENT INFORMATION FOR UNCONSOLIDATED
         SUBSIDIARY

The Company  accounts  for its  investment  in ILD under the equity  method of
accounting. Summarized income statement information for ILD is presented below
(in thousands):

<TABLE>
<CAPTION>



                                                                                              Three Months Ended March 31,
                                                                                                 2000           1999
                                                                                                 ----           ----

<S>                                                                                            <C>             <C>
Revenues     ..................................................................                $28,604         $25,953
Gross profit   ................................................................                  9,204           7,516
Income from operations.........................................................                  1,078            (157)
Net Loss available to common shareholders......................................                $  (165)        $  (840)
</TABLE>


NOTE 3 - INVENTORIES

The components of inventories are (in thousands):
<TABLE>
<CAPTION>
                                                                                            March 31,        December 31,
                                                                                                2000              1999
                                                                                                ----              ----

<S>                                                                                           <C>               <C>
Raw materials  ................................................................               $ 3,335           $ 3,362
Work in process................................................................                   122               133
Finished goods ................................................................                   802             1,003
                                                                                              -------           -------
                                                                                                4,259             4,498
Less reserves for obsolescence.................................................                (1,558)           (1,410)
                                                                                              -------           -------
Net inventory                                                                                 $ 2,701           $ 3,088
                                                                                              =======           =======
</TABLE>




                                      -6-
<PAGE>


INTELLICALL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS



NOTE 4 - FIXED ASSETS

<TABLE>
<CAPTION>

The components of fixed assets are (in thousands):                                           March 31,            December 31,
                                                                                               2000                  1999
                                                                                               ----                  ----

<S>                                                                                          <C>                   <C>
Office equipment..............................................................               $3,404                $3,404
Tooling and other equipment...................................................                5,001                 5,001
                                                                                             ------                 -----
                                                                                              8,405                 8,405
Less accumulated depreciation.................................................               (7,544)               (7,425)
                                                                                             ------                ------
                                                                                             $  861                $  980
                                                                                             ======                ======
</TABLE>


NOTE 5 - LONG-TERM DEBT

          The Company's debt consisted of the following (in thousands):

<TABLE>
<CAPTION>

                                                                                            March 31,                December 31,
                                                                                              2000                      1999
                                                                                              ----                     ----

<S>      <C>                                    <C>                                           <C>                    <C>
         8% Convertible subordinated notes, due 2000                                          2,630                  2,630
         8% Convertible subordinated notes, due 2001                                          5,000                  5,000
         7% Convertible subordinated notes, due 2004                                          2,000                  2,000
         Prime rate promissory  note, due 2001                                                  500                    --
                                                                                           --------                --------
                                                                                             10,130                  9,630

         Less:  Unamortized debt discount                                                      (379)                  (443)
                                                                                           --------                -------
                                                                                              9,751                  9,187
                                                                                           --------                -------

         Less:  Current portion of long-term debt                                            (3,130)                (2,630)
                                                                                           --------                -------
              Total long-term debt                                                         $  6,621                $ 6,557
                                                                                           --------                -------
</TABLE>


              On February  11, 2000 the Company  signed a $.5 million  revolving
promissory note with Bank of America due February 11, 2001.  Interest is payable
monthly at Prime  commencing  on March 11, 2000 with the  principal  of the note
guaranteed  by Bill Hunt,  Chairman  of the Board of  Intellicall.  The Company
may repay and  re-borrow  under the terms of the note at any time, up to a
maximum aggregate outstanding balance equal to the principal amount of the note.
Proceeds of the note were used for working capital purposes.  As of March 31,
2000,  the  outstanding  balance  on the note is $.5 million. On May 1, 2000
the Company paid off the $.5 million note.


                                      -7-
<PAGE>


INTELLICALL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS



         On April 27, 2000 the Company received the remaining  proceeds from the
sale of its  ownership in ILD (See Note 9). A portion of the proceeds  were used
to retire the remaining  $2.6 million 8.0%  convertible  subordinated  notes due
December 31, 2000 and $4.8 million of the 8.0%  convertible  subordinated  notes
due November 22, 2001, both due to Banca del Gottardo.  Additionally,  on May 1,
2000 the Company paid off the $.5 million note due to Bank of America.

The total  remaining  debt  outstanding  at May 15, 2000 is $2.2  million and is
comprised of $.2 million 8% convertible subordinated notes due November 22, 2001
and $2 million 7% convertible subordinated notes due June 11, 2004.


NOTE 6 - DISCONTINUED OPERATIONS

          On September 22, 1999 the Company  elected to discontinue  its billing
services operations  effective October 21, 1999. The billing services segment of
the  Company's  business was  determined  to be  unprofitable  after taking into
account the  administrative  and support  costs for the segment.  The  Company's
billing services system is a combination of hardware and software that performs,
without  human  intervention,  all the  functions  necessary  for  completing an
operator  assisted  payphone call (i.e.,  collect,  calling card and credit card
calls) and a range of other payphone services and features.  During the quarters
ended March 31, 2000 and 1999,  the  Company  reported a loss from  discontinued
operations of zero and $.25 million.  As a result of this action,  the Company's
revenues and operating  expenses for the periods  presented  herein reflect only
the equipment operations with the net results of the billing services operations
reported on its statements of operations  under the caption  "Income (loss) from
discontinued  operations."  Net  revenues  related to the  discontinued  billing
services  operations were zero and $3.2 million for the quarters ended March 31,
2000 and 1999.


NOTE 7 - BUSINESS COMBINATION

         On January 18, 2000, Intellicall entered into a definitive agreement to
acquire,  through  the  exchange  of  common  stock  of  Intellicall,  Heads  Up
Technologies,  Inc.  ("Heads  Up")  of  Carrollton,  Texas.  Heads  Up  designs,
manufactures and markets  interactive  digital  products for the aviation,  mass
transit and entertainment  industries.  Heads Up sells computerized  products to
nearly  1,250  customers  in more  than 10  countries.  Pursuant  to the  merger
agreement,  Intellicall  and  Heads  Up have  agreed  to an  exchange  ratio  of
approximately  (1.3) shares of Intellicall  common stock for each share of Heads
Up common  stock.  This will result in the Heads Up  shareholders  being  issued
approximately 11.5 million shares of Intellicall common stock, resulting in such
shareholders  owning   approximately  46.8  %  of  the  issued  and  outstanding
Intellicall  common  stock  following  such  merger.  The merger is subject to a
number of conditions,  including without  limitation,  approval by Intellicall's
stockholders.  The merger is scheduled  to be completed in the third  quarter of
2000. There can be no assurance, however, that this merger will be consummated.



                                      -8-
<PAGE>


INTELLICALL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS



NOTE 8 - SUBSEQUENT EVENTS

          On April 11, 2000 the Company sold to Banca del Gottardo the Company's
remaining  ownership  in ILD,  exclusive  of 6,239  shares of Series A preferred
convertible  stock  the  Company  is  required  to  hold  pursuant  to  the  ILD
Organization  Agreement.  The Company's ownership in ILD includes  approximately
58,772 shares of ILD Series A convertible  stock, 725 shares of ILD Common stock
and 11,111  shares of ILD Common stock  obtainable  upon  conversion of the $1.0
million subordinated  convertible note (the "Note") due from ILD to Intellicall,
dated May 10,  1996.  Pursuant  to the sale to Banca del  Gottardo, Intellicall,
as of  March  10,  2000, elected  to  convert  the  entire principal balance of
the Note into 11,111 shares of ILD Common stock.

          The terms of the offer  include the  purchase of the  ownership of ILD
(70,608  combined  shares of Series A and Common  shares)  for $220 per share or
$15.5  million,  with the  Company  maintaining  the  option  for 12  months  to
repurchase the shares at $250 per share.

          The  Company  received  $1.0  million on March 13, 2000 from Banca del
Gottardo as an advance payment toward the ILD stock sale. On April 27, 2000, the
Company received the remaining proceeds from Banca del Gottardo.

          Proceeds  of the stock  sale have been used to pay off all of the $2.6
million,  8% convertible  subordinated noted due December 31, 2000, $4.8 million
of the $5.0 million,  8% convertible  subordinated  noted due November 22, 2001,
and the $.5 million  revolving  promissory  note due February 11, 2001 (See Note
5). The remainder of the proceeds will be used for working capital purposes.


                                      -9-
<PAGE>




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

         The accompanying unaudited financial statements,  in the opinion of the
Company's  management,  contain all material,  normal and recurring  adjustments
necessary to present  accurately the financial  condition of the Company and the
results of its operations for the periods  presented.  The results of operations
for the periods  reported are not  necessarily  indicative  of the results to be
experienced for the entire year.

         The  following  discussion  of the  financial  condition and results of
operations  of the  Company  should be read in  conjunction  with the  Financial
Statements of the Company,  the Notes thereto and information included elsewhere
in this report.  References in the following  discussion to annual periods refer
to the Company's years ended December 31, 1999.


Forward-Looking Statements - Cautionary Statements

         This Form 10-Q contains certain "forward-looking statements" within the
meaning  of  Section  27A of  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"),  and Section 21E of the Securities  Exchange Act of 1934, as
amended (the "Exchange Act"). Specifically, all statements other than statements
of historical  facts included in this report  regarding the Company's  financial
position,  business  strategy  and plans and  objectives  of  management  of the
Company   for  future   operations   are   forward-looking   statements.   These
forward-looking statements are based on the beliefs of the Company's management,
as well  as  assumptions  made by and  information  currently  available  to the
Company's  management.  When  used  in  this  report,  the  words  "anticipate,"
"believe,"  "estimate,"  "expect,"  "intend",  and words or  phrases  of similar
import,  as they relate to the Company or Company  management,  are  intended to
identify   forward-looking   statements.   Such  statements   (the   "cautionary
statements")  reflect the current  view of the  Company  with  respect to future
events  and are  subject  to risks,  uncertainties  and  assumptions  related to
various factors including,  without  limitation,  competitive  factors,  general
economic  conditions,  customer  relations,   relationships  with  vendors,  the
interest rate environment, governmental regulation and supervision, seasonality,
product introductions and acceptance,  technological change, changes in industry
practices and one-time events.  Although the Company believes that  expectations
are reasonable, it can give no assurance that such expectations will prove to be
correct.  Based upon changing conditions,  should any one or more of these risks
or  uncertainties  materialize,  or  should  any  underlying  assumptions  prove
incorrect,  actual results may vary materially  from those  described  herein as
anticipated,  believed,  estimated, expected or intended. All subsequent written
and oral  forward-looking  statements  attributable  to the  Company  or persons
acting on its behalf are expressly qualified in their entirety by the applicable
cautionary  statements.  The Company's future operating results are subject to a
number of risks and uncertainties.


                                      -10-
<PAGE>


Risk Factors Relating to Forward-Looking Statements

Regulatory  Changes.  The Company's  sales and revenues are affected by existing
regulations  and by  changes  in state  and  federal  regulations  to which  the
Company's  customers,  equipment business and service business are subject.  The
rate of  change in  proposed  and  promulgated  regulations  affecting  operator
service  businesses and payphone  manufacturers has accelerated since passage of
the  Telecommunications  Act of 1996 in  February  of that  year.  In  addition,
numerous  parties  affected by regulatory  changes have sought  modifications or
rescission of proposed or existing  regulations,  some of which would  adversely
affect  the  Company  if  adopted.  There  can  be no  assurance  that  proposed
regulatory  changes that might adversely affect the Company will not be adopted,
or that  existing  regulations  that may benefit  the  Company's  operations  if
implemented   will  not  be  rescinded  or  delayed  in  their   implementation.
Furthermore, many aspects of telecommunications legislation and regulations have
been  litigated in various  federal and state courts.  Decisions  emanating from
federal and state courts could have an adverse effect on the Company.

Volume and  Profitability  of Equipment  Sales.  The Company  develops and sells
products  into  mature  markets  that have  limited  opportunity  for growth and
expansion.  The Company's  long-term financial welfare will depend on deeper and
more profitable  penetration  within these markets.  Furthermore,  the Company's
ability to implement and execute an effective business strategy for new products
and services,  will directly  effect the Company's  ability to generate  working
capital and fund growth.  Funds  available to the Company from external  sources
may be  insufficient  to  finance  growth in  working  capital,  and  internally
generated  funds may be  insufficient  to finance  desired  capital  spending or
research and development spending.

         The  Company  has  historically  suffered  from low  gross  margins  on
equipment sales. Although provisions for inventory losses, bad debt and warranty
reserves  have  resulted in negative  gross  margins  until 1998,  the Company's
variable gross margins on phone and network equipment products  introduced since
1996 have improved.  Notwithstanding such improvement, increased equipment sales
volume is  required  in future  periods to cover a variety of costs.  Such costs
include  but may not be limited to fixed  manufacturing  overhead  expenses  and
selling,  general and administrative expenses associated with the production and
sale of the Company's products. There is no guarantee that the required increase
in sales will generate sufficient gross profit to finance the portion of working
capital growth not financed externally.

International  Economic  Conditions.  As a  provider  of  payphone  and  network
switching  equipment  into  developing  countries,  the  Company  is  subject to
economic  and  political  instability  that may affect  its  ability to sell its
products  into these  markets  and/or  collect on accounts for products  sold in
these markets.


                                      -11-
<PAGE>


Year 2000 Discussion

         The Company  undertook a multi-year  program (the "Y2K Program") during
1997 to ensure that its operations,  computer  systems and certain products were
not  functionally  impaired as a result of a failure to  properly  record in any
electronic medium the correct time and date on and after January 1, 2000.

         In general, the Company's products currently produced or supported have
been Y2K certified.  Through its evaluation of IT Systems used by the Company in
its manufacturing,  accounting,  administration and human resources departments,
and on the basis of letters of assurance obtained from third-party  vendors, the
Company has  concluded  that the  accounting,  MRP and  payroll  systems are Y2K
compliant.  Letters of  assurance  were  requested  from  other key  third-party
vendors  concerning  other  equipment  and  systems  utilized  by  the  Company,
including outside billing agents used in the collection of customer call traffic
accounts receivable.

         To date the Company has not  encountered  any  material Y2K issues with
respect  to the  Companies  products  currently  produced,  supported  or widely
deployed,  IT  Systems  used by the  Company in its  manufacturing,  accounting,
administration and human resources departments, or other key third-party vendors
concerning other equipment and systems utilized by the Company. Despite the fact
the Year 2000 has commenced and no material  problems have been  experienced  to
date,  the Company  cannot  assure that the risks posed by Year 2000 issues will
not materially  adversely affect its business in the future,  either as a result
of  unanticipated  difficulties  related  to the  Company's  systems or to third
parties.



Changes in Presentation

         On September 22, 1999 the Company  elected to  discontinue  its billing
services  operations  effective  October 21,  1999 (See Note 6 to the  unaudited
Financial  Statements).  The billing services segment of the Company's  business
was determined to be unprofitable  after taking into account the  administrative
and support costs for that segment.  The Company's  billing services system is a
combination of hardware and software that performs,  without human intervention,
all the functions  necessary for completing an operator  assisted  payphone call
(i.e.,  collect,  calling  card  and  credit  card  calls)  and a range of other
payphone  services  and  features.  As a result of this  action,  the  Company's
revenues and operating  expenses for the periods  presented  herein reflect only
the equipment operations with the net results of the billing services operations
reported in its statements of operations  under the caption  "Income (loss) from
discontinued  operations".  Prior periods have been presented  under the revised
format.



                                      -12-
<PAGE>


Recent Developments

         On January 4, 2000 the Company was notified by ILD  Telecommunications,
Inc. ("ILD") of its intention to redeem Intellicall's interest in ILD's Series B
preferred  convertible  stock.  ILD is to redeem 5,000 shares for $100 per share
plus accrued and unpaid  dividends.  As of March 31, 2000,  ILD had remitted $.2
million  to the  Company,  redeeming  1,487  shares  of the  Series B  preferred
convertible  stock and became  current  on all  accrued  and  unpaid  dividends.
Proceeds from the sale were used for general  operating  purposes (See Note 1 to
the unaudited Financial Statements).

         On January 18, 2000, Intellicall entered into a definitive agreement to
acquire,  through  the  exchange  of  common  stock  of  Intellicall,  Heads  Up
Technologies,  Inc.  ("Heads  Up")  of  Carrollton,  Texas.  Heads  Up  designs,
manufactures and markets  interactive  digital  products for the aviation,  mass
transit and  entertainment  industries  (See Note 7 to the  unaudited  Financial
Statements).

         On April 11, 2000 the Company sold to Banca del Gottardo the  Company's
remaining  ownership  in ILD,  exclusive  of 6,239  shares of Series A preferred
convertible  stock  the  Company  is  required  to  hold  pursuant  to  the  ILD
organization agreement. The Company received $1.0 million on March 13, 2000 from
Banca del Gottardo as an advance  payment  toward the stock sale.  The Company's
ownership in ILD includes  approximately 58,772 shares of ILD Series A preferred
convertible  stock,  725  shares of ILD common  stock and  11,111  shares of ILD
common  stock  obtainable  upon  conversion  of the  $1.0  million  subordinated
convertible  note due from ILD to Intellicall,  dated May 10, 1996.  Pursuant to
the sale to Banca del Gottardo, Intellicall, as of March 10, 2000, elected  to
convert the entire  principal  balance of the Note into 11,111 shares of ILD
common stock.

          The terms of the ILD stock sale include the purchase of the  Company's
ownership in ILD (70,608 combined shares of Series A and Common shares) for $220
per share or $15.5 million with the Company maintaining the option for 12 months
to repurchase the shares at $250 per share.

         On April 27, 2000 the Company received the remaining  proceeds from the
sale of its  ownership in ILD. A portion of the proceeds were used to retire the
remaining $2.6 million 8.0% convertible subordinated notes due December 31, 2000
and $4.8  million of the 8.0%  convertible  subordinated  notes due November 22,
2001, both due to Banca del Gottardo.  Additionally,  On May 1, 2000 the Company
retired the $.5 million note due to Bank of America. The remaining proceeds will
be used for general  operating  purposes and to fund  expansion into new markets
subsequent to the acquisition of Heads Up (See Note 7 to the unaudited Financial
Statements).



                                      -13-
<PAGE>


Results of Operations

Equipment  Sales.  Equipment sales for the quarter ended March 31, 2000 were $.9
million compared to $4.8 million for the same period last year. The $3.9 million
decrease is partially due to a reduction of shipments  into the Canadian  market
and an overall reduction in demand for payphones and their related parts.

Gross  Profit  (Loss).  Gross loss for the quarter  ended March 31, 2000 was $.1
million compared to a gross profit of $.6 million for the same period last year.
The $.7 million decline in gross profit is primarily due to the down turn in the
Independent  Payphone  Provider  ("IPP")  market,  which  led  to a  significant
reduction in  production.  Fixed costs  associated  with excess  capacity in the
McAllen  manufacturing  facility  resulted  in an increase in cost of goods sold
relative to sales, thereby reducing gross profit for the period.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses ("SG&A") for the quarter ended March 31, 2000 were $1.5
million  compared to $1.8 million for the same period last year. The $.3 million
decline is primarily  due to cost cutting  measures  undertaken  by the Company,
including a reduction in personnel in the corporate and administrative  areas of
the Company.  Similarly,  the Company  experienced a general  reduction in other
costs as  management  focused on decreasing  the Company's  cost to meet current
operating  requirements,  including  outsourcing Human Resources and certain MIS
functions, as well as reducing travel and advertising expenses.

Provision for Doubtful Accounts. Provision for doubtful accounts expense for the
quarter ended March 31, 2000 was $.02 compared to a gain of $.25 million for the
same  period  last  year.  The  $.27  million  increase  is  primarily  due to a
reclassification  provision for doubtful accounts expense of $.34 million during
the first quarter of 1999 between the equipment segment and the billing services
segment, which was discontinued on October 12, 1999 (See Note 6 to the unaudited
Financial  Statements).  Exclusive  of  this  reclassification,   provision  for
doubtful  accounts  expense  decreased $.07 million from the quarter ended March
31, 1999 due to an improvement in the quality of the Company's  receivables  and
positive  collection  efforts  on old and  outstanding  accounts,  as well as an
overall reduction in sales volume.

Research and Development Expenses. Research and development expenses expense for
the quarter ended March 31, 2000 was $.3 million compared to $.2 million for the
same  period  last  year.  The $.1  million  increase  is  primarily  due to the
Company's decision to discontinue  capitalizing software development,  partially
offset by a  reduction  of salaries  due to a reduction  in head count and other
costs associated with research and development.

Gain on Sale of Assets.  On January 4, 2000 the Company  was  notified by ILD of
its  intention  to redeem  Intellicall's  interest  in ILD's  Series B preferred
convertible stock. ILD is to redeem 5,000 shares for $100 per share plus accrued
and unpaid dividends.  As of March 31, 2000, ILD had remitted $.2 million to the
Company,  redeeming 1,487 shares of the Series B preferred convertible stock and
becoming current on all accrued and unpaid dividends.  As a result,  the Company
recorded a gain on



                                      -14-
<PAGE>


the sale of the 1,487 shares of $.1 million. Proceeds from
the sale were used for general  operating  purposes (See Note 1 to the unaudited
Financial Statements).


Interest  Income.  Interest  income for the quarter ended March 31, 2000 was $.3
million  compared to $.6 million for the same period last year. The $.3 decrease
is primarily  resulting from New York City Telecom  discontinuing the service of
its note payable to the Company.

Interest Expense.  Interest expense for the quarter ended March 31, 2000 was $.3
million, or $.1 less than the same period last year. The $.1 million decrease is
primarily  a result of lower  interest  rates in the  Company's  debt due to the
retirement of the $1 million, 10% note payable to T.J. Berthel Investments, L.P.
on April 9, 1999 and the  retirement of the Company's  obligations  to Finova on
January 28, 1999.

Equity in Loss of Unconsolidated Subsidiary. The Company reported a $.05 million
loss on the  equity  investment  in ILD for the  quarter  ended  March 31,  2000
compared to $.4 million  for the same  period  last year.  This loss  represents
Intellicall's proportionate share, based on ownership, of ILD's net loss for the
period.

Discontinued   Operations.   On  September  22,  1999  the  Company  elected  to
discontinue its billing services operations effective October 21, 1999 (See Note
6 to the unaudited  Financial  Statements).  The billing services segment of the
Company's  business was determined to be unprofitable  after taking into account
the  administrative  and support costs for the segment.  The  Company's  billing
services system is a combination of hardware and software that performs, without
human  intervention,  all the  functions  necessary  for  completing an operator
assisted payphone call (i.e., collect, calling card and credit card calls) and a
range of other  payphone  services and features.  As a result of this action the
net results of the billing services operations are reported on the statements of
operations under the caption "Income (loss) from  discontinued  operations." Net
revenues related to the discontinued  billing services  operations were zero and
$3.2 million for the quarters  ended March 31, 2000 and 1999 Net loss related to
the discontinued  billing  services  operations was zero and $.3 million for the
quarters ended March 31, 2000 and 1999.


Liquidity and Capital Resources

          The Company  reported a net loss from  continuing  operations  of $2.2
million  during the quarter ended March 31, 2000.  This loss  included  non-cash
charges  of $.4  million  for  depreciation  and  amortization,  provisions  for
doubtful accounts,  provisions for inventory losses and the equity in loss of an
unconsolidated  subsidiary,  ILD. Adding  depreciation  and  amortization of $.2
million and  interest  charges of $.3 million to the net loss  results in a loss
before interest,  taxes, depreciation and amortization (EBITDA) of approximately
$1.7 million. Net changes in operating assets and liabilities during the quarter
ended  March 31,  2000  provided a source of cash of $1.0  million.  Inventories
decreased $.3 million and accounts payable  decreased $.4 as a result of reduced
inventory purchases and improved inventory management.

                                      -15-
<PAGE>

          Cash flows from investing  activities  include receipts of $.2 million
from ILD representing the redemption of 1,487 shares of ILD's Series B preferred
convertible stock. (See Note 1 to the unaudited Financial Statements).

          Cash flows from financing  activities  include a $.5 million revolving
promissory  note with Bank of  America  (See Note 5 to the  unaudited  Financial
Statements) and a $1.0 million prepayment from Banca del Gottardo toward the ILD
stock sale (See Note 8 to the unaudited Financial Statements).

          On  February  11,  2000 the  Company  signed a $.5  million  revolving
promissory note with Bank of America,  N.A., due February 11, 2001.  Interest is
payable  monthly  at its  prime  rate  commencing  on March  11,  2000  with the
principal of the note  guaranteed  by Bill Hunt,  Chairman of the Board of
Intellicall.  The Company may repay and  re-borrow under the terms of the note
at any time, up to a maximum  aggregate  outstanding balance  equal to the
principal  amount of the note.  Proceeds of the note were used for working
capital  purposes.  The  outstanding  balance on the note as of March 31,
2000 was $.5  million.  On May 1, 2000 the  Company  paid off the $.5 million
note (See Note 5 to the unaudited Financial Statements).

           On  April  11,  2000  the  Company  sold to Banca  del  Gottardo  the
Company's  remaining  ownership  in ILD,  exclusive  of 6,239 shares of Series A
preferred  convertible stock the Company is required to hold pursuant to the ILD
organization agreement. (See Note 8 to the unaudited Financial Statements).

           On April 27, 2000, the Company  received the remaining  proceeds from
the sale of the ILD stock to Banca del Gottardo.  A portion of the proceeds were
used to retire the remaining $2.6 million 8.0%  convertible  subordinated  notes
due  December  31, 2000 and $4.8  million of the 8.0%  convertible  subordinated
notes due November 22, 2001,  both due to Banca del Gottardo.  Additionally,  On
May 1, 2000 the Company retired the $.5 million note due to Bank of America (See
Note 5 to the unaudited  Financial  Statements).  The remaining proceeds will be
used for  general  operating  purposes  and to fund  expansion  into new markets
subsequent to the acquisition of Heads Up.

         Beyond  2000,  the  Company's  ability  to obtain  further  funds  from
external  sources  will  depend in part on its  ability  to  generate  operating
profits, or to substantially reduce its operating losses,  through the execution
of its current business plan and the implementation of the new business strategy
related to the Heads Up acquisition. Although management of the Company believes
that the Company's sales will grow in 2000 and that  profitability  will improve
with sales,  there can be no assurance that the events  necessary for such sales
growth  will occur as or when  expected,  or that  future  sales  growth will be
sufficiently large or profitable to permit the Company to finance its activities
without  recourse to  continuing  sales of assets or external  funding  sources.
There can be no assurance  that under such  conditions,  external funds would be
available or, if available, would not potentially dilute shareholders' interests
or returns.

                                      -16-
<PAGE>



Part II.  Other Information


ITEM 1.  Legal Proceedings.

           None.


ITEM 6.  Exhibits and Reports on Form 8-K
         (a)      The following exhibits are filed as a part of this Quarterly
                  Report on Form 10-Q.

                  *10.1   Agreement and Plan of Merger and Amendments
                  *10.2   Stock Purchase Agreement

                  *       Filed herewith.

         (b)      Reports on Form 8-K:      None.















                                     -17-
<PAGE>




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


                                          INTELLICALL, INC.



                                 /s/ John J. McDonald, Jr.
                                 --------------------------------------
                                          John J. McDonald, Jr.
                                          President and
                                          Chief Executive Officer


                                 /s/ R. Phillip Boyd
                                 --------------------------------------
                                          R. Phillip Boyd
                                          Vice President Finance
                                          and Chief Financial Officer


Date:   May 15, 2000













                                -18-