<PAGE>

 
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                  FORM 10-QSB


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


     [X]  Quarterly report under Section 13 or 15(d) of the Securities Exchange
          Act of 1934

          For the quarterly period ended:  OCTOBER 31, 1996

     [_]  Transition period under Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the transition period from ______ to _____.


     Commission file number:  0-13652

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


                   COMMUNICATIONS WORLD INTERNATIONAL, INC.
                ----------------------------------------------
                (Name of Small Business Issuer in Its Charter)


               Colorado                                   84-0917382
-----------------------------------------   ------------------------------------
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
     incorporation or organization)  


6025 South Quebec, Suite 300, Englewood, Colorado             80111  
-------------------------------------------------  -----------------------------
    (Address of principal executive offices)               (Zip Code)


                                (303) 721-8200
                ----------------------------------------------
                Issuer's Telephone Number, Including Area Code



Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months 
(or for such shorter period that the Registrant was required to file such 
reports), and (2) has been subject to such filing requirements for the past 
90 days.    Yes X    No
               ---      ---

As of November 18, 1996, the issuer had 1,620,260 shares of its no par value
Common Stock issued and outstanding.


<PAGE>
 
                                    PART I

                             FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         Attached.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

For the three month and six month periods ended October 31, 1996, Communications
World International, Inc. ("CommWorld" or the "Company") reported net income of
$51,019 and $82,080, respectively, as compared to net losses of $449,542 and
$665,387 for the comparable periods ended October 31, 1995. Total revenue for
the quarter ended October 31, 1996 was $3,963,275, an increase of $811,264 or
25.7%, compared to total revenue of $3,152,011 for the quarter ended October 31,
1995. For the six month period ended October 31, 1996, total revenue was
$7,706,094, an increase of $1,284,516 or 20% , compared to the six month period
ended October 31, 1995. The gross margin percentage on total revenue was 32.2%
for the quarter ended October 31, 1996 compared to 30% for the quarter ended
October 31, 1995. For the six month periods ended October 31, 1996 and 1995, the
gross margin percentages on total revenue were 33.9% and 29.5%, respectively.
The increase in the gross margin percentage is attributable to the higher
percentage of direct equipment and service sales. These sales have  higher
profit margins than the equipment sales to franchises. Net income before
depreciation and amortization was $153,771 for the quarter ended October 31,
1996 and $288,670 for the six months then ended compared to net losses before
depreciation and amortization of $354,483 and $477,110 for the same periods
ended October 31, 1995.

Revenue from direct equipment and service sales for the quarter ended October
31, 1996 was $2,550,112, an increase of $921,549 or 56% from the quarter ended
October 31, 1995. For the six months ended October 31, 1996 revenue from direct
equipment and service sales was $4,672,814, an increase of  $1,666,660 or 55%
from the six month period ended October 31, 1995. The gross margin percentage on
this revenue fluctuates depending on the mix of product sold during the period
but averages approximately 45%. For the six months ended October 31, 1996 and
1995, the gross margin percentage was 44% and 46%, respectively.

Revenue from equipment and related service sales to franchises increased for the
quarter ended October 31, 1996 by $25,150 compared to the  quarter ended October
31, 1995. For the six month period ended October 31, 1996, this revenue
decreased by $235,797 compared to the same period of the prior year. The gross
margin realized on this revenue was $163,261 and $354,066, for the three and six
month periods ended October 31, 1996, respectively. These gross margins were
higher than realized in the same periods of the prior year due to increased
discounts realized from a major supplier effective July 1, 1995 and due to one
time charges against this revenue in October, 1995. The gross margin percentage
on this revenue was 12.4% and 12.6% for the three and six month periods ended
October 31, 1996.  These margins are consistent with management's expectations.

General and administrative expenses for the quarter ended October 31, 1996
decreased by $153,906 compared to the quarter ended October 31, 1995. For the
six month period ended October 31, 1996, general and administrative expenses
decreased by $56,665 compared to the six month period ended October 31, 1995.
For the three month period ended October 31, 1995, there were non recurring
charges to general and administrative expenses of approximately $72,000 which
affects the comparability of these


                                       2
<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED

expenses for these periods. Without the non recurring charges, general and
administrative expenses for the six months ended October 31, 1996, were less
than 1% higher than the same period of the prior year.

Effective September 30, 1996, the Company acquired the assets of its franchise
in Tucson, Arizona (CWT). The operations of CWT will be continued as part of the
operations of the Company's wholly owned subsidiary, CommWorld of Phoenix, Inc.
The Company acquired inventory of approximately $41,000 and fixed assets with a
net book value of approximately $21,000. The Company issued 74,222 shares of
common stock , valued at the market price of the common stock of $1.125 per
share on the date of the letter of intent, 83,500 shares of Series G Preferred
Stock, valued at the par value of $1.00 per share, and 133,000 shares of Series
F Preferred Stock, valued at the par value of $1.00 per share.

The Company incurred operating losses for the years ended April 30, 1996 and
1995 and in prior periods.  The Company's operating losses were financed
principally by the Company's major supplier. Management plans to improve the 
Company's cash flow by increasing revenue, both from national accounts and
Company-owned outlets, improving gross profit margins and containing general and
administrative expenses, in addition to attempting to obtain additional debt or
equity financing. The Company has also taken measures to improve its working
capital position.

The Company had working capital at October 31, 1996 of  $389,286 compared to
working capital at April 30, 1996 of $206,374.  The improved working capital
position at October 31, 1996 results from the net income for the six months then
ended along with non cash expenses of depreciation and amortization of $206,590.
Also, in September 1996, the Company completed a conversion of certain notes
payable in the aggregate principal amount of $169,819 into 169,819 shares of
Series F Preferred Stock. Approximately $75,000 of these notes had been recorded
as a current liability. Liquidity of the Company was also improved during the
quarter ended October 31, 1996, by changes in the  terms of the line of credit
to the Company. The line of credit, which is collateral based against accounts
receivable and inventory, was increased by the lender from $1 million to $1.5
million and the annual interest rate was reduced from 10% over the prime rate to
7.5% over the prime rate.

The Company believes that it has sufficient financial resources available to
meet its short-term working capital needs. The ability of the Company to
continue as a going concern is dependent upon the realization of management's
plans. There can be no assurance that the Company will be able to successfully
implement its plans and therefore finance its operations over the longer term.
The accompanying unaudited interim consolidated financial statements have been
prepared assuming the Company will continue as a going concern. These unaudited
interim consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.


                                       3
<PAGE>
 
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          2. Asset Acquisition Agreement Between William R. Heath d.b.a.
CommWorld of Tucson ("CWT") and Communications World International, Inc., a
Colorado Corporation

     (b)  Reports on Form 8-K

       The Company filed a Report on Form 8-K dated October 16, 1996.
Information was reported in Item 5 , "Other Events", as follows:

       Acquisition of the assets of the Company's franchise located in Tucson,
Arizona.

       Conversion of certain notes payable in the aggregate principal amount of
$169,819 into 169,819 shares of Series F Preferred Stock.


       The following financial statements were included in the Form 8-K:

       Pro Forma Unaudited Balance Sheet as of September 30, 1996

       Unaudited Consolidated Statement of Operations for the five months ended
September 30, 1996

       Unaudited Consolidated Statement of Cash Flows for the five months ended
September 30, 1996



                                       4
<PAGE>
 
                                  SIGNATURES


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


                                    Communications World International, Inc.
                                    ----------------------------------------
                                    (Registrant)



Date:  December 5, 1996             /s/  Richard D. Olson
       ----------------             ----------------------------------------
                                    Richard D. Olson, President and C.E.O.



Date:  December 5, 1996             /s/  Scott E. Harris
       ----------------             ----------------------------------------
                                    Scott E. Harris, Chief Financial Officer



                                       5
<PAGE>
 
COMMUNICATIONS WORLD INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
OCTOBER 31, 1996

(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
 
 
ASSETS
------
Current assets:
<S>                                                                                               <C>          
   Cash                                                                                            $    49,096 
   Trade accounts and current portion of notes receivable, less allowance for                     
       doubtful accounts of $226,021                                                                 2,477,271              
   Inventories                                                                                         927,193              
   Prepaid expenses                                                                                     74,396 
                                                                                                   ----------- 
       Total current assets                                                                          3,527,956 
                                                                                                               
Property and equipment, net                                                                            447,977 
Deposits and other assets                                                                               30,250 
Notes receivable                                                                                        83,576 
Intangible assets, net                                                                               1,435,076 
                                                                                                   ----------- 
                                                                                                   $ 5,524,835 
                                                                                                   =========== 
                                                                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                           
------------------------------------                                                                           
Current liabilities:                                                                                          
   Trade accounts payable                                                                          $ 1,607,059 
   Revolving line of credit                                                                            776,412 
   Current portion of notes payable                                                                    336,103 
   Accrued expenses                                                                                    199,814 
   Current portion of capital lease obligations                                                         29,736 
   Deposits and other current liabilities                                                              189,546 
                                                                                                   ----------- 
       Total current liabilities                                                                     3,138,670 
                                                                                                               
Capital lease obligations and deferred revenue                                                          45,774 
Notes payable (including $130,000 due to related parties)                                            1,211,411 
                                                                                                   ----------- 
       Total liabilities                                                                             4,395,855 
                                                                                                               
Stockholders' equity:                                                                                          
   Preferred stock, 3,000,000 shares authorized:
      Cumulative, convertible, $1.00 par value, Series B - 80,088 shares issued and                    903,085 
         outstanding, Series C - 426,678 shares issued and outstanding, Series F -
         312,819 shares issued and outstanding, Series G - 83,500 shares issued and                                                
         outstanding;                                                                                        
   Common stock, no par value, 2,000,000 shares authorized,  
      shares issued and outstanding; 1,620,260                                                       4,224,512 
   Additional paid-in capital                                                                          452,884 
   Accumulated deficit                                                                              (4,451,501)
                                                                                                   ----------- 
       Total stockholders' equity                                                                    1,128,980 
                                                                                                   ----------- 
                                                                                                   $ 5,524,835 
                                                                                                   =========== 
</TABLE>

See accompanying notes to consolidated financial statements


                                       6
<PAGE>
 
COMMUNICATIONS WORLD INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1996 AND 1995
 
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
 
                                                     For the Three Months Ended October 31,
                                                     --------------------------------------
                                                            1996                1995
                                                         ----------          ----------
<S>                                                      <C>                 <C>
Revenue:
   Equipment and related service                         $1,321,024          $1,295,874
   Royalty fees                                              59,782              46,560
   Direct equipment and service                           2,550,112           1,628,563
   Other revenue                                             32,357             181,014
                                                         ----------          ----------
        Total revenue                                     3,963,275           3,152,011
 
Costs and expenses:
    Cost of equipment and related service                 1,157,403           1,260,064
    Cost of direct equipment and service                  1,516,054             876,156
    Cost of other revenue                                    12,069              69,653
    Selling                                                 219,062             248,209
    General and administrative                              826,357             980,263
    Depreciation and amortization                           102,752              95,059
    Interest expense                                         78,559              72,149
                                                         ----------          ----------
        Total cost and expenses                           3,912,256           3,601,553
 
        Net income (loss)                                    51,019            (449,542)
 
Cumulative dividend on preferred stock                       10,786              10,219
                                                         ----------          ----------
 
        Net income (loss) applicable to common stock     $   40,233          $ (459,761)
                                                         ==========          ==========
 
Weighted average number of shares outstanding             1,571,048           1,546,038
                                                         ==========          ==========
 
        Income (loss) per common share                   $      .03          $     (.30)
                                                                ===                ====
 
</TABLE>



See accompanying notes to consolidated financial statements



                                       7
<PAGE>
 
COMMUNICATIONS WORLD INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995

(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                            For the Six Months Ended October 31,
                                            ------------------------------------
                                                   1996               1995
                                                ----------         ----------
<S>                                              <C>               <C>
Revenue:
   Initial franchise fees                        $   12,500         $   32,500
   Equipment and related service                  2,805,336          3,041,133
   Royalty fees                                     112,077             92,499
   Direct equipment and service                   4,672,814          3,006,154
   Other revenue                                    103,367            249,292
                                                  ---------         ----------
        Total revenue                             7,706,094          6,421,578
 
Costs and expenses:
    Cost of equipment and related service         2,451,270          2,804,513
    Cost of direct equipment and service          2,617,596          1,612,853
    Cost of other revenue                            27,493            109,291
    Selling                                         437,803            455,318
    General and administrative                    1,728,574          1,785,239
    Depreciation and amortization                   206,590            188,277
    Interest expense                                154,688            131,474
                                                  ---------          ---------
        Total cost and expenses                   7,624,014          7,086,965
 
        Net income                                   82,080           (665,387)
 
Cumulative dividend on preferred stock               21,005             18,318
                                                  ---------         ----------
 
        Net income applicable to common          
         stock                                   $   61,075         $ (683,705)
                                                     ======            =======
 
Weighted average number of shares outstanding     1,558,543          1,475,319
                                                  =========          =========
 
        Income (loss) per common share            $     .04         $     (.46)
                                                        ===               ====
 
</TABLE>



See accompanying notes to consolidated financial statements

                                       8
<PAGE>
 
COMMUNICATIONS WORLD INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995
 
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
 
                                                     1996            1995
                                                   ---------      ----------
<S>                                                <C>            <C>
Cash flows from operating activities:
   Net income (loss)                               $  82,080       (665,387)
   Adjustments to reconcile to net cash
    provided (used) by operating activities:
          Depreciation and amortization              206,590        186,937
          Provision for losses on                     56,987         66,666
           accounts and notes receivable
          Changes in operating assets
           and liabilities:
               Trade accounts and notes             
                receivable                          (654,159)      (249,597)
               Inventories                           (78,309)        98,153
               Prepaid expenses                      (41,327)       118,791
               Deposits and other assets              (2,561)        (1,559)
               Trade accounts payable                366,740        628,047
               Accrued expenses                       15,933        197,599
               Other liabilities                      94,933       (168,480)
                                                   ---------      ---------
               Net cash provided by (used in) 
                operating activities                  46,907       (211,170)
                                                   ---------      --------- 
Cash flows from investing activities:
    Payments in connection with
     acquisition and expenses                                        (8,158)
    Capital expenditures                             (16,279)       (63,755)
                                                   ---------      ---------
               Net cash used by                     
                investing activities                 (16,279)       (71,913)
                                                   ---------      ---------
 
Cash flows from financing activities:
    Net borrowings (repayments) under       
     line-of-credit agreement                         87,352       (294,306)
    Net borrowings (repayments) of       
     notes and contract payable                     (155,806)       113,250
    Repayment of capital lease obligations           (16,826)       (25,413)
                                                   ---------      ---------
               Net cash used by                      (85,280)      (206,469)
                financing activities               ---------      ---------
 
Net increase (decrease) in cash                       54,652        (67,212)
 
Cash at beginning of the period                      103,748         68,998
                                                   ---------      ---------
 
Cash at end of the period                          $  49,096      $   1,786
                                                   =========      =========
 
</TABLE>
See accompanying notes to consolidated financial statements

                                       9
<PAGE>
 
COMMUNICATIONS WORLD INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995
 
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
 
                                                         1996       1995
                                                       --------   --------
<S>                                                    <C>        <C>
Supplemental disclosures of cash flow
 information:
        Interest paid                                  $154,688   $131,474
 
    Non-cash investing activities:
        Business acquisitions financed by:
            Issuance of common stock                   $ 83,500   $ 87,500
            Issuance of preferred stock                $226,500   $105,134
            Issuance of notes payable                        --   $ 30,000
        Equipment acquisitions through                  
         capital lease obligations                           --   $ 67,117
 
Conversion of notes payable to preferred stock         $169,819
 
</TABLE>



See accompanying notes to consolidated financial statements

                                       10
<PAGE>
 
COMMUNICATIONS WORLD INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)
--------------------------------------------------------------------------------

The accompanying interim consolidated financial statements  are those of
Communications World International, Inc. (the "Company" or "CommWorld") and its
subsidiaries, CommWorld of Phoenix, Inc., CommWorld of Seattle, Inc., Digital
Telecom, Inc. and CommWorld National Capitol Area, Inc.  All significant
intercompany balances and transactions have been eliminated.

These unaudited interim consolidated financial statements reflect, in the
opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation. The accounting policies followed
by the Company are set forth in Note 1 to the Company's consolidated financial
statements included in the Company's April 30, 1996  Form 10-KSB filing.
Operating results for the three and six months ended October 31, 1996 are not
necessarily indicative of the results that may be expected for the year ending
April 30, 1997.

The Company adopted Financial Accounting Standards Board ("FASB") Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, effective  the beginning of the current year. Based
on current circumstances, the effect of the adoption was not material.

In October 1995, the FASB issued Statement No. 123, Accounting for Stock-Based
Compensation, which provides an alternative to APB Opinion No. 25, Accounting
for Stock Issued to Employees, in accounting for stock-based compensation issued
to employees.  The Statement allows for a fair value based method of accounting
for employee stock options and similar equity instruments. However, for
companies that continue to account for stock-based compensation arrangements
under Opinion No. 25, Statement No. 123 requires disclosure of the pro forma
effect on net income and earnings per share of its fair value based accounting
for those arrangements. The Company has elected not to adopt the recognition and
measurement provisions of the Statement; however, the required disclosures will
be provided for its fiscal year ending April 30, 1997.

1.   LIQUIDITY
     ---------

The Company incurred operating losses for the years ended April 30, 1996 and
1995 and in prior periods. The Company's operating losses were financed
principally by the Company's major supplier.  Management plans to improve its
cash flow by increasing revenue, both from national accounts and Company-owned
outlets, improving gross profit margins and containing general and
administrative expenses, in addition to attempting to obtain additional debt or
equity financing.

The Company believes that it has sufficient financial resources available to
meet its short-term working capital needs. The ability of the Company to
continue as a going concern is dependent upon the realization of management's
plans. There can be no assurance that the Company will be able to successfully
implement its plans and therefore finance its operations over the longer term.
The accompanying  unaudited interim consolidated financial statements have been
prepared assuming the Company will continue as a going concern. These unaudited
interim consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

                                       11