##### Table of Contents









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549




---

FORM 10-Q

(Mark One)

|     |  |                                                                                                                                                                  
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|    
|    
|    
|[X]  |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
        THE SECURITIES EXCHANGE ACT OF 1934
        For the three months ended September 30, 2000.
        OR
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
        THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________.     

Commission File Number 0-29782

WORLD ACCESS, INC.

(Exact name of Registrant as specified in its
Charter)


|                                                                                                     |  |                                     
|---------------------------------------------------------------------------------------------------- |  | ------------------------------------
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Delaware                                                                                             |  | 58-2398004                          
|(State of Incorporation)                                                                             |  | (I.R.S. Employer Identification No.)
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|945 E. Paces Ferry Road, Suite 2200
        Atlanta, Georgia(Address of principal executive offices) |  | 30326(Zip Code)                     

(404) 231-2025

(Registrants telephone number)


Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share

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

The number of shares outstanding of the Registrants common
stock, par value $.01 per share, at November 14, 2000 was
73,391,958.



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---

TABLE OF CONTENTS



|                                               |  |  |  |  |  |  |  | 
|---------------------------------------------- |  |  |  |  |  |  |  | 
|PART I -- FINANCIAL INFORMATION               
|CONSOLIDATED BALANCE SHEETS                   
|CONSOLIDATED STATEMENTS OF OPERATIONS         
|CONSOLIDATED STATEMENT IN STOCKHOLDERS EQUITY
|CONSOLIDATED STATEMENTS OF CASH FLOWS         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|PART II -- OTHER INFORMATION                  
|SIGNATURES                                    
|Financial Data Schedule                       



---






PART I

FINANCIAL INFORMATION

Item  1.  Consolidated Financial
Statements

WORLD ACCESS, INC. AND SUBSIDIARIES






CONSOLIDATED BALANCE SHEETS


(In thousands)


|                                     |                                      |                                            |           |              |           |  |         |           |           | 
|------------------------------------ | ------------------------------------ | ------------------------------------------ | --------- | ------------ | --------- |  | ------- | --------- | --------- | 
|                                     |                                      | September 30,                              |           | December 31,
|                                     |                                      | 2000                                       |           | 1999        
|                                     |                                      |                                            |           |             
|                                     |                                      | (Unaudited)                                |           |             
|                                    
|                                    
|                                    
|                                    
|ASSETS                              
|Current Assets                       |                                      |                                            |           |              |           |  |         |          
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and equivalents                 |                                            | $         | 324,600      |           |  | $       | 147,432   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Short-term investments               |                                            |           | 82,249       |           |  |         |          |          
|                                    
|                                    
|                                    
|                                    
|                                     | Restricted cash                      |                                            |           | 17,229       |           |  |         | 32,243    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts receivable                  |                                            |           | 226,411      |           |  |         | 164,768   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Net assets held for sale             |                                            |           | 23,333       |           |  |         | 244,388   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Other current assets                 |                                            |           | 42,946       |           |  |         | 24,547    |          
|                                     |                                      |                                            |           |              |           |  |         |          
|                                     |                                      | Total Current Assets                       |           |              | 716,768   |  |         |           | 613,378   | 
|                                    
|                                    
|                                    
|                                    
|Property and equipment               |                                      |                                            | 130,618   |              |           |  | 136,033 |          
|                                    
|                                    
|                                    
|                                    
|Goodwill and other intangibles       |                                      |                                            | 1,097,251 |              |           |  | 830,234 |          
|                                    
|                                    
|                                    
|                                    
|Investment in TelDaFax               |                                      |                                            | 64,242    |              |           |  |        |          
|                                    
|                                    
|                                    
|                                    
|Net advances to WorldxChange         |                                      |                                            | 54,650    |              |           |  |        |          
|                                    
|                                    
|                                    
|                                    
|Other assets                         |                                      |                                            | 74,426    |              |           |  | 50,159  |          
|                                     |                                      |                                            |           |              |           |  |         |          
|                                     |                                      | Total Assets                               |           | $            | 2,137,955 |  |         | $         | 1,629,804 | 
|                                     |                                      |                                            |           |              |           |  |         |          
|                                    
|                                    
|                                    
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY
|Current Liabilities                  |                                      |                                            |           |              |           |  |         |          
|                                    
|                                    
|                                    
|                                    
|                                     | Short-term debt                      |                                            | $         | 60,017       |           |  | $       | 83,837    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable                     |                                            |           | 260,994      |           |  |         | 182,107   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Other accrued liabilities            |                                            |           | 167,303      |           |  |         | 57,590    |          
|                                     |                                      |                                            |           |              |           |  |         |          
|                                     |                                      | Total Current Liabilities                  |           |              | 488,314   |  |         |           | 323,534   | 
|                                    
|                                    
|                                    
|                                    
|Long-term debt                       |                                      |                                            | 407,151   |              |           |  | 408,338 |          
|                                    
|                                    
|                                    
|                                    
|Other liabilities                    |                                      |                                            | 3,789     |              |           |  | 633     |          
|                                     |                                      |                                            |           |              |           |  |         |          
|                                     |                                      | Total Liabilities                          |           |              | 899,254   |  |         |           | 732,505   | 
|                                     |                                      |                                            |           |              |           |  |         |          
|Stockholders Equity                 |                                      |                                            |           |              |           |  |         |          
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred stock                      |                                            |           | 6            |           |  |         | 4         |          
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock                         |                                            |           | 732          |           |  |         | 523       |          
|                                    
|                                    
|                                    
|                                    
|                                     | Capital in excess of par value       |                                            |           | 1,539,915    |           |  |         | 1,062,939 |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive loss |                                            |           | (22,671      | )         |  |         | (341      | )        
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated deficit                  |                                            |           | (279,281     | )         |  |         | (165,826  | )        
|                                     |                                      |                                            |           |              |           |  |         |          
|                                     |                                      | Total Stockholders Equity                 |           |              | 1,238,701 |  |         |           | 897,299   | 
|                                     |                                      |                                            |           |              |           |  |         |          
|                                     |                                      | Total Liabilities and Stockholders Equity |           | $            | 2,137,955 |  |         | $         | 1,629,804 | 
|                                     |                                      |                                            |           |              |           |  |         |          

See notes to consolidated financial statements.

1



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES






CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)


|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |         |       |  
|------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------- | ------- | ------------------- | ----- | ---- | ------- | ------- | ---- | - | ------- | -------- | ----- | - | ------- | ------- | ----- | -
|                                                                                      |                                                              |                         |         |                    
|                                                                                      |                                                              | Three Months            |         | Nine Months        
|                                                                                      |                                                              | Ended September 30,     |         | Ended September 30,
|                                                                                      |                                                              |                         |         |                    
|                                                                                      |                                                              | 2000                    |         | 1999                |       | 2000 |         | 1999   
|                                                                                      |                                                              |                         |         |                     |       |      |         |        
|                                                                                      |                                                              |                         |         |                    
|                                                                                      |                                                              | (Unaudited)             |         | (Unaudited)        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Carrier services                                                                      |                                                              | $                       | 239,900 |                     |       | $    | 130,210 |         |      | $ | 760,900 |          |       | $ | 328,224 |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Retail services                                                                       |                                                              |                         | 25,160  |                     |       |      |        |         |      |   | 65,760  |          |       |   |        |        
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      | Total Revenue                                                |                         |         | 265,060             |       |      |         | 130,210 |      |   |         | 826,660  |       |   |         | 328,224 |      
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Cost of services (exclusive of depreciation and amortization
	shown separately below) |                                                              |                         | 234,730 |                     |       |      | 115,973 |         |      |   | 725,060 |          |       |   | 298,777 |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Selling, general and administrative                                                   |                                                              |                         | 66,067  |                     |       |      | 5,667   |         |      |   | 117,405 |          |       |   | 14,341  |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Depreciation and network amortization                                                 |                                                              |                         | 5,022   |                     |       |      | 1,273   |         |      |   | 14,345  |          |       |   | 3,707   |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Amortization of intangibles                                                           |                                                              |                         | 14,797  |                     |       |      | 1,175   |         |      |   | 41,986  |          |       |   | 3,338   |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Expense under WorldxChange management agreement                                       |                                                              |                         | 22,688  |                     |       |      |        |         |      |   | 22,688  |          |       |   |        |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Restructuring charge                                                                  |                                                              |                         | 38,321  |                     |       |      |        |         |      |   | 34,326  |          |       |   |        |        
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      | Total Operating Expenses                                     |                         |         | 381,625             |       |      |         | 124,088 |      |   |         | 955,810  |       |   |         | 320,163 |      
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      | Operating Income (Loss)                                      |                         |         | (116,565            | )     |      |         | 6,122   |      |   |         | (129,150 | )     |   |         | 8,061   |      
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Interest and other income                                                             |                                                              |                         | 12,646  |                     |       |      | 913     |         |      |   | 21,900  |          |       |   | 1,785   |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Interest expense                                                                      |                                                              |                         | 13,899  |                     |       |      | 2,418   |         |      |   | 42,471  |          |       |   | 6,733   |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Foreign exchange gain (loss)                                                          |                                                              |                         | (586    | )                   |       |      |        |         |      |   | (375    | )        |       |   |        |        
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      | Income (Loss) From Continuing Operations Before Income Taxes |                         |         | (118,404            | )     |      |         | 4,617   |      |   |         | (150,096 | )     |   |         | 3,113   |      
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Income taxes (benefit)                                                                |                                                              |                         | (17,150 | )                   |       |      | 1,990   |         |      |   | (19,265 | )        |       |   | 2,214   |        
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      | Income (Loss) From Continuing Operations                     |                         |         | (101,254            | )     |      |         | 2,627   |      |   |         | (130,831 | )     |   |         | 899     |      
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Net income (loss) from discontinued operations                                        |                                                              |                         | (4,248  | )                   |       |      | 11,578  |         |      |   | (10,397 | )        |       |   | 19,726  |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Net gain (loss) on sale of discontinued operations                                    |                                                              |                         | (8,000  | )                   |       |      |        |         |      |   | 27,773  |          |       |   | (12,342 | )      
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      | Net Income (Loss)                                            |                         |         | (113,502            | )     |      |         | 14,205  |      |   |         | (113,455 | )     |   |         | 8,283   |      
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Preferred stock dividends                                                             |                                                              |                         | 744     |                     |       |      | 784     |         |      |   | 1,907   |          |       |   | 1,197   |        
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      | Net Income (Loss) Available to Common Stockholders           |                         | $       | (114,246            | )     |      | $       | 13,421  |      |   | $       | (115,362 | )     |   | $       | 7,086   |      
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|Income (Loss) Per Common Share:                                                       |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Basic:                                                       |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |         |      
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      |                                                              | Continuing Operations   |         | $                   | (1.64 | )    |         | $       | 0.05 |   |         | $        | (2.24 | ) |         | $       | (0.01 | )
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      |                                                              | Discontinued Operations |         |                     | (0.20 | )    |         |         | 0.32 |   |         |          | 0.29  |   |         |         | 0.20  |  
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      |                                                              | Net Income (Loss)       |         | $                   | (1.83 | )    |         | $       | 0.37 |   |         | $        | (1.95 | ) |         | $       | 0.20  |  
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      | Diluted:                                                     |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |         |      
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      |                                                              | Continuing Operations   |         | $                   | (1.64 | )    |         | $       | 0.04 |   |         | $        | (2.24 | ) |         | $       | (0.01 | )
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      |                                                              | Discontinued Operations |         |                     | (0.20 | )    |         |         | 0.27 |   |         |          | 0.29  |   |         |         | 0.18  |  
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      |                                                              | Net Income (Loss)       |         | $                   | (1.83 | )    |         | $       | 0.31 |   |         | $        | (1.95 | ) |         | $       | 0.18  |  
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|Weighted Average Shares Outstanding:                                                  |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Basic                                                        |                         |         | 62,281              |       |      |         | 36,509  |      |   |         | 59,199   |       |   |         | 36,245  |      
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        
|                                                                                      | Diluted                                                      |                         |         | 100,209             |       |      |         | 43,491  |      |   |         | 95,366   |       |   |         | 40,048  |      
|                                                                                      |                                                              |                         |         |                     |       |      |         |         |      |   |         |          |       |   |         |        

See notes to consolidated financial statements.

2



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES






CONSOLIDATED STATEMENT IN STOCKHOLDERS EQUITY


(In thousands)


|                              |                                                                                        |             |   |        |  |            |     |               |  |             |           |         |   |   |         |         |   |   |          |          |   |   |           |          |  
|----------------------------- | -------------------------------------------------------------------------------------- | ----------- | - | ------ |  | ---------- | --- | ------------- |  | ----------- | --------- | ------- | - | - | ------- | ------- | - | - | -------- | -------- | - | - | --------- | -------- | -
|                              |                                                                                        |             |   |        |  |            |     | Accumulated   |  |             |           |        
|                              |                                                                                        |             |   |        |  | Capital in |     | Other         |  |             |           |        
|                              |                                                                                        | Preferred   |   | Common |  | Excess of  |     | Comprehensive |  | Accumulated |           |        
|                              |                                                                                        | Stock       |   | Stock  |  | Par Value  |     | Loss          |  | Deficit     |           | Total  
|                              |                                                                                        |             |   |        |  |            |     |               |  |             |           |        
|                              |                                                                                        |             |   |       
|                              |                                                                                        | (Unaudited) |   |       
|                             
|                             
|                             
|                             
|Balance at January 1, 2000    |                                                                                        | $           | 4 |        |  | $          | 523 |               |  | $           | 1,062,939 |         |   | $ | (341    | )       |   | $ | (165,826 | )        |   | $ | 897,299   |         
|                             
|                             
|                             
|                             
|                              | Net loss                                                                               |             |   |        |  |            |     |               |  |             |           |         |   |   |         |         |   |   |          | (113,455 | ) |   |           | (113,455 | )
|                             
|                             
|                             
|                             
|                              | Foreign currency translation adjustment                                                |             |   |        |  |            |     |               |  |             |           |         |   |   |         | (25,545 | ) |   |          |          |   |   |           | (25,545  | )
|                             
|                             
|                             
|                             
|                              | Unrealized gain on marketable securities, net of taxes                                 |             |   |        |  |            |     |               |  |             |           |         |   |   |         | 3,215   |   |   |          |          |   |   |           | 3,215    |  
|                              |                                                                                        |             |   |        |  |            |     |               |  |             |           |         |   |   |         |         |   |   |          |          |   |   |           |         
|                              | Total comprehensive loss                                                               |             |   |        |  |            |     |               |  |             |           |         |   |   |         |         |   |   |          |          |   |   |           | (135,785 | )
|                             
|                             
|                             
|                             
|                              | Issuance of common and preferred shares in private offerings                           |             |   |        |  |            |     | 39            |  |             |           | 101,972 |   |   |         |         |   |   |          |          |   |   |           | 102,011  |  
|                             
|                             
|                             
|                             
|                              | Issuance of preferred shares, common shares and options for
	acquisition of businesses |             |   | 2      |  |            |     | 128           |  |             |           | 330,304 |   |   |         |         |   |   |          |          |   |   |           | 330,434  |  
|                             
|                             
|                             
|                             
|                              | Dividends on preferred stock                                                           |             |   |        |  |            |     |               |  |             |           | (1,907  | ) |   |         |         |   |   |          |          |   |   |           | (1,907   | )
|                             
|                             
|                             
|                             
|                              | Conversion of preferred stock into common shares                                       |             |   |        |  |            |     | 15            |  |             |           | (15     | ) |   |         |         |   |   |          |          |   |   |           |         |  
|                             
|                             
|                             
|                             
|                              | Conversion of debt into common and preferred shares                                    |             |   |        |  |            |     | 18            |  |             |           | 24,600  |   |   |         |         |   |   |          |          |   |   |           | 24,618   |  
|                             
|                             
|                             
|                             
|                              | Release of escrowed common shares                                                      |             |   |        |  |            |     |               |  |             |           | 1,000   |   |   |         |         |   |   |          |          |   |   |           | 1,000    |  
|                             
|                             
|                             
|                             
|                              | Issuance of common shares for option and warrant exercises                             |             |   |        |  |            |     | 9             |  |             |           | 11,058  |   |   |         |         |   |   |          |          |   |   |           | 11,067   |  
|                             
|                             
|                             
|                             
|                              | Tax benefit from option and warrant exercises                                          |             |   |        |  |            |     |               |  |             |           | 2,604   |   |   |         |         |   |   |          |          |   |   |           | 2,604    |  
|                             
|                             
|                             
|                             
|                              | Accelerated vesting of options                                                         |             |   |        |  |            |     |               |  |             |           | 6,273   |   |   |         |         |   |   |          |          |   |   |           | 6,273    |  
|                             
|                             
|                             
|                             
|                              | Other issuances of common shares                                                       |             |   |        |  |            |     |               |  |             |           | 1,087   |   |   |         |         |   |   |          |          |   |   |           | 1,087    |  
|                              |                                                                                        |             |   |        |  |            |     |               |  |             |           |         |   |   |         |         |   |   |          |          |   |   |           |         
|Balance at September 30, 2000 |                                                                                        | $           | 6 |        |  | $          | 732 |               |  | $           | 1,539,915 |         |   | $ | (22,671 | )       |   | $ | (279,281 | )        |   | $ | 1,238,701 |         
|                              |                                                                                        |             |   |        |  |            |     |               |  |             |           |         |   |   |         |         |   |   |          |          |   |   |           |         

See notes to consolidated financial statements.

3



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES






CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                                                      |                                                                                              |                                                                                        |                              |                                              |         |         |          |        |        |         |         |  
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ---------------------------- | -------------------------------------------- | ------- | ------- | -------- | ------ | ------ | ------- | ------- | -
|                                                                      |                                                                                              |                                                                                       
|                                                                      |                                                                                              | Nine Months Ended                                                                     
|                                                                      |                                                                                              | September 30,                                                                         
|                                                                      |                                                                                              |                                                                                       
|                                                                      |                                                                                              | 2000                                                                                   |                              | 1999                                        
|                                                                      |                                                                                              |                                                                                        |                              |                                             
|                                                                      |                                                                                              |                                                                                       
|                                                                      |                                                                                              | (Unaudited)                                                                           
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Cash Flows From Operating Activities:                                 |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net income (loss)                                                                            |                                                                                        | $                            | (113,455                                     | )       |         | $        | 8,283  |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Adjustments to reconcile net income (loss) to net cash from
	(used by) operating activities: |                                                                                        |                              |                                              |         |         |          |        |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Depreciation and amortization                                                          |                              |                                              | 62,216  |         |          |        | 22,721 |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Expense under WorldxChange management agreement                                        |                              |                                              | 22,688  |         |          |        |       |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Income tax benefits                                                                    |                              |                                              | (24,792 | )       |          |        |       |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Gain on sale of securities                                                             |                              |                                              | (7,625  | )       |          |        |       |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Net (gain) loss from sale of discontinued operations                                   |                              |                                              | (27,773 | )       |          |        | 13,662 |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Income tax benefit from stock options and warrants                                     |                              |                                              | 2,604   |         |          |        | 162    |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Provision for inventory reserves                                                       |                              |                                              | 263     |         |          |        | 923    |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Provision for bad debts                                                                |                              |                                              | 27,184  |         |          |        | 2,863  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Restructuring charge                                                                   |                              |                                              | 30,818  |         |          |        |       |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Stock contributed to employee benefit plan                                             |                              |                                              | 335     |         |          |        | 305    |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              | Changes in operating assets and liabilities, net of effects from
	businesses acquired: |                              |                                              |         |         |          |        |        |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              |                                                                                        | Accounts receivable          |                                              |         | (74,828 | )        |        |        | (50,251 | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              |                                                                                        | Inventories                  |                                              |         | (15,015 | )        |        |        | (6,349  | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              |                                                                                        | Accounts payable             |                                              |         | 39,290  |          |        |        | 30,904  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                              |                                                                                        | Other assets and liabilities |                                              |         | (52,266 | )        |        |        | (5,800  | )      
|                                                                      |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|                                                                      |                                                                                              |                                                                                        |                              | Net Cash From (Used By) Operating Activities |         |         | (130,356 | )      |        |         | 17,423  |  
|                                                                      |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|Cash Flows From Investing Activities:                                 |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Acquisition of businesses, net of cash acquired                                              |                                                                                        |                              | 25,678                                       |         |         |          | (3,094 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Proceeds from sales of assets                                                                |                                                                                        |                              | 293,209                                      |         |         |          | 8,144  |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Purchase of short-term investments                                                           |                                                                                        |                              | (84,812                                      | )       |         |          |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Proceeds from sale of short-term investments and securities                                  |                                                                                        |                              | 89,742                                       |         |         |          |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Expenditures for property and equipment                                                      |                                                                                        |                              | (18,008                                      | )       |         |          | (7,944 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Capitalization of software development costs                                                 |                                                                                        |                              | (168                                         | )       |         |          | (3,735 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Loans and advances to WorldxChange                                                           |                                                                                        |                              | (77,338                                      | )       |         |          |       |       
|                                                                      |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|                                                                      |                                                                                              |                                                                                        |                              | Net Cash From (Used By) Investing Activities |         |         | 228,303  |        |        |         | (6,629  | )
|                                                                      |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|Cash Flows From Financing Activities:                                 |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net proceeds from sales of common stock                                                      |                                                                                        |                              | 82,211                                       |         |         |          |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net proceeds from sales of preferred stock                                                   |                                                                                        |                              | 19,800                                       |         |         |          | 47,751 |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Short-term borrowings (repayments)                                                           |                                                                                        |                              | (16,423                                      | )       |         |          | 2,000  |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Issuance of long-term debt                                                                   |                                                                                        |                              |                                             |         |         |          | 1,654  |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Long-term debt repayments                                                                    |                                                                                        |                              | (15,280                                      | )       |         |          | (9,987 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Payment of preferred stock dividends                                                         |                                                                                        |                              | (2,154                                       | )       |         |          | (413   | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Proceeds from exercise of stock options and warrants                                         |                                                                                        |                              | 11,067                                       |         |         |          | 999    |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Other                                                                                        |                                                                                        |                              |                                             |         |         |          | (133   | )     
|                                                                      |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|                                                                      |                                                                                              |                                                                                        |                              | Net Cash From Financing Activities           |         |         | 79,221   |        |        |         | 41,871  |  
|                                                                      |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|                                                                      |                                                                                              |                                                                                        |                              | Increase in Cash and Equivalents             |         |         | 177,168  |        |        |         | 52,665  |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cash and Equivalents at Beginning of Period                                                  |                                                                                        |                              | 147,432                                      |         |         |          | 55,176 |       
|                                                                      |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|                                                                      |                                                                                              |                                                                                        |                              | Cash and Equivalents at End of Period        |         | $       | 324,600  |        |        | $       | 107,841 |  
|                                                                      |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|Supplemental Schedule of Noncash Financing and Investing
	Activities: |                                                                                              |                                                                                        |                              |                                              |         |         |          |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Issuance of common stock for TelDaFax investment                                             |                                                                                        |                              | 64,242                                       |         |         |          |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Issuance of common stock for businesses acquired                                             |                                                                                        | $                            | 22,185                                       |         |         | $        | 3,825  |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Issuance of preferred stock for businesses acquired                                          |                                                                                        |                              | 222,519                                      |         |         |          | 18,539 |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Issuance of stock options and warrants for businesses acquired                               |                                                                                        |                              | 21,731                                       |         |         |          | 300    |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Conversion of debt into common stock                                                         |                                                                                        |                              | 24,292                                       |         |         |          |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Conversion of note receivable to investment in LDI                                           |                                                                                        |                              | 4,674                                        |         |         |          |       |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Issuance of common stock for technology license agreements                                   |                                                                                        |                              |                                             |         |         |          | 2,191  |       

See notes to consolidated financial statements.

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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  A:  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements
include the accounts of World Access, Inc. and its majority
owned and wholly owned subsidiaries (the Company)
from their effective dates of acquisition. These financial
statements have been prepared in accordance with the
instructions to Form 10-Q and 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 a fair presentation
of the results of the interim periods covered have been included.

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

The estimated fair value of financial instruments has been
determined by the Company using available market information and
appropriate valuation methodologies. However, considerable
judgment is required in interpreting data to develop the
estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the
Company could realize in a current market exchange. The fair
value estimates presented in the balance sheets herein are based
on pertinent information available to management as of the
respective balance sheet dates. Although management is not aware
of any factors that would significantly affect the estimated
fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that
date and current estimates of fair value may differ
significantly from the amounts presented herein.

The fair values of cash equivalents, accounts receivable,
accounts payable and accrued expenses approximate the carrying
values due to their short-term nature. Short-term investments
include shares of BATM Advanced Communications Limited (see
Note E) and other securities with an original
maturity of more than three months and a remaining maturity of
less than one year. The BATM shares are recorded at fair market
value based on trading in the public market, with unrealized
gains and losses being recognized as a separate component of
stockholders equity, net of income taxes. The other
short-term investments are recorded at cost as it is the intent
of the Company to hold these securities until maturity. The fair
values of long-term debt are estimated based on current market
rates and instruments with the same risk and maturities and
approximate the carrying value.

The results of operations for the three and nine months ended
September 30, 2000 are not necessarily indicative of the
results expected for the full year. Certain reclassifications
have been made to the prior periods financial information
to conform with the presentations used in 2000.

Accounts receivable are presented net of an allowance for
doubtful accounts of $46.8 million and $18.5 million as of
September 30, 2000 and December 31, 1999, respectively.

Cost of carrier services excludes depreciation and amortization
expenses related to the services network, which are included in
Depreciation and network amortization on the
consolidated statements of operations.

NOTE  B:     ACQUISITIONS

LDI Acquisition

In February 2000, the Company acquired substantially all of
the assets and assumed certain liabilities of Long Distance
International Inc. (LDI). The most significant and
strategic asset acquired was NETnet International S.A.
(NETnet), a wholly owned subsidiary of LDI.
NETnet provides an array of retail

5



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

telecommunications services concentrating on the needs of
business customers in Austria, France, Germany, Italy, Norway,
Spain, Sweden, Switzerland, and the United Kingdom.

In connection with the LDI acquisition, the Company issued
185,000 shares of Convertible Preferred Stock, Series D
(Series D Preferred Stock) to LDIs
stockholders and the holders of LDIs senior notes. The
Series D Preferred Stock, which has a $185.0 million
liquidation preference, was valued at $217.6 million based on
its estimated market value during the period including the three
trading days prior and subsequent to the date economic terms of
the LDI acquisition were announced. In addition, the Company
issued 1,500,000 non-qualified options to purchase Company
common stock at an exercise price of $18.50 per share in
exchange for substantially all the stock options held by
LDIs employees. The new stock options were valued at $21.7
million based on the Black-Scholes option valuation model.

The Series D Preferred Stock bears no dividend and is
convertible into shares of the Companys common stock at
the option of the holder in accordance with a conversion formula
equal to the $1,000 liquidation preference per share divided by
a conversion price of $18.00 per common share, subject to
adjustment in the event of below market issuances of common
stock, stock dividends and certain other distributions with
respect to common stock. If the closing trading price of the
Companys common stock exceeds $18.00 per share for 60
consecutive trading days, the Series D Preferred Stock will
automatically convert into common stock.

The acquisition of LDI has been accounted for under the purchase
method of accounting. Accordingly, the results of LDIs
operations have been included in the accompanying consolidated
financial statements from February 11, 2000. The following
summarizes the allocation of the purchase price based on
information currently available to management (in thousands):

|                                        |                        |                      |   |         |         | 
|--------------------------------------- | ---------------------- | -------------------- | - | ------- | ------- | 
|                                       
|                                       
|                                       
|                                       
|Purchase price:                         |                        |                      |   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Preferred stock issued |                      | $ | 217,560 |        
|                                       
|                                       
|                                       
|                                       
|                                        | Debt forgiven          |                      |   | 4,674   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Stock options issued   |                      |   | 21,731  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Fees and expenses      |                      |   | 2,000   |        
|                                        |                        |                      |   |        
|                                        |                        | Total purchase price |   |         | 245,965 | 
|                                       
|                                       
|                                       
|                                       
|Allocation to fair value of net assets: |                        |                      |   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Cash                   |                      |   | (42,476 | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Other current assets   |                      |   | (15,447 | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Property and equipment |                      |   | (17,113 | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Intangible assets      |                      |   | (27,614 | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Other assets           |                      |   | (871    | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Current liabilities    |                      |   | 80,433  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other liabilities      |                      |   | 723     |        
|                                        |                        |                      |   |        
|                                        |                        | Goodwill             |   | $       | 223,600 | 
|                                        |                        |                      |   |        

Intangible assets include the estimated fair values of the
NETnet trademark, NETnets customer base and certain
European interconnection agreements and operating licenses.
These assets are being amortized over a five to seven year
period. The excess of purchase price over the fair value of net
assets acquired has been recorded as goodwill and is being
amortized over a 20 year period.

TelDaFax Investment

In June 2000, the Company executed an agreement to acquire a
majority interest in TelDaFax AG (TelDaFax) through
the completion of several integrated transactions including a
tender for the remaining shares of TelDaFax held by public
shareholders. TelDaFax, a publicly traded company, provides
telecommunications services to business and residential
customers in Germany. In September 2000, the Company

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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

modified the original agreement and acquired approximately 33%
of the outstanding shares of TelDaFax in a private transaction
with a group of affiliated institutional investors. To acquire
this interest, the Company issued 11,457,631 shares of
restricted common stock with a value of approximately $64.2
million, based on the closing price of the Companys common
stock on the date of acquisition.

The Company is accounting for its current investment in TelDaFax
based on the equity method, i.e., 33% of TelDaFaxs
estimated net income or loss from the date of acquisition will
be recorded in the Companys consolidated statement of
operations. During the third quarter of 2000, the Company
recorded a loss of approximately $207,000 on its investment. The
Company expects to acquire a majority ownership in TelDaFax in
December 2000 or January 2001 upon the completion of
one or more of the pending TelDaFax transactions (see
Note K).

Pro Forma Results of Operations

During 1999, the Company acquired several businesses including
(i) substantially all the assets of Comm/Net Holding
Corporation and its wholly owned subsidiaries (collectively
referred to herein as Comm/Net) and
(ii) FaciliCom International, Inc. (FaciliCom).

On a pro forma, unaudited basis, as if the acquisitions of
Comm/Net, FaciliCom and LDI had occurred as of January 1,
1999, total revenue, operating loss from continuing operations,
loss from continuing operations and loss from continuing
operations per diluted common share for the nine months ended
September 30, 2000 and 1999 would have been approximately
$835.0 million and $734.6 million; $86.4 million
and $106.8 million; $146.8 million and
$147.2 million; and $2.48 and $2.92, respectively. These
unaudited pro forma results have been prepared for comparative
purposes only and are not necessarily indicative of the results
of operations which would actually have occurred had the
acquisitions been in effect on the date indicated.

NOTE  C:  WORLDXCHANGE MANAGEMENT AGREEMENT
AND ADVANCES

In February 2000, the Company executed a definitive merger
agreement with Communication TeleSystems International, d/b/a
WorldxChange Communications (WorldxChange), a
privately held multinational telecommunications service provider
(see Note K). On August 1, 2000, the Company
entered into an Executive Management Services Agreement
(Management Agreement) with WorldxChange. Under this
agreement, the Company serves as the exclusive agent for
WorldxChange to provide all management services required for the
operation and management of WorldxChange. The Company has the
authority, to the fullest extent permitted by law, to take all
actions and make all decisions on behalf of WorldxChange in the
operation and management of WorldxChanges day to day
business affairs. This includes the direction and use of and
access to WorldxChanges assets and the power to select,
terminate and determine the compensation of the management and
employees of WorldxChange. Under this agreement, the Company has
also assumed all financial responsibility related to the
operations of WorldxChange subsequent to August 1, 2000.

As of September 30, 2000, the Company has net advances due
from WorldxChange of $54.7 million, which consisted of the
following (in thousands):

|                                        |  |   |         |  
|--------------------------------------- |  | - | ------- | -
|                                       
|                                       
|                                       
|                                       
|Net expenses under Management Agreement |  | $ | (22,688 | )
|                                       
|                                       
|                                       
|                                       
|Secured term loan                       |  |   | 35,732  |  
|                                       
|                                       
|                                       
|                                       
|Working capital advances                |  |   | 41,606  |  
|                                        |  |   |         |  
|                                        |  | $ | 54,650  |  
|                                        |  |   |         |  

As a result of World Access assuming all financial
responsibility for WorldxChange, the Company has recorded the
net loss incurred by WorldxChange since August 1, 2000 as a
single line item, Expense under WorldxChange Management
Agreement, in its Statement of Operations. This item has
been presented as part of the Companys operations due to
the significant integration that has occurred between the
companies.

7



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

As of September 30, 2000, World Access and WorldxChange
have consolidated their sale forces, billing systems and network
operations centers, as well as decommissioned certain switches
as traffic has migrated from one network to the other.

The Statement of Operations for WorldxChange for the two months
ended September 30, 2000 while operating under the
Management Agreement is (in thousands):

|                                      |  |   |         |  
|------------------------------------- |  | - | ------- | -
|                                     
|                                     
|                                     
|                                     
|Revenue                               |  | $ | 74,031  |  
|                                     
|                                     
|                                     
|                                     
|Cost of services                      |  |   | 55,920  |  
|                                     
|                                     
|                                     
|                                     
|Selling, general and administrative   |  |   | 25,842  |  
|                                     
|                                     
|                                     
|                                     
|Depreciation and network amortization |  |   | 6,808   |  
|                                     
|                                     
|                                     
|                                     
|Amortization of intangibles           |  |   | 1,889   |  
|                                      |  |   |         |  
|Total operating expense               |  |   | 90,459  |  
|                                      |  |   |         |  
|Operating loss                        |  |   | (16,428 | )
|                                     
|                                     
|                                     
|                                     
|Interest and other income             |  |   | 280     |  
|                                     
|                                     
|                                     
|                                     
|Interest expense                      |  |   | 6,511   |  
|                                      |  |   |         |  
|Loss before income taxes              |  |   | (22,659 | )
|                                     
|                                     
|                                     
|                                     
|Income taxes                          |  |   | 29      |  
|                                      |  |   |         |  
|Net loss                              |  | $ | (22,688 | )
|                                      |  |   |         |  

In February 2000, the Company entered into a participation
agreement with Foothill Capital Corporation
(Foothill) under which WorldxChange can borrow
money. In this participation agreement, Foothill is the lead
lender and will act as agent for the Company in dispersing the
funds and in administering and collecting the loan. The Foothill
participation agreement allows the Company to advance up to
$45.0 million to WorldxChange. The terms of the loan are
governed by the terms of an existing loan arrangement between
Foothill and WorldxChange.

Advances by the Company under the Foothill agreement are
structured as a term loan which bears interest at a rate of 11%
per annum and matures on February 11, 2001. Both the term
loan and the existing indebtedness to Foothill under the loan
arrangement are secured by a security interest in all personal
property of WorldxChange. The participation interest of the
Company in the term loan is a last-out participation, which
means that at any time after an acceleration by Foothill of the
maturity of the obligations under the loan arrangement, or the
failure of WorldxChange to repay such obligations in full upon
the stated maturity, all amounts collected or received by
Foothill will be applied first to the repayment of all
principal, interest and costs owing to Foothill, and then to
repayment of amounts owing to the Company. Subsequent to
September 30, 2000, the Foothill loan was repaid by the
Company.

As of September 30, 2000, WorldxChange owes
$69.1 million under the Foothill loan, including
$35.7 million advanced by the Company. These funds are
being used to finance operating losses expected to be incurred
by WorldxChange prior to the merger date as well as to make
permanent investments in working capital that are required to
support WorldxChanges growth.

Stockholders holding a majority of the outstanding shares of
voting stock of both the Company and WorldxChange have entered
into agreements in which they agreed to vote in favor of the
WorldxChange merger. In early August 2000, when it was
determined that completion of the WorldxChange merger was highly
likely under the voting agreements, the Company began advancing
funds to WorldxChange for working capital purposes.

8



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE  D:  RESTRUCTURING

2000 Plan

In September 2000, the Company recorded a restructuring charge
of $38.3 million associated with integrating existing operations
with the operations of entities acquired or controlled under a
management agreement. This charge includes the estimated costs
of (i) consolidating the administrative and operational
functions within the United States, (ii) consolidating
certain offices throughout Europe, and (iii) eliminating
redundant switching facilities. All elements of this plan are
expected to be complete by mid-2001.

Beginning in July 2000, the Company began consolidating the
network monitoring, billing services, customer support, and
operational accounting functions within the U.S. to
WorldxChanges corporate offices. In addition, within
Europe, numerous office closings were announced in order to
consolidate locations into one major office per country. These
consolidations resulted in the notification of approximately 85
employees of the elimination of their positions. As of
September 30, approximately 26 of these employees have been
terminated, receiving severance payments of $423,000. The
employees remaining will be terminated between October 2000 and
February 2001, receiving estimated severance benefits totaling
$2.0 million. Such benefits will be paid into the third quarter
of 2001.

Other significant costs incurred in conjunction with these
consolidations include estimated costs associated with abandoned
locations, including: (i) future lease obligations of $16.7
million, after considering estimated sublease opportunities, and
(ii) asset write-downs of $2.9 million for leasehold
improvements and other office furniture, equipment and
proprietary information systems to their net realizable value
upon sale or abandonment. Payments under the abandoned leases
extend into 2008.

Efforts to maximize network efficiency resulted in the vacating
of four of the Companys U.S. gateway switch locations.
From these four switch sites, the Company believes it can
redeploy two of the switches to other locations within its
network. The remaining two switches were written down to their
estimated net realizable value, along with the leasehold
improvements and various other incidental assets located at the
four sites. In addition, the Company held certain equipment in
inventory for redeployment, but determined, due to network
assets from recent acquisitions, that such equipment was no
longer the most effective network solution. Accordingly, this
equipment was also written down to its net realizable value.
These decisions resulted in a charge of approximately $6.4
million.

The Company also recorded approximately $6.5 million associated
with closure and dissolution activities, of which approximately
$2.5 million has been paid as of September 30, 2000. Such
costs include amounts associated with transferring functions to
new locations, vacating offices, and dissolving legal entities.
The closure and transition of functions also resulted in
contract termination penalties of $3.0 million. These amounts
will be paid out by the end of 2001.

9



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table summarizes the amounts included in each
major component of the restructuring charge (in thousands):

|                                                                |  |               |        |          |  |               |        |  |  |   |        | 
|--------------------------------------------------------------- |  | ------------- | ------ | -------- |  | ------------- | ------ |  |  | - | ------ | 
|                                                                |  |               |        |          |  | Reserve      
|                                                                |  |               |        |          |  | Balance at   
|                                                                |  | Restructuring |        | 2000     |  | September 30,
|                                                                |  | Charge        |        | Activity |  | 2000         
|                                                                |  |               |        |          |  |              
|Accrual for lease commitments                                   |  | $             | 16,690 |          |  | $             | 630    |  |  | $ | 16,060 | 
|                                                               
|                                                               
|                                                               
|                                                               
|Write-down of network equipment                                 |  |               | 6,411  |          |  |               | 6,411  |  |  |   |       | 
|                                                               
|                                                               
|                                                               
|                                                               
|Write-down of leasehold improvements and other general property |  |               | 2,854  |          |  |               | 2,854  |  |  |   |       | 
|                                                               
|                                                               
|                                                               
|                                                               
|Closure and dissolution costs                                   |  |               | 6,456  |          |  |               | 2,456  |  |  |   | 4,000  | 
|                                                               
|                                                               
|                                                               
|                                                               
|Severance                                                       |  |               | 2,431  |          |  |               | 423    |  |  |   | 2,008  | 
|                                                               
|                                                               
|                                                               
|                                                               
|Contract termination penalties                                  |  |               | 3,000  |          |  |               |       |  |  |   | 3,000  | 
|                                                               
|                                                               
|                                                               
|                                                               
|Other                                                           |  |               | 479    |          |  |               |       |  |  |   | 479    | 
|                                                                |  |               |        |          |  |               |        |  |  |   |        | 
|                                                                |  | $             | 38,321 |          |  | $             | 12,774 |  |  | $ | 25,547 | 
|                                                                |  |               |        |          |  |               |        |  |  |   |        | 

1999 Plan

In December 1999, the Company recorded a restructuring charge of
$37.8 million in connection with the acquisition of FaciliCom.
The restructuring charge included the estimated costs of
(i) consolidating certain of the Companys United
States gateway switching centers and related technical support
functions into existing FaciliCom operations;
(ii) consolidating certain of the Companys United
Kingdom operations into existing FaciliCom operations;
(iii) consolidating certain of the Companys
administrative functions into FaciliComs operations; and
(iv) eliminating other redundant operations and assets as a
result of combining the two entities.

FaciliCom is a multi-national long distance service carrier
focused on providing international telecommunications services
to other carriers worldwide. FaciliCom provides these services
over its carrier-grade international network, which consists of
17 gateway switches as well as a satellite earth station. Given
the duplication of network assets between FaciliCom and the
Company, including switching and transmission equipment, the
Company made the decision in late 1999 to shut down and dispose
of its six gateway switches located in Chicago, Los Angeles,
Newark, Dallas, San Francisco and London. All of the U.S.
switches were effectively taken out of service as of
December 31, 1999. The U.K. switch is being utilized on a
limited basis and is scheduled to be taken out of service in the
fourth quarter of 2000, up to six months later than the
Companys initial estimate. The ongoing costs of operating
the U.K. switch continue to be charged to current operations.
The restructuring charge also provided for the write-off of
leasehold improvements at the six switch sites and lease
commitments remaining on certain facilities and equipment taken
out of service.

Since installation of the six switches, the Company has
experienced certain performance issues involving the equipment.
In April 2000, the Company settled with the vendor its disputes
over performance. In connection therewith, the Company settled
its approximately $19.0 million debt under the related capital
leases by agreeing to pay the lessor $15.0 million in a
combination of cash and shares of common stock. The net result
of this settlement was a one-time pre-tax gain of approximately
$4.0 million, which was recorded as a restructuring credit in
the second quarter of 2000.

Approximately 25 personnel whose job functions included
accounting and administrative support as well as network
operations were terminated as part of the overall restructuring.
The termination benefits associated with these personnel were
included in the restructuring charge.

10



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table summarizes the amounts included in each
component of the restructuring charge (in thousands):

|                                                       |  |               |        |          |  |          |        |                 |  |   |       |  |  |   |       | 
|------------------------------------------------------ |  | ------------- | ------ | -------- |  | -------- | ------ | --------------- |  | - | ----- |  |  | - | ----- | 
|                                                       |  | Restructuring |        | 1999     |  | 2000     |        | Reserve Balance
|                                                       |  | Charge        |        | Activity |  | Activity |        | at 9/30/00     
|                                                       |  |               |        |          |  |          |        |                
|Write-down of leasehold improvements                   |  | $             | 1,506  |          |  | $        | 1,506  |                 |  | $ |      |  |  | $ |      | 
|                                                      
|                                                      
|                                                      
|                                                      
|Write-down of network equipment                        |  |               | 25,372 |          |  |          | 25,372 |                 |  |   |      |  |  |   |      | 
|                                                      
|                                                      
|                                                      
|                                                      
|Write-down of redundant software and general equipment |  |               | 1,256  |          |  |          | 1,256  |                 |  |   |      |  |  |   |      | 
|                                                      
|                                                      
|                                                      
|                                                      
|Accrual for lease and circuit cost commitments         |  |               | 8,078  |          |  |          | 1,216  |                 |  |   | 2,739 |  |  |   | 4,123 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Accrual for termination benefits                       |  |               | 1,588  |          |  |          | 270    |                 |  |   | 522   |  |  |   | 796   | 
|                                                       |  |               |        |          |  |          |        |                 |  |   |       |  |  |   |       | 
|                                                       |  | $             | 37,800 |          |  | $        | 29,620 |                 |  | $ | 3,261 |  |  | $ | 4,919 | 
|                                                       |  |               |        |          |  |          |        |                 |  |   |       |  |  |   |       | 

NOTE  E:  DISCONTINUED OPERATIONS

In December 1999, in connection with the acquisition of
FaciliCom, the Company adopted a plan to divest all of its
remaining equipment businesses in order to focus on its
international long distance business. As a result of this plan,
all of the Companys equipment businesses have been
accounted for as discontinued operations and, accordingly, the
results of their operations have been excluded from continuing
operations in the consolidated statements of operations for all
periods presented. Discontinued operations consisted primarily
of the following businesses at December 31, 1999:



| |   |                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Telco Systems Division, a provider of next generation transport
	and access solutions for service providers throughout the world.
	Its products include intelligent integrated access devices,
	multiplexers and digital microwave radios.
|
| |  | NACT Switching Division, a provider of advanced switching
	platforms with integrated proprietary applications software as
	well as billing and telemanagement systems.                                                                    
|
| |  | Wireless Local Loop (WLL) Division, a research and
	development group designing a next generation, fixed wireless
	local loop system.                                                                                                   
|
| |  | Cellular Infrastructure Supply (CIS) Division, a
	value-added supplier of new and refurbished cellular base
	stations and related equipment.                                                                                            

In April 2000, the Company sold its Telco Systems and WLL
divisions in two separate transactions that generated aggregate
gross cash proceeds of approximately $281.6 million. In
connection with the sale of Telco Systems, the Company also
received 9,600,000 restricted shares of BATM Advanced
Communications Limited (BATM) stock, as adjusted for
a ten for one stock split in July 2000. The shares of BATM
stock, which had an initial value of approximately
$76.9 million, trade on the London Stock Exchange. Under
the terms of the sales agreement, the Company may not sell,
transfer or otherwise monetize these shares for a period of one
year without the consent of BATM. As a result of the sale of
Telco Systems and WLL, the Company recorded a net gain of
$35.8 million in the second quarter of 2000.

During the first four months of 2000, the Company monetized its
investment in CIS accounts receivable and inventories in the
normal course of business. The remaining assets of CIS, which
were not material, were sold in a private transaction completed
in May 2000. The Companys only remaining discontinued
operation as of the date of this Report is its NACT Switching
Division.

11



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The assets and liabilities of the discontinued operations are
reflected as Net assets held for sale in the
consolidated balance sheets and consisted of the following (in
thousands):

|                               |                          |               |        |              |  |   |         |         | 
|------------------------------ | ------------------------ | ------------- | ------ | ------------ |  | - | ------- | ------- | 
|                               |                          | September 30, |        | December 31,
|                               |                          | 2000          |        | 1999        
|                               |                          |               |        |             
|Accounts receivable            |                          | $             | 4,699  |              |  | $ | 58,080  |        
|                              
|                              
|                              
|                              
|Inventories                    |                          |               | 6,609  |              |  |   | 26,716  |        
|                              
|                              
|                              
|                              
|Other current assets           |                          |               | 4,237  |              |  |   | 40,369  |        
|                               |                          |               |        |              |  |   |         |        
|                               | Total current assets     |               |        | 15,545       |  |   |         | 125,165 | 
|                              
|                              
|                              
|                              
|Property and equipment         |                          |               | 3,679  |              |  |   | 13,198  |        
|                              
|                              
|                              
|                              
|Goodwill and other intangibles |                          |               | 21,581 |              |  |   | 167,295 |        
|                              
|                              
|                              
|                              
|Other assets                   |                          |               | 3,773  |              |  |   | 17,891  |        
|                               |                          |               |        |              |  |   |         |        
|                               | Total assets             |               |        | 44,578       |  |   |         | 323,549 | 
|                              
|                              
|                              
|                              
|Accounts payable               |                          |               | 8,663  |              |  |   | 22,771  |        
|                              
|                              
|                              
|                              
|Other current liabilities      |                          |               | 6,859  |              |  |   | 40,840  |        
|                              
|                              
|                              
|                              
|Other liabilities              |                          |               | 5,723  |              |  |   | 15,550  |        
|                               |                          |               |        |              |  |   |         |        
|                               | Net assets held for sale |               | $      | 23,333       |  |   | $       | 244,388 | 
|                               |                          |               |        |              |  |   |         |        

NOTE  F:  DEBT

Summary

Debt consisted of the following (in thousands):

|                                             |                |               |         |              |  |   |         |         | 
|-------------------------------------------- | -------------- | ------------- | ------- | ------------ |  | - | ------- | ------- | 
|                                             |                | September 30, |         | December 31,
|                                             |                | 2000          |         | 1999        
|                                             |                |               |         |             
|13.25% Senior Notes due 2008                 |                | $             | 286,450 |              |  | $ | 285,078 |        
|                                            
|                                            
|                                            
|                                            
|4.5% Convertible Subordinated Notes due 2002 |                |               | 115,000 |              |  |   | 115,000 |        
|                                            
|                                            
|                                            
|                                            
|Bank line of credit                          |                |               |        |              |  |   | 25,000  |        
|                                            
|                                            
|                                            
|                                            
|IRU and other capital lease obligations      |                |               | 24,213  |              |  |   | 45,380  |        
|                                            
|                                            
|                                            
|                                            
|Nortel line of credit                        |                |               | 30,362  |              |  |   | 21,717  |        
|                                            
|                                            
|                                            
|                                            
|Term loan                                    |                |               | 11,143  |              |  |   |        |        
|                                             |                |               |         |              |  |   |         |        
|                                             | Total debt     |               |         | 467,168      |  |   |         | 492,175 | 
|                                            
|                                            
|                                            
|                                            
|Amount due within one year                   |                |               | 60,017  |              |  |   | 83,837  |        
|                                             |                |               |         |              |  |   |         |        
|                                             | Long-term debt |               | $       | 407,151      |  |   | $       | 408,338 | 
|                                             |                |               |         |              |  |   |         |        

In connection with the LDI acquisition, the Company assumed a
$10.0 million loan with a stockholder of LDI pursuant to a term
loan agreement. The loan bears interest at 12.25% per annum and
was originally scheduled to mature on July 20, 2000. In
July 2000, the loan was amended to adjust the principal by the
amount of the accrued interest and extend the maturity date to
July 20, 2002. At anytime after July 20, 2001, the
holder of the term loan has the right to demand that the Company
immediately repay the loan. The holder of the term loan also has
an option to exchange the debt, including accrued interest, at
anytime prior to its maturity date for shares of the
Companys common stock valued at $11.50 per share.

In April 2000, the Company issued an aggregate of 936,081 shares
of Company common stock as payment in full for certain capital
lease obligations assumed in connection with the acquisitions of
LDI and Resurgens Communications Group (December 1998). These
capital lease obligations amounted to approximately $22.7
million, including accrued interest.

Summarized Financial Information of WA Telcom Products Co.,
Inc.

On October 28, 1998, World Access, Inc. reorganized its
operations into a holding company structure and changed its name
to WA Telcom Products Co., Inc. (WA Telcom). As a
result of the reorganization, WA Telcom became a wholly-owned
subsidiary of WAXS INC., which changed its name to World Access,
Inc.

12



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

and is the company filing this Report. Pursuant to the
reorganization, the Company exchanged each outstanding share of
common stock of WA Telcom for one share of common stock of the
Company, converted each option and warrant to purchase shares of
common stock of WA Telcom into options and warrants to purchase
a like number of shares of common stock of the Company, and
fully and unconditionally guaranteed the payment of the $115.0
million aggregate principal amount 4.5% Convertible Subordinated
Notes dated October 1, 1997 (due 2002) previously issued by
WA Telcom.

Set forth below is summarized financial information of WA Telcom
presented for the information of its debtholders. Separate
financial statements of WA Telcom are not presented because
management has determined that they would not be material to
investors. The summarized financial information presented below
includes the results of operations for the following businesses
from their respective dates of acquisitions: Discontinued
operations: Cellular Infrastructure Supply, Inc. 
January 1997; Galaxy Personal Communications Services,
Inc.  July 1997 to December 1999; Advanced
TechCom, Inc.  January 1998; NACT Telecommunications,
Inc.  February 1998; Continuing operations: Cherry
Communications Incorporated and Cherry Communications U.K.
Limited  December 1998; Comm/Net  May
1999; LDI  February 2000; and GTN Telecom,
SA  July 2000 (in thousands):

Balance Sheet Information

|                                           |  |               |         |              |  |   |         | 
|------------------------------------------ |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                           |  | September 30, |         | December 31,
|                                           |  | 2000          |         | 1999        
|                                           |  |               |         |             
|Current assets                             |  | $             | 131,609 |              |  | $ | 108,264 | 
|                                          
|                                          
|                                          
|                                          
|Non-current assets                         |  |               | 358,490 |              |  |   | 448,311 | 
|                                          
|                                          
|                                          
|                                          
|Total assets                               |  |               | 495,971 |              |  |   | 556,575 | 
|                                          
|                                          
|                                          
|                                          
|Current liabilities                        |  |               | 157,840 |              |  |   | 112,020 | 
|                                          
|                                          
|                                          
|                                          
|Non-current liabilities                    |  |               | 1,480   |              |  |   | 131,009 | 
|                                          
|                                          
|                                          
|                                          
|Stockholders equity                       |  |               | 336,651 |              |  |   | 313,546 | 
|                                          
|                                          
|                                          
|                                          
|Total liabilities and stockholders equity |  |               | 495,971 |              |  |   | 556,575 | 

Operating Statement Information

|                                               |  |                   |          |      |  |   |         |  
|---------------------------------------------- |  | ----------------- | -------- | ---- |  | - | ------- | -
|                                               |  |                  
|                                               |  | Nine Months Ended
|                                               |  | September 30,    
|                                               |  |                  
|                                               |  | 2000              |          | 1999
|                                               |  |                   |          |     
|Total revenue from continuing operations       |  | $                 | 188,324  |      |  | $ | 328,224 |  
|                                              
|                                              
|                                              
|                                              
|Net loss from continuing operations            |  |                   | (36,183  | )    |  |   | 15,351  |  
|                                              
|                                              
|                                              
|                                              
|Net income (loss) from discontinued operations |  |                   | (189,433 | )    |  |   | (8,690  | )
|                                              
|                                              
|                                              
|                                              
|Net income (loss)                              |  |                   | (225,616 | )    |  |   | 6,660   |  

13



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE  G:     STOCKHOLDERS
EQUITY

Shares of common and preferred stock outstanding consisted of
the following:

|                                               |          |               |            |              |  |  |            |         | 
|---------------------------------------------- | -------- | ------------- | ---------- | ------------ |  |  | ---------- | ------- | 
|                                               |          | September 30, |            | December 31,
|                                               |          | 2000          |            | 1999        
|                                               |          |               |            |             
|Common Stock (150,000,000 shares authorized)   |          |               | 73,254,336 |              |  |  | 52,333,832 |        
|                                               |          |               |            |              |  |  |            |        
|Preferred Stock (10,000,000 shares authorized) |          |               |            |              |  |  |            |        
|                                              
|                                              
|                                              
|                                              
|                                               | Series A |               |            | 70,000       |  |  |            | 50,000  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Series B |               |            |             |  |  |            | 23,174  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Series C |               |            | 350,260      |  |  |            | 350,260 | 
|                                              
|                                              
|                                              
|                                              
|                                               | Series D |               |            | 184,000      |  |  |            |        | 
|                                              
|                                              
|                                              
|                                              
|                                               | Series E |               |            | 9,645        |  |  |            |        | 
|                                               |          |               |            |              |  |  |            |        
|                                               |          |               | 613,905    |              |  |  | 423,434    |        
|                                               |          |               |            |              |  |  |            |        

In February 2000, the Company sold 3,822,552 shares of
restricted common stock for approximately $83.1 million, or
$21.75 per share, in two private transactions with institutional
and sophisticated investors.

In February 2000, the Company issued 185,000 shares of
Series D Preferred Stock in connection with its acquisition
of LDI (see Note B).

In March 2000, all of the Series B Preferred Stock outstanding
was converted into 1,448,373 shares of common stock.

In June 2000, the Company issued 20,000 shares of Series A
Preferred Stock for an aggregate amount of $20.0 million. These
shares were issued to The 1818 Fund III, L.P., in
connection with its exercise of an option agreement.

In September 2000, the Company issued 11,457,631 shares of
restricted common stock to acquire a 33% interest in TelDaFax
(see Note B).

As of September 30, 2000, a total of approximately
33.9 million shares of common stock are reserved for
issuance upon conversion of the Series A, C, D and E Preferred
Stock.

NOTE  H:  INCOME TAXES

The Companys provision for income taxes attributable to
continuing operations for the nine months ended
September 30, 2000 was a benefit of $19.3 million, or
approximately 12.8% of loss from continuing operations before
income taxes. The provision for income taxes differs from the
amount computed by applying the statutory federal and state
income tax rates due to non-deductible expenses, consisting
primarily of amortization of intangibles.

NOTE  I:  LITIGATION

Following the Companys announcement in early 1999
regarding earnings expectations for the quarter and year ended
December 31, 1998 and the subsequent decline in the price
of the Companys common stock, 23 class action shareholder
suits were filed against the Company. The Company and certain of
its then current officers and directors were named as
defendants. These suits arise from alleged misstatements of
material information in and alleged omission of material
information from some of the Companys securities filings
and other public disclosures, principally related to product
development, inventory and sales activities during the fourth
quarter of 1998. These class action suits were consolidated into
a single action for all pretrial proceedings in the United
States District Court for the Northern District of Georgia.
Plaintiffs have requested damages in an unspecified amount in
their complaints.

14



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Although the Company and the individuals named as defendants
deny they have violated any of the requirements or obligations
of the federal securities laws, there can be no assurance the
Company will not sustain material liability as a result of or
related to these shareholders suits. As the outcome of these
class action suits is unknown, the potential liability is not
reasonably estimable.

NOTE  J:  REPORTABLE SEGMENT DATA

In December 1999, the Company adopted a plan to divest all its
telecommunications equipment businesses. As a result, the
Companys service segment, Continuing
Operations is the only reportable business segment.

Revenue is attributed to countries based on the location of
customers. Revenue by geographic region was as follows (in
thousands):

|              |                    |                    |         |                   |  |      |         |         |  |   |         |         |  |   |         |         | 
|------------- | ------------------ | ------------------ | ------- | ----------------- |  | ---- | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|              |                    |                    |         |                  
|              |                    | Three Months Ended |         | Nine Months Ended
|              |                    | September 30,      |         | September 30,    
|              |                    |                    |         |                  
|              |                    | 2000               |         | 1999              |  | 2000 |         | 1999   
|              |                    |                    |         |                   |  |      |         |        
|North America |                    | $                  | 167,322 |                   |  | $    | 130,210 |         |  | $ | 506,155 |         |  | $ | 328,224 |        
|             
|             
|             
|             
|Europe        |                    |                    | 97,738  |                   |  |      |        |         |  |   | 320,505 |         |  |   |        |        
|              |                    |                    |         |                   |  |      |         |         |  |   |         |         |  |   |         |        
|              | Consolidated total |                    | $       | 265,060           |  |      | $       | 130,210 |  |   | $       | 826,660 |  |   | $       | 328,224 | 
|              |                    |                    |         |                   |  |      |         |         |  |   |         |         |  |   |         |        

Long-lived assets by geographic region were as follows (in
thousands):

|              |                    |               |        |              |  |   |        |         | 
|------------- | ------------------ | ------------- | ------ | ------------ |  | - | ------ | ------- | 
|              |                    | September 30, |        | December 31,
|              |                    | 2000          |        | 1999        
|              |                    |               |        |             
|North America |                    | $             | 77,964 |              |  | $ | 88,695 |        
|             
|             
|             
|             
|Europe        |                    |               | 52,654 |              |  |   | 47,338 |        
|              |                    |               |        |              |  |   |        |        
|              | Consolidated total |               | $      | 130,618      |  |   | $      | 136,033 | 
|              |                    |               |        |              |  |   |        |        

NOTE  K:  PENDING MERGERS AND ACQUISITIONS

STAR Merger

In February 2000, the Company executed a definitive agreement
with STAR Telecommunications, Inc. (STAR), a
publicly held multinational telecommunications service provider,
pursuant to which STAR will be merged with and into the Company.
In June 2000, the parties amended the merger agreement to modify
certain closing conditions and reduce the exchange ratio. Under
the terms of the amended agreement, each share of STAR common
stock will be exchanged for .386595 shares of the Companys
common stock (approximately 23 million shares). The Company
has the option of paying up to 40% of the merger consideration
in cash but does not currently intend to exercise this option.
The Company expects the transaction to close in December 2000.

The STAR merger is subject to, among other things, the approval
of the stockholders of the Company and STAR, and the divestiture
by STAR of its PT-1 subsidiary for minimum net cash proceeds in
excess of $120.0 million. The merger is intended to qualify
as a tax-free reorganization, and will be accounted for as a
purchase transaction. The Company has agreed to provide bridge
financing to STAR in an amount up to $35.0 million, none of
which has been funded as of the date of this Report. STAR will
be entitled to elect one director to the Companys board of
directors.

Upon consummation of the STAR merger, WorldCom, Inc.
(WorldCom) has agreed to convert approximately
$90.0 million of trade debt owed by STAR into shares of the
Companys common stock valued at $11.50 per share. After
considering this debt conversion and assuming that STAR receives
$120.0 million in net cash proceeds from the sale of PT-1, the
Company is expected to assume approximately $75.0 million of net
debt in connection with the STAR merger.

15



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

For further information regarding the STAR merger, see the
Companys Registration Statement on Form S-4
(No. 333-37750).

WorldxChange Merger

In February 2000, the Company executed a definitive merger
agreement with WorldxChange, a privately held multinational
telecommunications service provider. WorldxChange generated
pro-forma revenue in 1999 of approximately $600.0 million,
through its primary operations in North America, Germany, the
United Kingdom, France, the Netherlands, Belgium, Australia and
New Zealand. Under the terms of the agreement, each share of
WorldxChange common stock will be exchanged for .6583 shares of
the Companys common stock (approximately 30 million
shares). The Company expects the transaction to close in
December 2000.

The WorldxChange merger is subject to, among other things, the
approval of the stockholders of the Company and WorldxChange.
The merger is intended to qualify as a tax-free reorganization,
and will be accounted for as a purchase transaction.
WorldxChange will be entitled to elect one director to the
Companys board of directors. On August 1, 2000, the
Company entered into an Executive Management Services Agreement
with WorldxChange pursuant to which the Company manages the
operations and business affairs of WorldxChange as if the
parties had already consummated the WorldxChange merger (See
Note C).

Upon consummation of the WorldxChange merger, WorldCom has
agreed to convert approximately $25.0 million of trade debt owed
by WorldxChange into shares of the Companys common stock
valued at $11.50 per share. After considering this debt
conversion, the Company is expected to assume approximately
$225.0 million of net debt in connection with the WorldxChange
merger.

For further information regarding the WorldxChange merger, see
the Companys Registration Statement on Form S-4
(No. 333-37750).

TelDaFax Acquisition

In June 2000, the Company agreed to acquire a majority interest
in TelDaFax AG (TelDaFax) through the completion of
several integrated transactions including a tender for the
remaining shares of TelDaFax held by public shareholders.
TelDaFax is a facilities-based provider of bundled fixed line,
wireless, Internet and e-commerce services to business and
residential customers in Germany. As of June 30, 2000,
TelDaFax had cash and marketable securities of approximately
$26.4 million, with approximately $19.3 million of
long-term debt.

In September 2000, the Company modified its agreement and issued
11,457,631 shares of restricted common stock to acquire
11,178,176 TelDaFax shares, or approximately 33% of the
outstanding shares of TelDaFax, from the Apax funds, a group of
affiliated institutional investors (see
Note B). The purchase price represented an
exchange ratio of 1.025 (the Exchange Ratio), which
the Company expects to utilize in all its TelDaFax transactions.
The Company expects to purchase approximately 8% of
TelDaFaxs outstanding shares from a member of
TelDaFaxs management and to contribute certain of its
German businesses to TelDaFax for newly issued TelDaFax shares.
The Company also expects to make a tender offer for the
remaining shares of TelDaFax at the Exchange Ratio, subject to
upward or downward adjustment as determined in good faith by the
Companys board of directors in order to complete the
tender offer. The Company expects to issue a total of
approximately 35 million shares of its common stock
assuming it is successful in acquiring all of TelDaFaxs
outstanding shares at the Exchange Ratio.

The completion of the remaining TelDaFax transactions is subject
to, among other things, acquisition by the Company of at least
50.1% of the fully diluted shares outstanding of TelDaFax on a
pro forma basis, certain regulatory approvals in Germany and the
approval of the Companys stockholders. The transactions
are expected to close in December 2000 or January 2001.

16



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##### Table of Contents



WORLD ACCESS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

For further information regarding the TelDaFax transactions, see
the Companys Registration Statement on Form S-4
(No. 333-44864).

NOTE  L: RELATED PARTY TRANSACTIONS

Pursuant to a Carrier Services Agreement with WorldCom, the
Company recorded approximately $144.9 million of revenue and
related cost of services (exclusive of depreciation and
amortization) of $79.2 million during the first nine months of
2000. This represented approximately 17.5% and 10.9% of the
Companys total revenue and cost of services (exclusive of
depreciation and amortization) from continuing operations,
respectively. The Company recorded approximately $28.9 million
of revenue and related cost of services (exclusive of
depreciation and amortization) of $8.8 million during the third
quarter of 2000. This represented approximately 10.9% and 3.7%
of the Companys total revenue and cost of services
(exclusive of depreciation and amortization) from continuing
operations, respectively. The Company expects the percentage of
its total revenue contributed by WorldCom to continue to
decrease in connection with its acquisitions of STAR,
WorldxChange and TelDaFax.

NOTE  M: SUBSEQUENT EVENTS

In November 1999, WorldxChange acquired operations in the United
Kingdom, Germany and France from ACC Corp., ACC Credit Corp.,
ACC Service Corp., ACC Global Corp., and ACC Long Distance Corp.
(the ACC parties). In connection with the
acquisition, WorldxChange agreed to make a deferred payment to
the ACC parties equal to $53.0 million plus accrued interest at
12% per annum. Under an agreement dated October 9, 2000,
the Company agreed to purchase from the ACC parties their right
to receive the deferred payment from WorldxChange in exchange
for a payment by the Company of $12.0 million and the issuance
of shares of a new series of World Access convertible preferred
stock having an aggregate liquidation preference equal to the
deferred payment amount minus $12.0 million.

The new series of preferred stock will accrue dividends at a
rate of 9% per annum payable solely in shares of the
Companys common stock. The preferred stock is voluntarily
convertible at any time by the ACC parties at a conversion price
of $14.00 per share. Upon the occurrence of certain events, the
preferred stock will automatically convert into the
Companys common stock at the $14.00 per share conversion
price. In connection with automatic conversions, the Company
will have the obligation to pay to the ACC parties for each
share of common stock received in the conversion the difference
between the $14.00 conversion price and the average market price
of the Companys common stock for the ten trading days
prior to the conversion. The acquisition of the deferred payment
right is expected to be completed upon the closing of the
WorldxChange merger.

17



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##### Table of Contents



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

Forward Looking Statements

This Form 10-Q Report contains information regarding the
Companys strategies, plans and future expectations that
are forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. When
used in this report, the words may,
could, should, would,
believe, anticipate,
estimate, expect, intend,
plan and similar terms and/or expressions are
intended to identify forward-looking statements. These
statements reflect the Companys assessment of a number of
risks and uncertainties, and actual results could differ
materially from the results anticipated in these forward-looking
statements. In light of the risks and uncertainties inherent in
all such projected operational matters, a user of this Report
should not regard forward-looking statements contained in the
Report as representations by the Company or any other person
that the plans of the Company will be achieved or that any
future expectations will be realized.

Factors that could cause the Companys actual results to
differ from the results discussed in the forward-looking
statements include, but are not limited to (i) the ability
to successfully integrate new acquisitions; (ii) the
ability to acquire and develop an international
telecommunications network; (iii) the ability to manage
effectively the Companys rapid growth; (iv) changes
in customer rates per minute; (v) termination of certain
service agreements or inability to enter into additional service
agreements; (vi) changes in or developments under domestic
or foreign laws, regulations, licensing requirements or
telecommunications standards; (vii) changes in the
availability of transmission facilities; (viii) loss of the
service of key officers; (ix) loss of a customer which
provides significant revenue; (x) highly competitive market
conditions in the industry; and (xi) concentration of
credit risk. Any forward looking statement speaks only as of the
date of this Report.

Overview

The Company transports international long distance voice, data
and Internet traffic for long distance carriers in the United
States and Europe, regional Bell operating companies,
competitive local exchange carriers, private network operators
and other global carriers. These services are provided through a
combination of owned and leased switching, fiber and satellite
network facilities, international termination relationships and
resale agreements with other international long distance
providers. Through the acquisition of FaciliCom in December 1999
and NETnet in February 2000, the Company has expanded its
service offerings to include the sale of bundled voice, data and
Internet services directly to small and medium sized businesses
located throughout Western Europe.

Prior to December 1998, the Company was a manufacturer and
seller of telecommunications network equipment. In December
1998, in connection with the acquisition of Resurgens
Communication Group (Resurgens), and the appointment
of a new Chief Executive Officer, the Company reorganized into
two separate operating groups. The Telecommunications Group
provided international long distance service to other carriers
through a combination of its own and leased international
network facilities, various international termination
relationships and resale arrangements with other international
long distance service providers. The Equipment Group provided
digital switches, billing and network telemanagement systems,
fixed wireless local loop systems, intelligent multiplexers,
digital microwave radio systems, cellular base stations and
other telecommunications network products. In December 1999, the
Company adopted a plan to divest the businesses comprising the
Equipment Group.

In December 1998, the Company acquired Resurgens, a facilities
based provider of carrier international long distance services.
In connection therewith, a wholly owned subsidiary of WorldCom,
a major customer and vendor of Resurgens, became a significant
stockholder of the Company. WorldCom currently owns
approximately 6.6% of the voting common stock of the Company. In
December 1998, John D. Phillips was appointed the Companys
new Chief Executive Officer. Mr. Phillips was formerly the
President and Chief Executive Officer of Resurgens.

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##### Table of Contents



In 1999, management adopted a strategy designed to build on its
U.S.-based carrier service business and position the Company to
become a significant provider of bundled voice, data and
Internet services to retail business customers located in
selected European countries. Management believes that the
European telecommunications market has become extremely
fragmented in recent years due primarily to deregulation and
significant forecasted growth. As a result, management expects
that a significant consolidation of carriers operating in Europe
will occur in the next few years, not unlike that which occurred
in the United States telecommunications market during the late
1980s and 1990s. The strategy of the Company is to
establish a pan-European telecommunications network and gain
significant market share during this period as a consolidator in
this market. To execute this strategy, management intends to
aggressively pursue the acquisition of businesses, with a
particular emphasis on those that provide retail services to
small and medium sized businesses operating in Europe.

To support its retail services strategy, the Company acquired
FaciliCom in December 1999. FaciliCom had invested in excess of
$200.0 million over the past few years to establish an
inter-country network in the U.S. and 13 European countries.
Although the vast majority of its revenue was derived from
transporting traffic for other carriers, similar to the
Companys base business, FaciliComs network was also
capable of supporting certain retail traffic and related
services. This acquisition effectively doubled the size of the
Companys carrier service revenue, provided a significant
amount of European originated revenue and lowered the combined
companys costs of terminating international traffic in
Europe.

In February 2000, the Company acquired substantially all the
assets of LDI. The most significant and strategic asset acquired
was NETnet International, a wholly-owned subsidiary. NETnet,
which had revenue of approximately $83.0 million in 1999,
provides an array of telecommunications services to small and
medium sized business customers in Austria, France, Germany,
Italy, Norway, Spain, Sweden, Switzerland and the United Kingdom.

The acquisition of NETnet gave the Company approximately 20,000
retail customers, an experienced retail sales force and a
foundation for the offering of bundled voice, data and Internet
services to its targeted market in Europe. It also provided the
Company with a strong retail trade name, which management
currently expects to use for all of the Companys retail
product offerings in Europe. Management hopes to substantially
improve the historical gross margins realized by NETnet by
terminating selected NETnet traffic over the Companys
network and eliminating the costs of redundant network
facilities.

With the addition of NETnet, the Company now generates
approximately nine percent of its total revenue from retail
services and the remainder from its base carrier business. Of
the total revenue, approximately 60% results from traffic
originated in the United States and 40% from traffic originated
in Europe.

In February 2000, the Company entered into agreements to
merge with Star and WorldxChange. After completing these
mergers, the Companys revenue mix is expected to be
approximately 20% retail and 80% carrier. In addition to an
improved retail/ carrier revenue mix, the Star and WorldxChange
mergers are expected to provide the Company with substantial
benefits in the areas of network coverage, network capacity and
reduced operating costs.

On a combined basis, the networks and operations of the Company,
Star and WorldxChange contain redundant switching equipment,
facilities and personnel. Management expects to eliminate these
redundant assets and significantly reduce the headcount of the
combined company in an effort to realize cost synergies.
Implementing this process includes the write-down of switching
and transmission equipment taken out of service, the write-off
of certain leasehold improvements, establishing provisions for
lease commitments remaining on certain facilities and equipment
taken out of service, employee termination benefits and other
related costs. To the extent that these items relate to World
Access facilities and personnel, the Company recorded a
restructuring charge in accordance with EITF 94-3,
Liability Recognition of Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring) and FAS 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. All other costs relate
to facilities and personnel of Star and WorldxChange and
accordingly, will

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Recognition of Liabilities in Connection with a Purchase
Business Combination.


In connection with the Executive Management Services Agreement
entered into by the Company and WorldxChange on August 1,
2000, management committed to such a consolidation plan.
Pursuant to this agreement, the Company began managing the
operations and business affairs of WorldxChange as if the
WorldxChange merger had occurred as of August 1, 2000 (see
Restructuring). Management has not finalized a
consolidation plan for the World Access and STAR integration;
however, management believes that further consolidation
activities resulting from the STAR merger will not significantly
involve World Access facilities or personnel, and thus, no
material EITF 94-3 charge will be required.

The STAR and WorldxChange mergers will give the Company
substantial operations and network capacity in Germany and the
United Kingdom, which represent the two largest segments of the
European telecommunications market. Management expects to
leverage these operations to further grow the Companys
retail business in these two key countries. WorldxChange has
also developed Internet-based information management systems
that incorporate all key aspects of retail telecommunications
services, including billing, fraud protection and customer care.
These information systems are expected to serve as the platform
for supporting all retail operations conducted by World Access
in Europe.

In June 2000, the Company agreed to acquire a majority interest
in TelDaFax, a provider of bundled fixed line, wireless,
Internet and e-commerce services to business and residential
customers in Germany, through five transactions. In 1999,
TelDaFax had revenue of approximately $332.1 million. As of
June 30, 2000, TelDaFax had approximately $26.4 million in
cash and marketable securities, with approximately $19.3 million
of long-term debt. In September 2000, World Access modified its
original agreement and acquired approximately 33.0% of the
outstanding stock of TelDaFax.

TelDaFax currently operates nine switches and has
170 interconnection points within Germany. It is also in
the process of deploying a 2,800-kilometer fiber optic network
between selected German cities that will provide the foundation
for future growth in its service offerings. The TelDaFax
network, together with the existing network assets of the
Company and Star, will give the Company an extensive
telecommunications network in Germany. In addition, TelDaFax has
a sales force that consists of over 1,000 direct sales personnel
and sales agents.

Although the STAR, WorldxChange and TelDaFax acquisitions are
expected to provide significant benefits to the Company, they
also dramatically increase the business and financial risks the
Company must overcome to execute its strategy. STAR,
WorldxChange and TelDaFax all have a history of significant net
operating losses, and the Company is expected to assume
approximately $300.0 million in debt upon the consummation of
the acquisitions. You should carefully review the risk factors
contained in the Companys Registration Statements on Form
S-4 (No. 333-37750 and No. 333-44864).

The Company has used its common stock and new series of its
preferred stock as the primary forms of consideration paid for
the companies acquired in 1999 and the first nine months of
2000. These forms of consideration will also be the primary
forms utilized in the pending acquisitions of STAR, WorldxChange
and TelDaFax.

Quarterly Operating Results

The Companys quarterly operating results are difficult to
forecast with any degree of accuracy because a number of factors
subject these results to significant fluctuations. As a result,
the Company believes that period-to-period comparisons of its
operating results are not necessarily meaningful and should not
be relied upon as indications of future performance.

Carrier service revenue, costs and related expenses have
fluctuated significantly in the past and are likely to continue
to fluctuate significantly in the future as a result of numerous
factors. The Companys revenue in any given period can vary
due to factors such as call volume fluctuations, particularly in
regions with relatively high per-minute rates; the addition or
loss of major customers, whether through competition, merger,
consolidation or otherwise; the loss of economically beneficial
routing options for the termination of the

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##### Table of Contents





Restructuring

2000 Plan. In September 2000, the Company recorded a
restructuring charge of $38.3 million associated with
integrating existing operations with the operations of entities
acquired or controlled under a management agreement. This charge
includes the estimated costs of (i) consolidating the
administrative and operational functions within the United
States, (ii) consolidating certain offices throughout
Europe, and (iii) eliminating redundant switching
facilities. All elements of this plan are expected to be
complete by mid-2001.

Beginning in July 2000, the Company began consolidating the
network monitoring, billing services, customer support, and
operational accounting functions within the U.S. to
WorldxChanges corporate offices. In addition, within
Europe, numerous offices closings were announced in order to
consolidate locations into one major office per country. These
consolidations resulted in the notification of approximately 85
employees of the elimination of their positions. As of
September 30, approximately 26 of these employees have been
terminated, receiving severance payments of $423,000. The
employees remaining will be terminated between October 2000 and
February 2001, receiving estimated severance benefits totaling
$2.0 million. Such benefits will be paid into the third quarter
of 2001.

Other significant costs incurred in conjunction with these
consolidations include estimated costs associated with abandoned
locations, including: (i) future lease obligations of $16.7
million after considering estimated sublease opportunities, and
(ii) asset write-downs of $2.9 million for leasehold
improvements and other office furniture, equipment and
proprietary information systems to their net realizable value
upon sale or abandonment. Payments under the abandoned leases
extend into 2008.

Efforts to maximize network efficiency resulted in the vacating
of four of the Companys U.S. gateway switch locations.
From these four switch sites, the Company believes it can
redeploy two of the switches to other locations within its
network. The remaining two switches were written down to their
estimated net realizable value, along with the leasehold
improvements and various other incidental assets located at the
four sites. In addition, the Company held certain equipment in
inventory for redeployment, but determined, due to network
assets from recent acquisitions, that such equipment was no
longer the most effective network solution. Accordingly, this
equipment was also written down to its net realizable value.
These decisions resulted in a charge of approximately $6.4
million.

The Company also recorded approximately $6.5 million
associated with closure and dissolution activities, of which
approximately $2.5 million has been paid as of
September 30, 2000. Such costs include amounts associated
with transferring functions to new locations, vacating offices,
and dissolving legal entities. The

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##### Table of Contents





The following table summarizes the amounts included in each
major component of the restructuring charge (in thousands):

|                                                                |  |               |        |          |  |               |        |  |  |   |        | 
|--------------------------------------------------------------- |  | ------------- | ------ | -------- |  | ------------- | ------ |  |  | - | ------ | 
|                                                                |  |               |        |          |  | Reserve      
|                                                                |  |               |        |          |  | Balance at   
|                                                                |  | Restructuring |        | 2000     |  | September 30,
|                                                                |  | Charge        |        | Activity |  | 2000         
|                                                                |  |               |        |          |  |              
|Accrual for lease commitments                                   |  | $             | 16,690 |          |  | $             | 630    |  |  | $ | 16,060 | 
|                                                               
|                                                               
|                                                               
|                                                               
|Write-down of network equipment                                 |  |               | 6,411  |          |  |               | 6,411  |  |  |   |       | 
|                                                               
|                                                               
|                                                               
|                                                               
|Write-down of leasehold improvements and other general property |  |               | 2,854  |          |  |               | 2,854  |  |  |   |       | 
|                                                               
|                                                               
|                                                               
|                                                               
|Closure and dissolution costs                                   |  |               | 6,456  |          |  |               | 2,456  |  |  |   | 4,000  | 
|                                                               
|                                                               
|                                                               
|                                                               
|Severance                                                       |  |               | 2,431  |          |  |               | 423    |  |  |   | 2,008  | 
|                                                               
|                                                               
|                                                               
|                                                               
|Contract termination penalties                                  |  |               | 3,000  |          |  |               |       |  |  |   | 3,000  | 
|                                                               
|                                                               
|                                                               
|                                                               
|Other                                                           |  |               | 479    |          |  |               |       |  |  |   | 479    | 
|                                                                |  |               |        |          |  |               |        |  |  |   |        | 
|                                                                |  | $             | 38,321 |          |  | $             | 12,774 |  |  | $ | 25,547 | 
|                                                                |  |               |        |          |  |               |        |  |  |   |        | 

1999 Plan. In December 1999, the Company recorded a
restructuring charge of $37.8 million in connection with the
acquisition of FaciliCom. The restructuring charge included the
estimated costs of (i) consolidating certain of the
Companys United States gateway switching centers and
related technical support functions into existing FaciliCom
operations; (ii) consolidating certain of the
Companys United Kingdom operations into existing FaciliCom
operations; (iii) consolidating certain of the
Companys administrative functions into FaciliComs
operations; and (iv) eliminating other redundant operations
and assets as a result of combining the two entities. No costs
were included in the restructuring charge that were expected to
derive future economic benefit to the Company.

Given the duplication of network assets between FaciliCom and
the Company, including switching and transmission equipment, the
Company made the decision in late 1999 to shut down and dispose
of its six gateway switches located in Chicago, Los Angeles,
Newark, Dallas, San Francisco and London. All of the U.S.
switches were effectively taken out of service as of
December 31, 1999. The U.K. switch is being utilized on a
limited basis and is scheduled to be taken out of service by
September 30, 2000, three months later than the
Companys initial estimate. The ongoing costs of operating
the U.K. switch continue to be charged to current operations.
The restructuring charge also provided for the write-off of
leasehold improvements at the six switch sites and lease
commitments remaining on certain facilities and equipment taken
out of service.

The fourth quarter 1999 restructuring charge was recorded net of
the $1.6 million fair value of these six switches, the amount
the Company estimated it would receive from the sale of these
assets in the secondary equipment market. As of the date of this
Report, the Company has sold two of the switches for
approximately $600,000. The remaining assets continue to be
offered for sale.

Since installation of the six switches, the Company has
experienced certain performance issues involving the equipment.
In April 2000, the Company settled with the vendor its disputes
over performance. In connection therewith, the Company settled
its approximately $19.0 million debt under the related capital
leases by agreeing to pay the lessor $15.0 million in a
combination of cash and shares of common stock. The net result
of this settlement was a one-time pre-tax gain of approximately
$4.0 million, which has been recorded as a restructuring credit.

Approximately 25 personnel whose job functions included
accounting and administrative support as well as network
operations were terminated as part of the overall restructuring.
The termination benefits associated with these personnel were
included in the restructuring charge.

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The following table summarizes the amounts included in each
component of the restructuring charge (in thousands):

|                                                       |  |               |        |          |  |          |        |                 |  |   |       |  |  |   |       | 
|------------------------------------------------------ |  | ------------- | ------ | -------- |  | -------- | ------ | --------------- |  | - | ----- |  |  | - | ----- | 
|                                                       |  | Restructuring |        | 1999     |  | 2000     |        | Reserve Balance
|                                                       |  | Charge        |        | Activity |  | Activity |        | at 9/30/00     
|                                                       |  |               |        |          |  |          |        |                
|Write-down of leasehold improvements                   |  | $             | 1,506  |          |  | $        | 1,506  |                 |  | $ |      |  |  | $ |      | 
|                                                      
|                                                      
|                                                      
|                                                      
|Write-down of network equipment                        |  |               | 25,372 |          |  |          | 25,372 |                 |  |   |      |  |  |   |      | 
|                                                      
|                                                      
|                                                      
|                                                      
|Write-down of redundant software and general equipment |  |               | 1,256  |          |  |          | 1,256  |                 |  |   |      |  |  |   |      | 
|                                                      
|                                                      
|                                                      
|                                                      
|Accrual for lease and circuit cost commitments         |  |               | 8,078  |          |  |          | 1,216  |                 |  |   | 2,739 |  |  |   | 4,123 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Accrual for termination benefits                       |  |               | 1,588  |          |  |          | 270    |                 |  |   | 522   |  |  |   | 796   | 
|                                                       |  |               |        |          |  |          |        |                 |  |   |       |  |  |   |       | 
|                                                       |  | $             | 37,800 |          |  | $        | 29,620 |                 |  | $ | 3,261 |  |  | $ | 4,919 | 
|                                                       |  |               |        |          |  |          |        |                 |  |   |       |  |  |   |       | 

WorldxChange Management Agreement

In February 2000, the Company executed a definitive merger
agreement with Communication TeleSystems International, d/b/a
WorldxChange Communications (WorldxChange), a
privately held multinational telecommunications service provider
(see Note K). On August 1, 2000, the
Company entered into an Executive Management Services Agreement
with WorldxChange. Under this agreement, the Company serves as
the exclusive agent for WorldxChange to provide all management
services required for the operation and management of
WorldxChange. The Company has the authority, to the fullest
extent permitted by law, to take all actions and make all
decisions on behalf of WorldxChange in the operation and
management of WorldxChanges day to day business affairs.
This includes the direction and use of and access to
WorldxChanges assets and the power to select, terminate
and determine the compensation of the management and employees
of WorldxChange. Under this agreement, the Company has also
assumed all financial responsibility related to the operations
of WorldxChange subsequent to August 1, 2000.

As a result of World Access assuming all financial
responsibility for WorldxChange, the Company has recorded the
net loss incurred by WorldxChange since August 1, 2000 as a
single line item, Expense under WorldxChange Management
Agreement, in its Statement of Operations. This item has
been presented as part of the Companys operations due to
the significant integration that has occurred between the
companies. As of September 30, 2000, World Access and
WorldxChange have consolidated their sales forces, billing
systems and network operations centers, as well as
decommissioned certain switches as traffic has migrated from one
network to the other.

The Statement of Operations for WorldxChange for the two months
ended September 30, 2000 while operating under the
Management agreement is (in thousands):

|                                      |  |   |         |  
|------------------------------------- |  | - | ------- | -
|                                     
|                                     
|                                     
|                                     
|Revenue                               |  | $ | 74,031  |  
|                                     
|                                     
|                                     
|                                     
|Cost of services                      |  |   | 55,920  |  
|                                     
|                                     
|                                     
|                                     
|Selling, general and administrative   |  |   | 25,842  |  
|                                     
|                                     
|                                     
|                                     
|Depreciation and network amortization |  |   | 6,808   |  
|                                     
|                                     
|                                     
|                                     
|Amortization of intangibles           |  |   | 1,889   |  
|                                      |  |   |         |  
|Total operating expense               |  |   | 90,459  |  
|                                      |  |   |         |  
|Operating loss                        |  |   | (16,428 | )
|                                     
|                                     
|                                     
|                                     
|Interest and other income             |  |   | 280     |  
|                                     
|                                     
|                                     
|                                     
|Interest expense                      |  |   | 6,511   |  
|                                      |  |   |         |  
|Loss before income taxes              |  |   | (22,659 | )
|                                     
|                                     
|                                     
|                                     
|Income taxes                          |  |   | 29      |  
|                                      |  |   |         |  
|Net loss                              |  | $ | (22,688 | )
|                                      |  |   |         |  

Stockholders holding a majority of the outstanding shares of
voting stock of both the Company and WorldxChange have entered
into agreements in which they agreed to vote in favor of the
WorldxChange merger. In early August 2000, when it was
determined that completion of the WorldxChange merger was

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Due to the extensiveness of the integration between the
companies the expense associated with the management agreement
has been recorded as an operating expense. Since the Company has
recorded the net loss of WorldxChange as a management expense
there would not be any significant difference in net loss if the
Company had consolidated their financial results beginning
August 1, 2000. The Company will not present WorldxChange
on a consolidated basis until the merger is closed. If the
Company had consolidated WorldxChange effective August 1,
2000 the Company would have had the following pro forma results
for the third quarter of 2000 (in thousands):

|                                                    |  |   |          |  
|--------------------------------------------------- |  | - | -------- | -
|                                                   
|                                                   
|                                                   
|                                                   
|Revenue                                             |  | $ | 320,663  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Cost of services                                    |  |   | 272,222  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Selling, general and administrative                 |  |   | 91,909   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Depreciation and network amortization               |  |   | 9,576    |  
|                                                   
|                                                   
|                                                   
|                                                   
|Amortization of intangibles                         |  |   | 21,058   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Restructuring charge                                |  |   | 38,321   |  
|                                                    |  |   |          |  
|Total operating expense                             |  |   | 433,086  |  
|                                                    |  |   |          |  
|Operating loss                                      |  |   | (112,423 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Interest and other income                           |  |   | 12,361   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Interest expense                                    |  |   | 19,844   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Foreign exchange loss                               |  |   | (586     | )
|                                                    |  |   |          |  
|Loss from Continuing Operations before income taxes |  |   | (120,492 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Income taxes                                        |  |   | (17,121  | )
|                                                    |  |   |          |  
|Net loss from Continuing Operations                 |  | $ | (103,371 | )
|                                                    |  |   |          |  

Results Of Continuing Operations

The following table sets forth certain financial data expressed
as a percentage of total revenue from continuing operations:

|                                                              |                                          |                    |      |                   |    |      |       |       |   |  |      |       |    |  |       |       |  
|------------------------------------------------------------- | ---------------------------------------- | ------------------ | ---- | ----------------- | -- | ---- | ----- | ----- | - |  | ---- | ----- | -- |  | ----- | ----- | -
|                                                              |                                          |                    |      |                  
|                                                              |                                          | Three Months Ended |      | Nine Months Ended
|                                                              |                                          | September 30,      |      | September 30,    
|                                                              |                                          |                    |      |                  
|                                                              |                                          | 2000               |      | 1999              |    | 2000 |       | 1999 
|                                                              |                                          |                    |      |                   |    |      |       |      
|Carrier services                                              |                                          |                    | 90.5 | %                 |    |      | 100.0 | %     |   |  | 92.0 | %     |    |  | 100.0 | %    
|                                                             
|                                                             
|                                                             
|                                                             
|Retail services                                               |                                          |                    | 9.5  |                   |    |      |      |       |   |  | 8.0  |       |    |  |      |      
|                                                              |                                          |                    |      |                   |    |      |       |       |   |  |      |       |    |  |       |      
|                                                              | Total revenue                            |                    |      | 100.0             |    |      |       | 100.0 |   |  |      | 100.0 |    |  |       | 100.0 |  
|                                                             
|                                                             
|                                                             
|                                                             
|Cost of services (exclusive of depreciation and amortization) |                                          |                    | 88.5 |                   |    |      | 89.1  |       |   |  | 87.7 |       |    |  | 91.0  |      
|                                                             
|                                                             
|                                                             
|                                                             
|Selling, general and administrative                           |                                          |                    | 24.9 |                   |    |      | 4.3   |       |   |  | 14.2 |       |    |  | 4.4   |      
|                                                             
|                                                             
|                                                             
|                                                             
|Depreciation and network amortization                         |                                          |                    | 1.9  |                   |    |      | 1.0   |       |   |  | 1.7  |       |    |  | 1.1   |      
|                                                             
|                                                             
|                                                             
|                                                             
|Amortization of intangibles                                   |                                          |                    | 5.6  |                   |    |      | .9    |       |   |  | 5.1  |       |    |  | 1.0   |      
|                                                             
|                                                             
|                                                             
|                                                             
|Expense under WorldxChange management agreement               |                                          |                    | 8.6  |                   |    |      |      |       |   |  | 2.7  |       |    |  |      |      
|                                                             
|                                                             
|                                                             
|                                                             
|Restructuring charge                                          |                                          |                    | 14.5 |                   |    |      |      |       |   |  | 4.2  |       |    |  |      |      
|                                                              |                                          |                    |      |                   |    |      |       |       |   |  |      |       |    |  |       |      
|                                                              | Total operating expenses                 |                    |      | 144.0             |    |      |       | 95.3  |   |  |      | 115.6 |    |  |       | 97.5  |  
|                                                              |                                          |                    |      |                   |    |      |       |       |   |  |      |       |    |  |       |      
|                                                              | Operating income (loss)                  |                    |      | (44.0             | )  |      |       | 4.7   |   |  |      | (15.6 | )  |  |       | 2.5   |  
|                                                             
|                                                             
|                                                             
|                                                             
|Interest and other income                                     |                                          |                    | 4.8  |                   |    |      | .7    |       |   |  | 2.6  |       |    |  | .5    |      
|                                                             
|                                                             
|                                                             
|                                                             
|Interest expense                                              |                                          |                    | 5.2  |                   |    |      | 1.9   |       |   |  | 5.1  |       |    |  | 2.1   |      
|                                                             
|                                                             
|                                                             
|                                                             
|Foreign exchange gain (loss)                                  |                                          |                    | (0.2 | )                 |    |      |      |       |   |  |     |       |    |  |      |      
|                                                              |                                          |                    |      |                   |    |      |       |       |   |  |      |       |    |  |       |      
|                                                              | Income (loss) before income taxes        |                    |      | (44.6             | )  |      |       | 3.5   |   |  |      | (18.1 | )  |  |       | .9    |  
|                                                             
|                                                             
|                                                             
|                                                             
|Income taxes (benefit)                                        |                                          |                    | (6.5 | )                 |    |      | 1.5   |       |   |  | (2.3 | )     |    |  | .6    |      
|                                                              |                                          |                    |      |                   |    |      |       |       |   |  |      |       |    |  |       |      
|                                                              | Income (loss) from continuing operations |                    |      | (38.1             | )% |      |       | 2.0   | % |  |      | (15.8 | )% |  |       | .3    | %
|                                                              |                                          |                    |      |                   |    |      |       |       |   |  |      |       |    |  |       |      

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Third Quarter 2000 Continuing Operations Compared to Third
Quarter 1999 Continuing Operations

Revenue. Total revenue increased $134.9 million, or
103.6%, to $265.1 million in the third quarter of 2000 from
$130.2 million in the third quarter of 1999. The increase was
due to the acquisitions of FaciliCom in December 1999 and NETnet
in February 2000 (the Acquisitions). On a pro forma
basis, giving effect to the Acquisitions as if completed on
January 1, 1999, third quarter 2000 revenue decreased by
approximately $28.3 million, or 9.6%, as compared to the third
quarter of 1999. This decrease is due primarily to the
Companys tightened credit policies that were implemented
in the third quarter. The policies resulted in disconnecting
service to more than 50 carriers and severely restricting credit
allowed to approximately 25 other carriers.

As a result of the Acquisitions, the Company began providing
telecommunications services to retail European customers in the
first quarter of 2000, primarily to small and medium sized
businesses. The Companys long-term strategy is focused on
growing European retail revenues, primarily through
acquisitions. Retail revenue was $25.2 million, or 9.5% of total
revenue in the third quarter of 2000.

Minutes of traffic billed in the third quarter of 2000 were 1.7
billion, an increase of 297.6% from the 427.6 million minutes of
traffic billed in the third quarter of 1999. The increased
minutes were primarily due to new customers and new routes
related to the Acquisitions. Average total revenue per minute
was $.16, a significant decrease from the average total revenue
per minute of $.31 in the third quarter of 1999. The decrease in
rates reflects the impact of FaciliComs intra-European
long distance traffic, which traditionally carries significantly
lower rates than the Companys historical transatlantic
traffic, continued pricing pressures on competitive routes and
an increase in traffic in countries with lower rates per minute
of use.

During the third quarter of 2000, approximately 36.9% of the
Companys total revenue was from traffic originated in
Europe. The strengthening of the U.S. dollar versus the Euro and
other major European currencies negatively impacted the
Companys European revenue by approximately $12.3 million,
or 12%.

Pursuant to a Carrier Services Agreement with WorldCom, the
Company recorded approximately $28.9 million of revenue and
related cost of services (exclusive of depreciation and
amortization) of $8.8 million during the third quarter of 2000.
This represented approximately 10.9% and 3.7% of the
Companys total revenue and cost of services (exclusive of
depreciation and amortization) from continuing operations,
respectively. The Company expects the percentage of its total
revenue contributed by WorldCom to continue to decrease in
connection with its acquisitions of STAR, WorldxChange and
TelDaFax.

Cost of Services (Exclusive of Depreciation and
Amortization). Cost of services (exclusive of depreciation
and amortization), referred to herein as cost of
services, increased $118.8 million, or 102.4%, to $234.7
million in the third quarter of 2000 from $116.0 million in the
third quarter of 1999. This increase is primarily due to the
Acquisitions. As a percentage of revenue, cost of services
decreased to 88.5% of revenue for the third quarter of 2000 as
compared to 89.1% for the third quarter of 1999.

This decrease in cost of services as a percentage of total
revenue was due to several factors, including favorable costs
related to WorldCom traffic, the inclusion of retail revenue and
overall economies of scale associated with the significant
increase in total revenue. The economies of scale include
benefits from access to larger carrier vendors, lower purchasing
rates due to increases in minute traffic volumes and greater
utilization of fixed network facilities. The Company expects
that a reduced overall dependency upon WorldCom traffic and
pricing pressures due to increased competition may adversely
affect its costs of services in the future, particularly in the
carrier services business. Management expects to offset these
pressures through increased retail services revenue, the
realization of cost synergies from the Acquisitions and pending
acquisitions of Star, WorldxChange and TelDaFax, and direct
termination reductions realized through new direct transit
agreements.

Selling, General and Administrative Expenses. Selling,
general and administrative expenses increased $60.4 million, or
1065.8%, to $66.1 million in the third quarter of 2000 from $5.7
million in the third quarter of 1999, primarily due to the
Acquisitions and the $34.6 million one-time charge. As a
percentage of total revenue, these expenses, excluding the
one-time charge, increased to 11.9% in the third quarter of 2000
as compared to 4.3% in the third quarter of 1999. The percentage
increase relates primarily to the costs of

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In the third quarter of 2000, the Company recorded a one-time
selling, general and administrative expense charge of $34.6
million in order to significantly increase reserves for doubtful
accounts and accrue for costs associated with the integration of
World Access and WorldxChange billing systems and the rebranding
of all European retail activities using the NETnet brand.

In August 2000, the Company began to see a larger number of its
customers defer payments owed to it, particularly customers that
were operating as competitive local exchange carriers or those
operating in the prepaid calling card industry. These companies
are typically referred to as Tier 3 carriers. In late
August and early September, several of these carriers declared
bankruptcy or announced their intent to reorganize. While the
Company evaluates the collectibility of its accounts receivable
and establishes appropriate reserves on a regular basis, these
deteriorating conditions required the Company to perform a more
extensive review of the financial condition of its current
customer base, in particular Tier 3 carriers and resellers
of telecom services.

As a result of this review, the Company came to the conclusion
that many of these companies were undercapitalized and would
need significant additional capital in the next three to 12
months to continue as going concerns. Based on the continuing
weakness being experienced in the debt markets for telecom
companies and the dramatic decrease in equity valuations for
telecom companies in recent months, the Company also concluded
that it would be difficult for many of these companies to raise
the needed capital. The recent failures of several telecom
businesses and the public announcements by others of their need
to raise cash will only serve to further weaken the debt and
equity markets historically relied upon by these carriers.

In late August, in connection with the increasing number of late
payments, the Company elected to tighten its credit policies and
aggressively discontinue service when certain customers missed
payment commitments. Based on the review referenced above and
after careful consideration, the Company subsequently elected to
discontinue services entirely to many Tier 3 customers and
reseller customers and significantly restrict the volume of
traffic carried for others.

Although discontinuing or curtailing service to customers in and
of itself does not alleviate the legal liability for customers
to pay for services previously provided, and the Company
certainly intends to pursue every available course of action to
ensure accounts receivable are collected, there is now a much
greater risk of loss for amounts owed by these customers. This
risk is associated with the deteriorating financial condition of
these carriers, weaknesses in the debt and equity markets for
telecom companies and the fact these carriers will be inclined
to allocate available cash to the carriers they are using to
terminate their present and future traffic. In the future, these
customers will also likely be required to pay for a higher
percentage of their termination services on a prepaid basis,
further reducing the amount of cash available to pay for
previous services provided. To recognize the increased risk of
loss related to the actions taken in late August and September,
the Company felt it was necessary to record a significant
increase in its reserve for doubtful accounts in the third
quarter of 2000.

Depreciation and Network Amortization. Depreciation and
network amortization increased $3.7 million, or 294.5%, to $5.0
million in the third quarter of 2000 from $1.3 million in the
third quarter of 1999, primarily due to the depreciation and
amortization of FaciliComs European network.

Amortization of Intangibles. Amortization of intangibles
increased $13.6 million to $14.8 million in the third quarter of
2000 from $1.2 million in the third quarter of 1999. The
increase relates to goodwill and other intangibles recorded in
connection with the Acquisitions.

The Company amortizes goodwill and other intangibles to expense
on a straight-line basis over a five to 20-year period.
Management reviews the net carrying value of intangibles on a
regular basis, and, if deemed necessary, charges are recorded
against current operations for any impairment in the value of
these assets. Such reviews include an analysis of current
results and take into consideration the discounted value of
projected operating cash flows. There was no impairment incurred
in the third quarter of 2000.

26



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##### Table of Contents



Operating Income (Loss). Operating loss was $116.6
million, or 44.0% of revenue, in the third quarter of 2000
compared to $6.1 million of operating income, or 4.7% of
revenue, in the third quarter of 1999. Before the restructuring
charge and the one-time selling, general and administrative
charge, operating loss was 16.5% of revenue, or $43.6 million, a
decrease in operating income of $49.8 million from the same
period in 1999. The expenses under the WorldxChange management
agreement, and additional depreciation and amortization
resulting from acquired assets represents the majority of the
change. The remainder is attributable to the higher selling,
general and administrative costs associated with the
Companys shift to a retail customer base.

Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA). EBITDA was a loss of
$96.7 million, or 36.5% of revenue, in the third quarter of 2000
compared to positive EBITDA of $8.6 million, or 6.6% of
revenue, in the third quarter of 1999, a decrease of $105.3
million. Expenses recognized under the WorldxChange management
agreement included approximately $15.0 million for interest,
taxes, depreciation and amortization, increasing EBITDA to a
loss of $81.8 million. Prior to the effect of the restructuring
charge and the one-time selling, general and administrative
charge, EBITDA was a loss of $8.9 million, or 3.3% of revenue,
for the third quarter of 2000. The remaining decrease in EBITDA
is attributable to the higher selling, general and
administrative costs associated with the Companys shift to
a retail customer base and the effect of the expense under the
Management Service Agreement.

EBITDA from continuing operations is earnings (loss) before net
interest expense (income), income taxes, foreign exchange gains
or losses, depreciation and amortization and is presented
because the Company believes that such information is commonly
used in the telecommunications industry as one measure of a
companys operating performance and historical ability to
service debt. EBITDA from continuing operations is not
determined in accordance with generally accepted accounting
principles, is not indicative of cash provided by operating
activities, should not be used as a measure of operating income
and cash flows from operations as determined under generally
accepted accounting principles and should not be considered in
isolation or as an alternative to, or to be more meaningful
than, measures of performance determined in accordance with
generally accepted accounting principles. EBITDA, as calculated
by the Company, may not be comparable to similarly titled
measures reported by other companies and could be misleading
unless all companies and analysts calculated EBITDA in the same
manner.

Interest and Other Income. Interest and other income
increased $11.7 million to $12.6 million in the third quarter of
2000 from $913,000 in the third quarter of 1999 due to a $7.6
million gain on the sale of securities, an increase in invested
cash balances of the Company and higher market rates of return.
The gain on the sale of securities relates to the sale of Ciena
Corp. common shares received by the Company in July 2000 as
final payment for its previous investment in Omnia
Communications, Inc.

Interest Expense. Interest expense increased $11.5
million to $13.9 million in the third quarter of 2000 from $2.4
million in the third quarter of 1999. The increase was primarily
due to interest expense associated with the $300.0 million of
13.25% Senior Notes issued in December 1999 in exchange for
FaciliComs Senior Notes and other debt assumed by the
Company in connection with the Acquisitions.

Foreign Exchange Gain (Loss). The Company reported a
$586,000 foreign exchange loss in the third quarter of 2000. All
of this loss was unrealized and related to the conversion of
special drawing rights, or SDRs, into monetary units other than
U.S. dollars (see Quantitative and Qualitative Disclosures
about Market Risks).

First Nine Months of 2000 Continuing Operations Compared to
First Nine Months of 1999 Continuing Operations

Revenue. Total revenue increased $498.5 million, or
151.9%, to $826.7 million in the first nine months of 2000 from
$328.2 million in the first nine months of 1999. The increase
was due to the acquisition of CommNet in May 1999 and the
Acquisitions (collectively All Acquisitions) and
organic growth. On a pro forma basis, giving effect to All
Acquisitions as if completed on January 1, 1999, revenue
for the first nine months of 2000 increased by approximately
$100.4 million, or 13.0%, as compared to the first nine months
of 1999.

27



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##### Table of Contents



As a result of the FaciliCom and NETnet acquisitions, the
Company began providing telecommunications services to retail
European customers in the first quarter of 2000, primarily to
small and medium sized businesses. The Companys long-term
strategy is focused on growing European retail revenues,
primarily through acquisitions. Retail revenue was $65.8
million, or 8.0% of total revenue in the first nine months of
2000.

Minutes of traffic billed in the first nine months of 2000 were
5.5 billion, an increase of 450.0% from the
1.0 billion minutes of traffic billed in the first nine
months of 1999. The increased minutes were primarily due to new
customers and new routes related to All Acquisitions. Average
total revenue per minute was $.15, a significant decrease from
the average total revenue per minute of $.33 in the first nine
months of 1999. The decrease in rates reflects the impact of
FaciliComs intra-European long distance traffic, which
traditionally carries significantly lower rates than the
Companys historical transatlantic traffic, continued
pricing pressures on competitive routes and an increase in
traffic in countries with lower rates per minute of use.

During the first nine months of 2000, approximately 38.8% of the
Companys total revenue was from traffic originated in
Europe. The strengthening of the U.S. dollar versus the Euro and
other major European currencies negatively impacted the
Companys European revenue by approximately
$29.3 million, or 9.0%.

Pursuant to a Carrier Services Agreement with WorldCom, the
Company recorded approximately $144.9 million of revenue and
related cost of services (exclusive of depreciation and
amortization) of $79.2 million during the first nine months
of 2000. This represented approximately 17.5% and 10.9% of the
Companys total revenue and cost of services (exclusive of
depreciation and amortization) from continuing operations,
respectively. The Company expects the percentage of its total
revenue contributed by WorldCom to continue to decrease in
connection with its acquisitions of STAR, WorldxChange and
TelDaFax.

Cost of Services (Exclusive of Depreciation and
Amortization). Cost of services (exclusive of depreciation
and amortization), referred to herein as cost of
services, increased $426.3 million, or 142.7%, to $725.1
million in the first nine months of 2000 from $298.8 million in
the first nine months of 1999. This increase is primarily due to
All Acquisitions. As a percentage of revenue, cost of services
decreased to 87.7% of revenue for the first nine months of 2000
as compared to 91.0% for the first nine months of 1999.

This decrease in cost of services as a percentage of total
revenue was due to several factors, including favorable costs
related to WorldCom traffic, the inclusion of retail revenue and
overall economies of scale associated with the significant
increase in total revenue. The economies of scale include
benefits from access to larger carrier vendors, lower purchasing
rates due to increases in minute traffic volumes and greater
utilization of fixed network facilities. The Company expects
that a reduced overall dependency upon WorldCom traffic and
pricing pressures due to increased competition may adversely
affect its cost of services in the future, particularly in the
carrier services business. Management expects to offset these
pressures through increased retail services revenue, the
realization of cost synergies from All Acquisitions and pending
acquisitions of STAR, WorldxChange and TelDaFax, and direct
termination reductions realized through new direct transit
agreements.

Selling, General and Administrative Expenses. Selling,
general and administrative expenses increased $103.1 million, or
718.7%, to $117.4 million in the first nine months of 2000 from
$14.3 million in the first nine months of 1999, primarily due to
All Acquisitions and a $34.6 million one-time charge in the
third quarter of 2000. As a percentage of total revenue, these
expenses, excluding the one-time charge, increased to 10.0% in
the first nine months of 2000 as compared to 4.4% in the first
nine months of 1999. The percentage increase relates primarily
to the costs of operating FaciliComs businesses in 13
European countries and the inclusion of retail services, which
typically have selling, general and administrative expenses
greater than 20.0% of retail revenue.

In the third quarter of 2000, the Company recorded a one-time
selling, general and administrative expense charge of $34.6
million in order to significantly increase reserves for doubtful
accounts and accrue for costs associated with the integration of
World Access and WorldxChange billing systems and the rebranding
of all European retail activities using the NETnet brand. For
additional details of this charge, see Third Quarter 2000
Continuing Operations Compared to Third Quarter 1999 Continuing
Operations.

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Depreciation and Network Amortization. Depreciation and
network amortization increased $10.6 million, or 286.5%, to
$14.3 million in the first nine months of 2000 from $3.7 million
in the first nine months of 1999, primarily due to the
depreciation and amortization of FaciliComs European
network.

Amortization of Intangibles. Amortization of intangibles
increased $38.7 million to $42.0 million in the first nine
months of 2000 from $3.3 million in the first nine months of
1999. The increase relates to goodwill and other intangibles
recorded in connection with All Acquisitions.

Operating Income (Loss). Operating loss was $129.2
million, or 15.6% of revenue, in the first nine months of 2000
compared to $8.1 million of operating income, or 2.5% of
revenue, in the first nine months of 1999. Before the
restructuring charge and the one-time selling, general and
administrative charge, operating loss was 7.3% of revenue, or
$60.2 million, a decrease in operating income of $68.3 million
from the same period in 1999. The expenses under the
WorldxChange management agreement, and additional depreciation
and amortization resulting from acquired assets account for the
remainder of the change.

Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA). EBITDA was a loss of
$72.8 million, or 8.8% of revenue, in the first nine months of
2000 compared to positive EBITDA of $15.1 million, or 4.6% of
revenue, in the first nine months of 1999, a decrease of $87.9
million. Expenses recognized under the WorldxChange management
agreement included approximately $15.0 million for interest,
taxes, depreciation and amortization, increasing EBITDA to a
loss of $57.9 million. Prior to the effect of the restructuring
charge and the one-time selling, general and administrative
charge, EBITDA was positive $11.1 million, or 1.3% of revenue,
for the first nine months of 2000. The remaining decrease in
EBITDA is attributable to the higher selling, general and
administrative costs associated with the Companys shift to
a retail customer base and the effect of the expense under the
Executive Management Services Agreement.

Interest and Other Income. Interest and other income
increased $20.1 million to $21.9 million in the first
nine months of 2000 from $1.8 million in the first nine
months of 1999 due to a $7.6 million gain on the sale of
securities, an increase in invested cash balances of the Company
and higher market rates of return.

The gain on the sale of securities relates to the sale of Ciena
Corp. common stock received by the Company in July 2000 as final
payment for its previous investment in Omnia Communications, Inc.

Interest Expense. Interest expense increased
$35.8 million to $42.5 million in the first nine
months of 2000 from $6.7 million in the first nine months
of 1999. The increase was primarily due to interest expense
associated with the $300.0 million of 13.25% Senior Notes issued
in December 1999 in exchange for FaciliComs Senior Notes
and other debt assumed by the Company in connection with All
Acquisitions.

Foreign Exchange Gain (Loss). The Company reported a
$375,000 foreign exchange loss in the first nine months of 2000.
All of this loss was unrealized and related to the conversion of
special drawing rights, or SDRs, into monetary units other than
U.S. dollars (see Quantitative and Qualitative Disclosures
about Market Risks).

29



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Discontinued Operations

In December 1999, in connection with the acquisition of
FaciliCom, the Company adopted a plan to divest all of its
remaining equipment businesses in order to focus on its
international long distance business. As a result of this plan,
all of the Companys equipment businesses have been
accounted for as discontinued operations and, accordingly, the
results of their operations have been excluded from continuing
operations in the consolidated statements of operations for all
periods presented. Results of discontinued operations were as
follows (in thousands):

|                                    |                                   |                   |        |         |   |   |         |        | 
|----------------------------------- | --------------------------------- | ----------------- | ------ | ------- | - | - | ------- | ------ | 
|                                    |                                   |                  
|                                    |                                   | Nine Months Ended
|                                    |                                   | September 30,    
|                                    |                                   |                  
|                                    |                                   | 2000              |        | 1999   
|                                    |                                   |                   |        |        
|Sales                               |                                   | $                 | 26,939 |         |   | $ | 214,769 |       
|                                   
|                                   
|                                   
|                                   
|Cost of sales                       |                                   |                   | 20,418 |         |   |   | 133,551 |       
|                                   
|                                   
|                                   
|                                   
|Research and development            |                                   |                   | 6,778  |         |   |   | 13,281  |       
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |                                   |                   | 13,764 |         |   |   | 31,252  |       
|                                   
|                                   
|                                   
|                                   
|Goodwill amortization               |                                   |                   | 1,635  |         |   |   | 6,645   |       
|                                   
|                                   
|                                   
|                                   
|Other (income) expense, net         |                                   |                   | (267   | )       |   |   | 5,534   |       
|                                    |                                   |                   |        |         |   |   |         |       
|                                    | Income (loss) before income taxes |                   |        | (15,924 | ) |   |         | 35,574 | 
|                                   
|                                   
|                                   
|                                   
|Income taxes (benefit)              |                                   |                   | (5,527 | )       |   |   | 15,848  |       
|                                    |                                   |                   |        |         |   |   |         |       
|                                    | Net income (loss) from operations |                   |        | (10,397 | ) |   |         | 19,726 | 
|                                   
|                                   
|                                   
|                                   
|Net gain (loss) on sale             |                                   |                   | 27,773 |         |   |   | (12,342 | )     
|                                    |                                   |                   |        |         |   |   |         |       
|                                    | Net income (loss)                 |                   | $      | 17,376  |   |   | $       | 7,384  | 
|                                    |                                   |                   |        |         |   |   |         |       

Results for the first nine months of 1999 include sales and
income before income taxes of $12.9 million and $3.9 million,
respectively, for the Galaxy Engineering Services Division,
which was sold by the Company in December 1999. Discontinued
operations consisted of the following businesses as of
December 31, 1999:



| |   |                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Telco Systems Division (acquired November 1998), a provider of
	next generation transport and access solutions for service
	providers throughout the world. Its products include intelligent
	integrated access devices, multiplexers and digital microwave
	radios.
|
| |  | NACT Switching Division (acquired February 1998), a provider of
	advanced switching platforms with integrated proprietary
	applications software as well as billing and telemanagement
	systems.                                                                    
|
| |  | Wireless Local Loop (WLL) Division, a research and
	development group designing a next generation, fixed wireless
	local loop system.                                                                                                                             
|
| |  | Cellular Infrastructure Supply (CIS) Division
	(acquired March 1997), a value-added supplier of new and
	refurbished cellular base stations and related equipment.                                                                                                

In the fourth quarter of 1999, the Company evaluated the
remaining equipment businesses held for sale and compared the
net book value for each business to the best estimate of net
proceeds expected to be realized from the sale or liquidation of
each business. At that time, the Company expected to realize a
gain on the sale of Telco Systems and NACT. The basis for the
Telco Systems gain was the definitive agreement that had been
executed with BATM in February 2000. The basis for the NACT gain
was written expressions of interest received from several
potential buyers. Since both of these gains were contingent in
nature, they were not recorded in the fourth quarter.

The Company expected to realize a loss on the sale of the WLL
division, the liquidation of the CIS division and the sale of
certain other equipment assets. Accordingly, these estimated
losses were recorded in the fourth quarter of 1999. These losses
consisted primarily of the write-down of goodwill and other
intangible assets and a provision for estimated operating losses
expected to be incurred by these businesses during the period of
disposition.

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The assets and liabilities of the discontinued operations are
reflected as Net assets held for sale in the
consolidated balance sheets and consisted of the following (in
thousands):

|                               |                          |               |        |              |  |   |         |         | 
|------------------------------ | ------------------------ | ------------- | ------ | ------------ |  | - | ------- | ------- | 
|                               |                          | September 30, |        | December 31,
|                               |                          | 2000          |        | 1999        
|                               |                          |               |        |             
|Accounts receivable            |                          | $             | 4,699  |              |  | $ | 58,080  |        
|                              
|                              
|                              
|                              
|Inventories                    |                          |               | 6,609  |              |  |   | 26,716  |        
|                              
|                              
|                              
|                              
|Other current assets           |                          |               | 4,237  |              |  |   | 40,369  |        
|                               |                          |               |        |              |  |   |         |        
|                               | Total current assets     |               |        | 15,545       |  |   |         | 125,165 | 
|                              
|                              
|                              
|                              
|Property and equipment         |                          |               | 3,679  |              |  |   | 13,198  |        
|                              
|                              
|                              
|                              
|Goodwill and other intangibles |                          |               | 21,581 |              |  |   | 167,295 |        
|                              
|                              
|                              
|                              
|Other assets                   |                          |               | 3,773  |              |  |   | 17,891  |        
|                               |                          |               |        |              |  |   |         |        
|                               | Total assets             |               |        | 44,578       |  |   |         | 323,549 | 
|                              
|                              
|                              
|                              
|Accounts payable               |                          |               | 8,663  |              |  |   | 22,771  |        
|                              
|                              
|                              
|                              
|Other current liabilities      |                          |               | 6,859  |              |  |   | 40,840  |        
|                              
|                              
|                              
|                              
|Other liabilities              |                          |               | 5,723  |              |  |   | 15,550  |        
|                               |                          |               |        |              |  |   |         |        
|                               | Net assets held for sale |               | $      | 23,333       |  |   | $       | 244,388 | 
|                               |                          |               |        |              |  |   |         |        

In April 2000, the Company sold its Telco Systems Division to
BATM for $268.6 million in cash and 9,600,000 restricted shares
of BATM stock, as adjusted for a ten for one stock split in July
2000. In April 2000, the Company also sold its WLL Division
to Nera ASA, a Norwegian-based technology company, for $13.0
million of cash. Selling expenses for these two transactions
were approximately $11.0 million and consisted of investment
banking fees, legal fees, other professional fees and incentive
bonuses earned by Telco Systems and WLL management.

The shares of BATM stock held by the Company, which had an
estimated value of $76.9 million at the time of the Telco
Systems sale, trade on the London Stock Exchange. Under the
terms of the sales agreement, the Company may not sell, transfer
or otherwise monetize these shares until April 5, 2001
without the consent of BATM. The BATM shares are included in
Short-term investments on the Companys
consolidated balance sheet and were recorded by the Company at
fair market value. During 2000, the Company has recognized, net
of taxes, a $3.2 million unrealized gain on the value of
these securities. This gain is included in a separate component
of stockholders equity.

During the first four months of 2000, the Company monetized the
majority of its investment in CIS, which consisted primarily of
trade accounts receivable and inventories in the normal course
of business. The cash realized from these activities
approximated the carrying values of these assets at
December 31, 1999. The remaining assets of CIS, which were
not material, were sold in a private transaction completed in
May 2000.

In connection with the sales of these businesses and certain
other Equipment Group transactions, and after a charge to
write-down the carrying value of NACT to the Companys
current estimate of net realizable value, the Company recorded a
pre-tax gain in the second quarter of $124.5 million. After
income taxes, the net gain recorded was $35.8 million. The
income tax provision related to this gain was 71.3%,
significantly higher than statutory tax rates, primarily due to
the non-deductibility of Telco Systems and NACT goodwill
written-off.

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The following summarizes the $32.7 million write-down of
discontinued operations to net realizable value in the fourth
quarter of 1999, the $35.8 million net gain realized on the sale
of equipment businesses in the second quarter of 2000 and the
$8.0 million write-down to net realizable value recorded in the
third quarter of 2000 (in thousands):

|                                |                 |             |         |             |   |             |         |        |  |   |        |        |   |   |         |        |  
|------------------------------- | --------------- | ----------- | ------- | ----------- | - | ----------- | ------- | ------ |  | - | ------ | ------ | - | - | ------- | ------ | -
|                                |                 | 4th Quarter |         | 2nd Quarter |   | 3rd Quarter |         |       
|                                |                 | 1999        |         | 2000        |   | 2000        |         | Total 
|                                |                 |             |         |             |   |             |         |       
|Telco Systems                   |                 | $           |        |             |   | $           | 203,934 |        |  | $ |       |        |   | $ | 203,934 |       
|                               
|                               
|                               
|                               
|NACT                            |                 |             |        |             |   |             | (80,445 | )      |  |   | (8,000 | )      |   |   | (88,445 | )     
|                               
|                               
|                               
|                               
|CIS                             |                 |             | (22,079 | )           |   |             | (551    | )      |  |   |       |        |   |   | (22,630 | )     
|                               
|                               
|                               
|                               
|WLL                             |                 |             | (11,717 | )           |   |             | 2,611   |        |  |   |       |        |   |   | (9,106  | )     
|                               
|                               
|                               
|                               
|Other                           |                 |             | (5,716  | )           |   |             | (999    | )      |  |   |       |        |   |   | (6,715  | )     
|                                |                 |             |         |             |   |             |         |        |  |   |        |        |   |   |         |       
|Gain (loss) before income taxes |                 |             | (39,512 | )           |   |             | 124,550 |        |  |   | (8,000 | )      |   |   | 77,038  |       
|                               
|                               
|                               
|                               
|Income taxes                    |                 |             | 6,860   |             |   |             | (88,777 | )      |  |   |       |        |   |   | (81,917 | )     
|                                |                 |             |         |             |   |             |         |        |  |   |        |        |   |   |         |       
|                                | Net gain (loss) |             | $       | (32,652     | ) |             | $       | 35,773 |  |   | $      | (8,000 | ) |   | $       | (4,879 | )
|                                |                 |             |         |             |   |             |         |        |  |   |        |        |   |   |         |       

In the first nine months of 2000, NACT had sales and EBITDA loss
of $15.7 million and $1.1 million, respectively, considerably
below Company expectations and prior year results. In the second
quarter of 2000, the Company wrote-down the carrying value of
NACT to approximately $50.0 million based on revised estimates
of net realizable value. In the third quarter of 2000, the
Company wrote-down the carrying value of NACT by an additional
$8.0 million.

Liquidity and Capital Resources

Overview.Cash management is a key element of the
Companys operating philosophy and strategic plans.
Acquisitions to date have been structured to minimize the cash
element of the purchase price and ensure that appropriate levels
of cash are available to support the increased network capacity,
marketing programs and working capital normally associated with
the growth initiatives of acquired businesses. As of
September 30, 2000, the Company had $406.8 million of cash
and short-term investments to support its current working
capital requirements and strategic growth initiatives.

Operating Activities.Cash used by operating activities
was $130.4 million for the first nine months of 2000 as compared
to cash provided from operations of $17.4 million for the first
nine months of 1999.

Accounts receivable increased $61.6 million to $226.4 million at
September 30, 2000 from $164.8 million at December 31,
1999. The increase in accounts receivable was primarily due to
the acquisitions completed in 2000 and the $92.2 million
increase in the Companys total revenue for the third
quarter of 2000 as compared to the fourth quarter of 1999. In
addition, WorldCom, the Companys largest customer, began
paying for its carrier services under standard credit terms
during the first quarter of 2000. WorldCom had traditionally
prepaid for services provided by the Company under a Carrier
Service Agreement entered into in mid-1998.

Average days sales outstanding at September 30, 2000 were
approximately 79 days as compared to 59 days at
December 31, 1999. The increase related primarily to the
change in WorldCom payment terms and a net $39.3 million
increase in accounts payable during the first nine months of
2000. In its carrier service business, the Company will
frequently buy selected termination capacity, routes and
services from certain carriers and sell these same carriers
different termination capacity, routes and services. When the
timing impact of these offsetting receivables and payables is
excluded, management believes its normalized average days sales
outstanding currently approximates 60 days.

Investing Activities.Cash from investing activities was
$228.3 million in the first nine months of 2000 as compared to
cash used by investing activities of $6.6 million in the first
nine months of 1999.

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The net cash impact of business acquisitions and related
transactions completed in the first nine months of 2000 was the
generation of $25.7 million of cash, consisting of the following
(in thousands):

|                                   |  |   |         |  
|---------------------------------- |  | - | ------- | -
|                                  
|                                  
|                                  
|                                  
|Cash balance of acquired companies |  | $ | 44,511  |  
|                                  
|                                  
|                                  
|                                  
|Cash portion of purchase price     |  |   | (3,500  | )
|                                  
|                                  
|                                  
|                                  
|Fees and expenses paid             |  |   | (15,333 | )
|                                   |  |   |         |  
|                                   |  | $ | 25,678  |  
|                                   |  |   |         |  

In February 2000, the Company acquired substantially all of the
assets and assumed certain liabilities of LDI, including its
wholly-owned subsidiary NETnet. In connection with the LDI
acquisition, the Company issued 185,000 shares of Series D
Preferred Stock to LDIs stockholders and the holders of
LDIs senior notes. The Series D Preferred Stock,
which has a $185.0 million liquidation preference, was valued at
$217.6 million.

LDI had historically maintained significant cash balances in
escrow pursuant to the Indenture governing its $225.0 million
senior notes. As an integral component of the LDI acquisition,
the senior note holders waived their rights to the remaining
$36.7 million of restricted cash. This cash was received by the
Company free of restriction at the acquisition date.

The $15.3 million of fees and expenses paid in the first nine
months of 2000 related primarily to the FaciliCom acquisition
completed in December 1999 and the LDI acquisition.

During the first nine months of 2000, the Company invested $18.0
million in property and equipment. Of this amount, $16.8 million
related to continuing operations and was primarily spent on
upgrading the Companys European telecommunication network.

In February 2000, the Company executed a definitive agreement
with STAR, pursuant to which STAR will be merged with and into
the Company. Under the terms of the agreement, each share of
STAR common stock will be converted into .386595 shares of the
Companys common stock. The Company has the option of
paying up to 40% of the merger consideration in cash. In
addition, the Company will assume approximately $75.0 million in
STAR debt. The Company expects the transaction to close in
December 2000.

The STAR merger is subject to, among other things, the approval
of the stockholders of the Company and STAR, and the divestiture
by STAR of certain business segments for specified minimum net
cash proceeds. The merger is intended to qualify as a tax-free
reorganization, and will be accounted for as a purchase
transaction. The Company has agreed to provide bridge financing
to STAR in an amount up to $35.0 million, none of which has been
funded as of the date of this Report.

In February 2000, the Company executed a definitive merger
agreement with WorldxChange. Under the terms of the agreement,
each share of WorldxChange common stock will be exchanged for
 .6583 shares of the Companys common stock. In addition,
the Company will assume approximately $225.0 million in
WorldxChange debt. The Company expects the transaction to close
in December 2000.

The WorldxChange merger is subject to, among other things, the
approval of the stockholders of the Company and WorldxChange.
The merger is intended to qualify as a tax-free reorganization,
and will be accounted for as a purchase transaction. The Company
agreed as part of the merger agreement to provide bridge
financing to WorldxChange in an amount up to $45.0 million,
$35.7 million of which was funded in the first nine months of
2000. In addition, under the management services agreement the
Company has made working capital advances of approximately $41.6
million. Management anticipates that it will continue to make
working capital advances in the future. The loans and advances
to WorldxChange are included in Net advances to
WorldxChange in the consolidated balance sheets.

Financing Activities.Cash provided from financing
activities was $79.2 million and $41.9 million for the first
nine months of 2000 and 1999, respectively.

In February 2000, the Company sold an aggregate of 3,822,552
shares of restricted common stock for approximately $83.1
million, or $21.75 per share, in two private transactions with a
group of institutional and

33



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In June 2000, the Company issued 20,000 shares of Series A
Preferred Stock for an aggregate amount of $20.0 million. These
shares were issued to The 1818 Fund III, L.P., in connection
with its exercise of an option agreement.

In December 1998, the Company entered into a $75.0 million
revolving line of credit facility (the Facility),
with a banking syndicate group led by Bank of America. In
December 1999, the Company amended the Facility to increase the
line of credit to $100.0 million and extend the credit for
another 364-day term. In November 2000, the Company terminated
this facility.

As of December 31, 1999, borrowings of $25.0 million were
outstanding under the Facility, which represented the amount
drawn on the Facility in December 1999 to repay $25.0 million
owed by FaciliCom at the time of its acquisition under its
revolving line of credit. In January 2000, the Company repaid
the $25.0 million outstanding under the Facility.

During the first nine months of 2000, the Company received
approximately $11.1 million in cash from the exercises of stock
options and warrants by the Companys employees and
directors.

Commitments and Contingencies. Under the terms of the
Indenture governing the Companys $300.0 million of 13.25%
Senior Notes due 2008, the Company has an obligation to utilize
the net cash proceeds (as defined in the Indenture) from the
sale of certain of its equipment businesses (see
Discontinued Operations) to retire debt. Based on
the net cash received to date from the sale of Telco Systems in
April 2000, the Company is currently obligated to utilize
approximately $160 million to retire unsubordinated indebtedness
(as defined in the Indenture) or make a tender offer for its
13.25% Senior Notes by January 2, 2001. The net cash
relates to the $268.6 million cash element of the Telco Systems
sale price, less approximately $11.0 million of transaction
expenses and $97.0 million of income taxes. The income taxes
represent the net cash liability the Company is expected to
incur as a result of the gain it will realize on the sale of
Telco Systems for federal and state income tax purposes. Income
taxes assume a tax basis for Telco Systems of approximately
$92.0 million and a combined federal and state tax rate of 40%.

To the extent the Company uses its net cash proceeds to tender
for the 13.25% Senior Notes, the actual tender price is defined
in the Indenture as the face value of the Notes, plus accrued
and unpaid interest, less the current market value of $15.0
million, or five points, of Company common stock paid to the
noteholders as exchange consideration in December 1999. Assuming
$5.00 per share as the value of the Company common stock, the
current tender price would be approximately 98% of face value,
plus accrued and unpaid interest.

Under the indenture, the Company will also be required to retire
indebtedness when it receives additional net cash proceeds from
the sale of 9.6 million shares of BATM stock or from the sale of
its NACT business. The BATM shares, which had a value of
approximately $82.2 million at September 30, 2000, were
received by the Company in connection with the sale of Telco
Systems. The Company is contractually restricted from selling or
otherwise monetizing these shares until April 5, 2001
without the consent of BATM. The Company will be required to
retire unsubordinated indebtedness or make a tender offer for
its 13.25% Senior Notes within nine months from the date the
Company receives the related cash proceeds from these two events.

In the normal course of business, the Company enters into
certain sales-type lease arrangements with equipment customers.
These leases are generally sold to third-party financing
institutions. A portion of these arrangements contains certain
recourse provisions under which the Company remains liable. The
Companys maximum exposure under the recourse provisions,
net of related reserves, was approximately $7.4 million at
September 30, 2000. A portion of this contingent obligation
is collateralized by security interests in the related
equipment. The fair value of the recourse obligation at
September 30, 2000 was not determinable as no market exists
for these obligations.

Income Taxes.The Companys provision for income
taxes attributable to continuing operations for the first nine
months of 2000 was a benefit of $19.3 million, or approximately
12.8% of loss from continuing operations before income taxes.
The provision for income taxes differs from the amount computed
by applying

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As a result of the exercises of non-qualified stock options and
warrants by the Companys employees and directors, the
Company realized federal income tax benefits during the first
nine months of 2000 of approximately $2.6 million. Although
these tax benefits do not have any effect on the Companys
provision for income tax expense, they represent a cash benefit
to the Company. This tax benefit is accounted for as a decrease
in current income taxes payable and an increase in capital in
excess of par value.

Summary. Since June 1999, World Access has raised
significant capital through the sale of $70.0 million of
Series A Preferred Stock, the sale of $158.1 million of
common stock in private placement transactions and the sale of
certain equipment businesses for approximately $285.0 million of
gross cash proceeds. These transactions have significantly
enhanced the financial strength of World Access and improved its
liquidity. World Access believes that existing cash and
short-term investments, available borrowings and additional cash
expected to be generated from the sale of NACT and related
assets will provide World Access with sufficient financial
resources to support the cash requirements of World Access, STAR
and WorldxChange for at least the next twelve months.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, which establishes accounting and
reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and
for hedging activities. In June 1999, SFAS No. 133 was
amended by SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities  Deferral of the
Effective Date of SFAS 133. As a result of this
amendment, SFAS No. 133 shall be effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000.
In accordance with SFAS No. 133, an entity is required to
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at
fair value. SFAS No. 133 requires that changes in the
derivatives fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivatives gain
and losses to offset related results on the hedged item in the
income statement and requires that a company formally document,
designate and assess the effectiveness of transactions that
receive hedge accounting. The Company does not expect the
adoption of this standard to have a material effect on its
consolidated financial position or results of operations.

In December 1999, the Securities and Exchange Commission
staff issued SAB No. 101, Revenue Recognition in
Financial Statements. The SAB spells out four basic criteria
that must be met before companies can record revenue. These are:
(a) persuasive evidence that an arrangement exists;
(b) delivery has occurred or services have been rendered;
(c) the sellers price to the buyer is fixed or
determinable; and (d) collectibility is reasonably assured.
Many of the examples in the SAB address situations that give
rise to the potential for recording revenue prematurely. They
include transactions subject to uncertainties regarding customer
acceptance, including rights to refunds and extended payment
terms, and require continuing involvement by the seller.

In March 2000, the SEC issued SAB 101A  Amendment:
Revenue Recognition in Financial Statements, that delays the
implementation date of certain provisions of SAB 101. Under
the amendment, the Company is not required to restate its prior
financial statements provided that the Company reports a change
in accounting principle no later than the second fiscal quarter
(ending June 30, 2000) in accordance with FASB Statement
No. 3, Reporting Accounting Changes in Interim Financial
Statements. In accordance with SFAS 3, for companies
that adopt SAB 101 in the second quarter, financial
information for the first quarter would be restated by including
a cumulative effect adjustment in the quarter (i.e., the first
quarter). Management believes the adoption of SAB 101 may
result in an increase in the deferral of revenue for certain
sales by the Companys NACT business. Management does not
believe the adoption of SAB 101 would have a material
impact on the Companys consolidated financial position or
results of operations.

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In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, Accounting for Certain
Transactions Involving Stock Compensation,an interpretation
of APB Opinion No. 25. The Interpretation poses and answers
20 separate questions dealing with APB 25 implementation
practice issues.

The Interpretation will be applied prospectively to new awards,
modifications to outstanding awards, and changes in employee
status on or after July 1, 2000, except as follows:
(i) requirements related to the definition of an employee
apply to new awards granted after December 15, 1998;
(ii) modifications that directly or indirectly reduce the
exercise price of an award apply to modifications made after
December 15, 1998; and (iii) modifications to add a
reload feature to an award apply to modifications made after
January 12, 2000. Financial statements for periods prior to
July 1, 2000 will not be affected. Management does not
expect the adoption of Interpretation No. 44 to have a
material effect on its consolidated financial position or
results of operations.

Item  3.  Quantitative and Qualitative
Disclosures about Market Risks

Although the Companys reporting currency is the U.S.
dollar, an increasing percentage of the Companys revenue
will be generated from international operations. Accordingly,
changes in currency exchange rates may have a significant effect
on the Companys future results of operations. For example,
the accounting rate under certain European operating agreements
is often defined in monetary units other than U.S. dollars, such
as special drawing rights or SDRs. To
the extent that the U.S. dollar declines relative to units such
as SDRs, the dollar equivalent accounting rate would increase.
In addition, as the Company expands into foreign markets, its
exposure to foreign currency rate fluctuations is expected to
increase. Although the Company does not currently engage in
exchange rate hedging strategies, management may choose to limit
the Companys exposure by purchasing forward exchange
contracts or other similar hedging strategies. Specific hedging
contracts, if any, will be subject to approval by specified
officers acting within the Companys board of
directors overall policies and limits. Management intends
to limit the Companys hedging activities to the extent of
its foreign currency exposure. There can be no assurance that
any currency hedging strategy will be successful in avoiding
currency exchange-related losses.

Management invests cash balances in excess of operating
requirements in short-term securities, generally with maturities
of 90 days or less, in accordance with internal investment
policies. These investments are limited primarily to U.S.
Treasury securities, certain time deposits, and high quality
repurchase agreements and commercial paper (with restrictions on
the rating of the companies issuing these instruments).
Management does not invest in any derivative or commodity type
instruments. In addition, the restricted cash balance available
to partially fund the January 2001 interest payment on the
Companys 13.25% Senior Notes is invested in U.S. Treasury
securities. Accordingly, the Company is subject to minimal
market risk on any of its investments.

The majority of the Companys debt, which consists of
$300.0 million of 13.25% Senior Notes and $115.0 million of 4.5%
Convertible Notes, bears interest at a fixed rate. Although the
actual service requirements of this debt are fixed, changes in
interest rates generally could put the Company in a position of
paying interest that differs from then existing rates. The
Companys revolving line of credit agreement with Nortel
Networks, Inc. provide for borrowings which bear interest at
variable rates based on either the prime rate or the London
Interbank Offered Rates. The Company had approximately $30.4
million outstanding pursuant to this revolving line of credit at
September 30, 2000. Management believes that the effect, if
any, of reasonably possible near-term changes in interest rates
on the Companys financial position, results of operations
and cash flows should not be material.

In connection with the sale of Telco Systems in April 2000, the
Company received 9,600,000 restricted shares of BATM Advanced
Communications Limited (BATM) stock, as adjusted for
a ten for one stock split in July 2000. The shares of BATM
stock, which had an initial value of approximately $76.9
million, trade on the London Stock Exchange. Under the terms of
the sales agreement, the Company may not sell, transfer or
otherwise monetize these shares for a period of one year without
the consent of BATM. Unrealized gain and losses on the fair
value of the BATM stock are recognized as a separate component
of stockholders equity.

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##### Table of Contents






PART II

OTHER INFORMATION

Item  1.  Legal Proceedings

From time to time, the Company is involved in various legal
proceedings relating to claims arising in the ordinary course of
business. Other than as discussed below, neither World Access,
Inc. nor any of its subsidiaries is party to any legal
proceeding, the outcome of which is expected to have a material
adverse effect on the Companys financial condition or
results of operations.

Plaintiffs have filed 23 class action shareholder suits against
the Company and some of its current and former officers alleging
violations of the federal securities laws. These suits arise
from alleged misstatements of material information in and
alleged omissions of material information from some of the
Companys securities filings and other public disclosures,
principally related to product development, inventory and sales
activities during the fourth quarter of 1998. Plaintiffs have
requested damages in an unspecified amount in their complaints.
These class action suits were consolidated into a single action
for all pretrial proceedings in the United States District Court
for the Northern District of Georgia under the caption In re:
World Access, Inc. Securities Litigation(File No.
1:99-CV-43-ODE). The plaintiffs filed an amended consolidated
complaint for this action on or about May 28, 1999. The
Company filed a motion to dismiss the amended consolidated
complaint on June 28, 1999. The court denied this motion to
dismiss in an order dated March 28, 2000. The Company filed
an answer on May 5, 2000. On July 21, 2000, competing
plaintiffs filed Motions for Class Certification, Appointment of
Lead Plaintiffs and Appointment of Lead Counsel. Although the
Company denies that it violated any of the requirements or
obligations of the federal securities laws, there can be no
assurance that the Company will not sustain material liability
as a result of or related to these suits.

On February 14, 2000 and March 1, 2000 identical class
action complaints were filed against Star Telecommunications and
certain of its directors and executive officers which, among
other things, sought to enjoin that companys merger into
the Company. On May 5, 2000, the court granted the
defendants demurrer. On July 14, 2000, the plaintiffs
appealed the courts order granting demurrer.

Item  2.  Changes in Securities and Use of
Proceeds

1.  On July 13, 2000, the Company issued 1,659; 441;
140; 6,760 and 645 shares of convertible preferred stock,
Series E, to David Marcus, Luc Baechler, Symphony Finance
Ltd., 3i Group plc and Soditic S.A., respectively, in connection
with the purchase of all of the outstanding stock of GTN Telecom
S.A. by a wholly-owned subsidiary of the Company.

The Series E preferred stock is convertible, at any time, into
shares of World Access common stock at a conversion price equal
to $21.75 per share, subject to adjustment described in World
Access certificate of incorporation.

If for ten consecutive trading days the market price of World
Access common stock exceeds the conversion price in effect on
each such trading day, all shares of Series E preferred stock
will be automatically converted into such number of shares of
World Access common stock as equals the number of shares subject
to conversion multiplied by the quotient of $1,000 divided by
the conversion price in effect on the last trading day of such
ten-day period.

In addition, any outstanding shares of Series E preferred
stock that have not been converted into World Access common
stock by July 13, 2003 will be automatically converted into
such number of shares of World Access common stock as is equal
to the number of shares of Series E preferred stock subject
to conversion, multiplied by the quotient of (i) $1,000
divided by (ii) the average market price for the ten
consecutive days ending on July 13, 2003. Notwithstanding
the foregoing, the average market price for the ten consecutive
days ending on July 13, 2003 may not be less than $11.50 or
greater than the conversion price, and subject to increase based
on a specific decline in the Nasdaq Composite Index between
July 13, 2000 and July 13, 2003.

37



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The Series E stock ranks, as to dividends, equal with the
World Access common stock, the Series C preferred stock and
the Series D preferred stock and junior to the
Series A preferred stock. With respect to liquidation
preference, the Series E preferred stock ranks senior to the
World Access common stock, junior to the Series A preferred
stock, and equal with the Series C preferred stock and Series D
preferred stock.

2.  On September 18, 2000, the Company issued 18,563
shares of common stock to Long Aldridge & Norman LLP in
payment of $201,540 in legal fees.

3.  On September 21, 2000, the Company issued 3,676,995;
2,570,778; 3,849,888 and 1,359,970 shares of common stock to
Apax Germany II L.P., Apax Funds Nominees Ltd. für
B Account, Apax Funds Nominees Ltd. für
D Account and AP Vermögensverwaltung
Gesellschaft bürgerlichen Rechts, respectively, in
connection with the Companys purchase of an aggregate of
11,178,176 shares of TelDaFax AG.

4.  On September 26, 2000, the Company issued 8,729 shares
of common stock to Christian Vogl in connection with the
Companys purchase of Mr. Vogls shares of NETnet
Telekommunications GmbH, Austria.

No underwriters were involved in the issuances of theses
securities. The issuances of these securities were deemed to be
exempt from registration under the Securities Act in reliance on
Section 4(2) of the Securities Act as transactions by an
issuer not involving any public offering. The recipients of
securities in these transactions represented their intentions to
acquire the securities for investment only and not with a view
to or for sale in connection with any distribution of the
securities, and appropriate legends were affixed to the stock
certificates issued in theses transactions. All recipients
represented that they had adequate access to information
regarding the Company.

Item  3.  Defaults Upon Senior
Securities

None

Item  4.  Submission of Matters to a Vote
of Security Holders

None

Item 5.  Other Information

None

Item  6.  Exhibits and Reports on Form
8-K

(a)  Exhibits

|    |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1 |  |  |  | Agreement and Plan of Merger, dated February 11, 2000 among
	the Company, STI Merger Co., a Delaware corporation and
	wholly-owned subsidiary of the Company, and STAR
	Telecommunications, Inc., a Delaware corporation (incorporated
	by reference to Exhibit 2.1 to the Companys
	Form 10-Q for the quarter ended March 31, 2000, filed
	with the Commission on May 22, 2000, as amended on
	August 4, 2000). The following is a list of omitted
	schedules and other attachments which the Company agrees to
	furnish supplementally to the Commission upon request:

|                               |     |     |  |   |  |                                       
|------------------------------ | --- | --- |  | - |  | --------------------------------------
|                              
|                              
|                              
|                              
|SCHEDULES TO MERGER AGREEMENT:
|                               | 3.1 | (a) |  |  |  | Organization                          
|                               | 3.1 | (b) |  |  |  | Capital Structure                     
|                               | 3.1 | (c) |  |  |  | No Conflict                           
|                               | 3.1 | (d) |  |  |  | Reports and Financial Statements      
|                               | 3.1 | (g) |  |  |  | Required World Access Stockholder Vote
|                               | 3.1 | (j) |  |  |  | Litigation; Compliance with Laws      
|                               | 3.1 | (k) |  |  |  | Absence of Certain Changes or Events  

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| |     |     |  |   |  |                                               
| | --- | --- |  | - |  | ----------------------------------------------
| | 3.1 | (o) |  |  |  | Tax Matters                                   
| | 3.1 | (p) |  |  |  | Certain Contracts                             
| | 3.2 | (a) |  |  |  | Organization; Standing and Power; Subsidiaries
| | 3.2 | (b) |  |  |  | Capital Structure                             
| | 3.2 | (c) |  |  |  | Authority; No Conflicts                       
| | 3.2 | (h) |  |  |  | Litigation                                    
| | 3.2 | (i) |  |  |  | Absence of Certain Changes or Events          
| | 3.2 | (j) |  |  |  | Employee Benefits Matters                     
| | 3.2 | (k) |  |  |  | Intellectual Property                         
| | 3.2 | (n) |  |  |  | Taxes                                         
| | 3.2 | (o) |  |  |  | Certain Contracts                             
| | 4.2 | (f) |  |  |  | Sales                                         
| | 4.2 | (h) |  |  |  | Compensation                                  
| | 4.2 | (l) |  |  |  | Litigation                                    

| |     |  |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- |  |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.2 |  |  |  |  | Agreement and Plan of Merger, dated February 11, 2000 among
	the Company, CTI Merger Co., a Delaware corporation and
	wholly-owned subsidiary of the Company, and Communication
	TeleSystems International d/b/a WORLDxCHANGE Communications, a
	California corporation (incorporated by reference to
	Exhibit 2.2 to the Companys Form 10-Q for the
	quarter ended March 31, 2000, filed with the Commission on
	May 22, 2000, as amended on August 4, 2000). The
	following is a list of omitted exhibits, schedules and other
	attachments which the Company agrees to furnish supplementally
	to the Commission upon request:

|                               |      |     |  |   |  |                                              
|------------------------------ | ---- | --- |  | - |  | ---------------------------------------------
|                              
|                              
|                              
|                              
|EXHIBITS TO MERGER AGREEMENT: 
|                               | A    |     |  |  |  | Form of Escrow Agreement                     
|                               | B    |     |  |  |  | Form of Opinion of OMelveny & Myers LLP     
|                               | C    |     |  |  |  | Form of Opinion of Long Aldridge & Norman LLP
|                              
|                              
|                              
|                              
|SCHEDULES TO MERGER AGREEMENT:
|                               | 3.1  | (b) |  |  |  | Organization and Authorization               
|                               | 3.2  |     |  |  |  | Authorized and Outstanding Stock             
|                               | 3.4  |     |  |  |  | Financial Statements                         
|                               | 3.5  |     |  |  |  | Undisclosed Liabilities                      
|                               | 3.6  |     |  |  |  | Legal Issues                                 
|                               | 3.7  |     |  |  |  | Property                                     
|                               | 3.10 | (a) |  |  |  | Intellectual Property                        
|                               | 3.10 | (b) |  |  |  | Computer Software and Databases              
|                               | 3.10 | (c) |  |  |  | Year 2000 Compliance                         
|                               | 3.11 |     |  |  |  | Litigation                                   
|                               | 3.12 | (a) |  |  |  | Benefit Plans                                
|                               | 3.12 | (d) |  |  |  | Benefit Plans                                
|                               | 3.12 | (h) |  |  |  | Benefit Plans                                
|                               | 3.13 |     |  |  |  | Collective Bargaining                        
|                               | 3.15 |     |  |  |  | Investments                                  
|                               | 3.16 |     |  |  |  | Tax Matters                                  
|                               | 3.18 |     |  |  |  | Contracts and Commitments                    

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| |      |     |  |   |  |                                       
| | ---- | --- |  | - |  | --------------------------------------
| | 3.19 |     |  |  |  | No Conflict                           
| | 3.20 |     |  |  |  | Agreements in Full Force and Effect   
| | 3.21 |     |  |  |  | Required Consents and Approvals       
| | 3.22 |     |  |  |  | Certain Changes and Events            
| | 4.1  |     |  |  |  | Organization                          
| | 4.3  |     |  |  |  | No Conflict                           
| | 4.5  |     |  |  |  | Capital Structure                     
| | 4.6  |     |  |  |  | Reports and Financial Statements      
| | 4.10 |     |  |  |  | Required World Access Stockholder Vote
| | 4.13 |     |  |  |  | Litigation; Compliance with Laws      
| | 4.14 |     |  |  |  | Absence of Certain Changes or Events  
| | 4.15 |     |  |  |  | Tax Matters                           
| | 5.1  | (b) |  |  |  | Dividends; Changes in Share Capital   
| | 5.1  | (c) |  |  |  | Issuance of Securities                
| | 5.1  | (e) |  |  |  | Acquisitions                          
| | 5.1  | (f) |  |  |  | Sales                                 
| | 5.1  | (g) |  |  |  | Investments; Indebtedness             
| | 5.1  | (h) |  |  |  | Compensation                          
| | 5.1  | (j) |  |  |  | Material Agreements                   

|    |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.3 |  |  |  | Purchase and Transfer Agreement, dated June 14, 2000, among
	the Company, TelDaFax AG, Dr. Henning F. Klose, Apax
	Germany II L.P., Apax Funds Nominees Ltd. für
	B Account, Apax Funds Nominees Ltd. für
	D Account, AP Vermögensverwaltung Gesellschaft
	bürgerlichen Rechts and A&M GmbH & Co
	Vermögensverwaltung KG (incorporated by reference to
	Exhibit 2.3 to the Companys Form 10-Q for the
	quarter ended June 30, 2000, filed with the Commission on
	August 14, 2000, as amended on September 11, 2000 and
	October 6, 2000). The following is a list of omitted
	schedules and other attachments which the Company agrees to
	furnish supplementally to the Commission upon request:

|                       |       |   |   |                                                  |                                                      
|---------------------- | ----- | - | - | ------------------------------------------------ | -----------------------------------------------------
|                      
|                      
|                      
|                      
|EXHIBITS TO AGREEMENT:
|                       | 4.1.2 |   |  |                                                  | Contribution/Exchange Agreement                      
|                       | 5.3   |   |  |                                                  | Form of Agreement on Transfer of Title to Sold Shares
|                       | 5.5   |   |  |                                                  | Registration Rights Term Sheet                       
|                       | 8.2   |   |  |                                                  | Resolutions of Supervisory Board of TelDaFax         
|                       | 9.3.2 |   |  |                                                  | Letter from Custodian Bank                           
|10.2.1                 |       |  |   | Information Regarding TelDaFax                  
|11.2.3.2               |       |  |   | Trade Marks and Patents                         
|11.3.1.7               |       |  |   | Shares on Subsidiaries Not Paid In              
|11.3.1.8               |       |  |   | Satzung der TelDaFax Aktiengesellschaft         
|11.3.1.9               |       |  |   | Shareholders Agreements                        
|11.3.1.10              |       |  |   | Letter of Intent Regarding Dacotec GmbH         
|11.3.1.12              |       |  |   | Noch night eingetragene Gesellschafterbeschlüsse
|11.3.3.2               |       |  |   | Technologies                                    
|11.3.4.1               |       |  |   | Rückstellungsproblematik (TMI)                  
|11.3.5.4               |       |  |   | CSN-Contract DTAG                               
|11.3.6.1               |       |  |   | Anhängige Rechtsstrei tigk eiten der TelDaFax   

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|         |  |   |  |                                        
|-------- |  | - |  | ---------------------------------------
|11.3.7.1 |  |  |  | Anstellungsvertrag                     
|11.3.7.4 |  |  |  | Employees                              
|11.3.7.5 |  |  |  | Key Employees                          
|11.3.10  |  |  |  | Sondereinflüsse auf Personalkosten 2000
|11.4.6   |  |  |  | Necessary Consents                     
|11.4.7   |  |  |  | U.S. Governmental Approvals            

| |     |  |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- |  |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.4 |  |  |  |  | First Amendment to Agreement and Plan of Merger dated May 
	23, 2000 by and among World Access, Inc., WorldxChange
	Communications, Inc. and Communication TeleSystems International
	d/b/a WorldxChange Communications (incorporated by reference to
	Annex B to the Companys joint proxy statement/
	prospectus contained in its Form S-4 Registration Statement
	filed with the Commission on November 15, 2000
	(Registration No. 333-37750)).               
| | 2.5 |  |  |  |  | Second Amendment to Agreement and Plan of Merger dated
	August 1, 2000 by and among World Access, Inc.,
	WorldxChange Communications, Inc. and Communication TeleSystems
	International d/b/a WorldxChange Communications (incorporated by
	reference to Annex B to the Companys joint proxy
	statement/ prospectus contained in its Form S-4
	Registration Statement filed with the Commission on
	November 15, 2000 (Registration No. 333-37750)).             
| | 2.6 |  |  |  |  | First Amendment to Agreement and Plan of Merger dated June 
	7, 2000 by and among World Access, Inc., STI Merger Co. and STAR
	Telecommunications, Inc. (incorporated by reference to
	Annex A to the Companys joint proxy statement/
	prospectus contained in its Form S-4 Registration Statement
	filed with the Commission on November 14, 2000
	(Registration No.  333-37750)).                                                                              
| | 2.7 |  |  |  |  | Second Amendment to Agreement and Plan of Merger dated
	October 6, 2000 by and among World Access, Inc., STI Merger
	Co. and STAR Telecommunications, Inc. (incorporated by reference
	to Annex A to the Companys joint proxy statement/
	prospectus contained in its Form S-4 Registration Statement
	filed with the Commission on November 14, 2000
	(Registration No. 333-37750)).                                                                            
| | 2.8 |  |  |  |  | Third Amendment to Agreement and Plan of Merger dated
	October 23, 2000 by and among World Access, Inc.,
	WorldxChange Communications, Inc. and Communication TeleSystems
	International d/b/a WorldxChange Communications (incorporated by
	reference to Annex B to the Companys joint proxy
	statement/ prospectus contained in its Form S-4
	Registration Statement filed with the Commission on
	November 14, 2000 (Registration No. 333-37750)).            
| | 3.1 |  |  |  |  | Certificate of Incorporation of the Company and Amendments to
	Certificate of Incorporation (incorporated by reference herein
	to Exhibit 3.1 to the Companys Form S-4, filed
	with the Commission on October 6, 1998 (Registration
	No.  333-65386); Amendment to Certificate of Incorporation
	incorporated by reference herein to Exhibit 3.2 to
	Form  8-K of the Companys predecessor, World Access,
	Inc., filed with the Commission on October 28, 1998).
| | 3.2 |  |  |  |  | Amendment to Certificate of Incorporation (incorporated by
	reference to Exhibit 3.2 to the Companys Annual
	Report on Form 10-K for the year ended December 31,
	1998, filed with the Commission on April 9, 1999).                                                                                                                                                                                                                                             
| | 3.3 |  |  |  |  | Certificate of Designation of 4.25% Cumulative Senior Perpetual
	Convertible Preferred Stock, Series A (incorporated by
	reference herein to Exhibit 4 to the Companys
	Form 8-K, filed with the Commission on May 3, 1999).                                                                                                                                                                                                                                     
| | 3.4 |  |  |  |  | Certificate of Designation of Convertible Preferred Stock,
	Series C (incorporated by reference to Exhibit 1.7(b)
	to Appendix A to the Companys Proxy Statement dated
	November  5, 1999 relating to the Special Meeting of
	Stockholder held on December 7, 1999).                                                                                                                                                                                             
| | 3.5 |  |  |  |  | Certificate of Designation of Convertible Preferred Stock,
	Series D (incorporated by reference to Exhibit 4 to
	the Companys Form 8-K, filed with the Commission on
	February  28, 2000).                                                                                                                                                                                                                                                                       
| | 3.6 |  |  |  |  | Certificate of Designation of Convertible Preferred Stock,
	Series E (incorporated by reference to Exhibit 3.7 to
	the Companys Quarterly Report on Form 10-Q for the
	quarter ended June 30, 2000, filed with the Commission on
	August  14, 2000, as amended on September 11, 2000 and
	October 6, 2000).                                                                                                                                                      
| | 3.7 |  |  |  |  | Bylaws of the Company (incorporated by reference herein to
	Exhibit 3.2 to the Companys Form S-4, filed with
	the Commission on October 6, 1998 (Registration No. 
	333-65389).                                                                                                                                                                                                                                                                                  

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| |      |  |  |   |  |                                                                                                                                                                                                                                                                                                                                                                      
| | ---- |  |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.1  |  |  |  |  | Certificate of Designation of 4.25% Cumulative Senior Perpetual
	Convertible Preferred Stock, Series A (incorporated by
	reference herein to Exhibit B to the Companys
	Form 8-K, filed with the Commission on May 3, 1999).                                                                                                                                        
| | 4.2  |  |  |  |  | Certificate of Designation of Convertible Preferred Stock,
	Series C (incorporated by reference to Exhibit 1.7(b)
	to Appendix A to the Companys Proxy Statement dated
	November  5, 1999 relating to the Special Meeting of
	Stockholders held on December 7, 1999).                                                                                               
| | 4.3  |  |  |  |  | Certificate of Designation of Convertible Preferred Stock,
	Series D (incorporated by reference to Exhibit 4 to
	the Companys Form 8-K, filed with the Commission on
	February  28, 2000).                                                                                                                                                                          
| | 4.4  |  |  |  |  | Certificate of Designation of Convertible Preferred Stock,
	Series E (incorporated by reference to Exhibit 3.6
	hereto).                                                                                                                                                                                                                                             
| | 10.1 |  |  |  |  | Executive Management Services Agreement dated as of August 
	1, 2000 by and between World Access, Inc. and Communication
	TeleSystems International d/b/a/ WorldxChange Communications
	(incorporated by reference to Exhibit 10.36 to the
	Companys Form S-4 Registration Statement filed with the
	Commission on November 14, 2000 (Registration
	No. 333-37750)).
| | 27.1 |  |  |  |  | Financial Data Schedule (for SEC use only).                                                                                                                                                                                                                                                                                                                          




(b)  Reports on Form 8-K

On August 4, 2000, the Company filed a Current Report on
Form 8-K/A to amend its Current Report on Form 8-K
filed on December 22, 1999 (event date: December 7,
1999), as first amended on February 22, 2000, related to
the Companys merger with FaciliCom International, Inc.

On August 4, 2000, the Company filed a Current Report on
Form 8-K/A to amend its Current Report on Form 8-K
filed on February 28, 2000 (event date: February 11,
2000), as first amended on April 26, 2000 related to the
Companys acquisition of substantially all of the assets
and assumption of substantially all of the liabilities of Long
Distance International Inc. by World Access Telecommunications
Group, Inc., an indirect, wholly-owned subsidiary of the Company.

On September 11, 2000, the Company filed a Current Report
on Form 8-K/A to amend its Current Report on Form 8-K
filed on December 22, 1999 (event date: December 7,
1999), as amended on February 22, 2000 and August 4,
2000, related to the Companys merger with FaciliCom
International, Inc.




SIGNATURES

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

|                         |  |                                                                                           
|------------------------ |  | ------------------------------------------------------------------------------------------
|                         |  | WORLD ACCESS, INC.                                                                        
|                        
|Dated: November 20, 2000 |  | By: /s/ BRYAN D. YOKLEYBryan D. YokleyExecutive Vice President and Chief Financial Officer

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