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, 1997.
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 0-19998

                               WORLD ACCESS, INC.
             (Exact name of Registrant as specified in its Charter)

              DELAWARE                               65-0044209
      (State of Incorporation)           (I.R.S. Employer Identification No.)

        945 E. Paces Ferry Road, 
      Suite 2240, Atlanta Georgia                      30326
(Address of principal executive offices)             (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 13, 1997 was 19,257,862.


<PAGE>


PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements


<TABLE>

World Access, Inc. and Subsidiaries

Consolidated Balance Sheets

<CAPTION>
                                          Pro Forma
                                         September 30      September 30       December 31
                                             1997              1997              1996
                                        -------------     -------------     --------------     
                                         (Unaudited)       (Unaudited)
<S>                                     <C>               <C>               <C>        
ASSETS
Current Assets
     Cash and equivalents               $ 127,356,525     $  15,806,525     $   22,480,082 
     Accounts receivable                   22,446,050        22,446,050          9,651,884 
     Inventories                           18,899,308        18,899,308         10,657,412 
     Other current assets                   7,050,102         7,050,102          3,533,615 
                                        -------------     -------------     -------------- 
         Total Current Assets             175,751,985        64,201,985         46,322,993 
Property and equipment                      4,287,107         4,287,107          2,657,661 
Intangible assets                          29,370,323        29,370,323          9,526,140
Technology licenses                           903,787           903,787            907,489 
Debt issuance costs                         4,090,667           640,667            109,569 
Other assets                                2,035,152         2,035,152          1,212,114 
                                        -------------     -------------     -------------- 
         Total  Assets                  $ 216,439,021     $ 101,439,021     $   60,735,966 
                                        =============     =============     ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
    Short-term debt                     $      65,308     $      65,308     $      ---
    Accounts payable                        6,902,041         6,902,041          3,756,722 
    Accrued payroll and benefits            3,073,261         3,073,261          1,605,840 
    CIS purchase price payable              3,500,000         3,500,000            ---
    Other accrued liabilities               1,550,021         1,550,021          2,999,187 
                                        -------------     -------------     -------------- 
         Total Current Liabilities         15,090,631        15,090,631          8,361,749 
Long-term debt                            115,301,263           301,263            ---
                                        -------------     -------------     -------------- 
         Total Liabilities                130,391,894        15,391,894          8,361,749 
                                        -------------     -------------     -------------- 

Stockholders' Equity
    Common stock                              191,857           191,857            163,285 
    Capital in excess of par value         81,178,442        81,178,442         58,517,279 
    Note receivable from affiliate            ---               ---               (571,634)
    Retained earnings (deficit)             4,676,828         4,676,828         (5,734,713)
                                        -------------     -------------     -------------- 
         Total Stockholders' Equity        86,047,127        86,047,127         52,374,217 
                                        -------------     -------------     -------------- 
         Total Liabilities and 
         Stockholders' Equity           $ 216,439,021     $ 101,439,021     $   60,735,966 
                                        =============     =============     ==============




The accompanying notes are an integral part of these consolidated financial statements.

                                        1
</TABLE>
<PAGE>

<TABLE>
World Access, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

<CAPTION>

                                       Three Months Ended September 30   Nine Months Ended September 30
                                       -------------------------------   ------------------------------
                                            1997             1996             1997             1996
                                       -------------    -------------    -------------    -------------
<S>                                    <C>              <C>              <C>              <C>
Sales of products                      $  21,184,617    $   8,125,467    $  56,098,923    $  24,161,765 
Service revenues                           6,268,516        4,293,899       15,621,712       12,213,764 
                                       -------------    -------------    -------------    -------------
        Total Sales                       27,453,133       12,419,366       71,720,635       36,375,529 

Cost of products sold                     12,315,911        4,810,170       33,810,721       15,621,931 
Cost of services                           4,742,527        3,591,677       12,831,790       10,547,681 
                                       -------------    -------------    -------------    -------------
        Total Cost of Sales               17,058,438        8,401,847       46,642,511       26,169,612 
                                       -------------    -------------    -------------    -------------

        Gross Profit                      10,394,695        4,017,519       25,078,124       10,205,917 

Engineering and development                  605,220          242,983        1,350,225          618,001 
Selling, general 
  and administrative                       2,507,714        1,678,647        6,860,228        4,368,365 
Amortization of goodwill                     545,632          141,962        1,210,167          364,306 
                                       -------------    -------------    -------------    -------------
        Operating Income                   6,736,129        1,953,927       15,657,504        4,855,245 

Interest and other income                    246,049           24,700          834,595          182,785 
Interest and other expense                   (45,315)        (101,360)         (94,558)        (308,592)
                                       -------------    -------------    -------------    -------------
        Income Before Income Taxes         6,936,863        1,877,267       16,397,541        4,729,438 

Income taxes                               2,566,000          233,930        5,986,000          458,030 
                                       -------------    -------------    -------------    -------------
        Net Income                     $   4,370,863    $   1,643,337    $  10,411,541    $   4,271,408 
                                       =============    =============    =============    =============

Net Income Per Common Share:
        Primary                        $         .22    $         .12    $         .56     $        .31
                                       =============    =============    =============    =============
        Assuming Full Dilution         $         .22    $         .12    $         .55     $        .31
                                       =============    =============    =============    =============


Weighted Average Shares Outstanding:
        Primary                           19,599,538       13,835,374       18,561,230       13,694,591 
                                       =============    =============    =============    =============
        Assuming Full Dilution            20,224,016       13,835,374       19,075,743       13,694,591 
                                       =============    =============    =============    =============






The accompanying notes are an integral part of these consolidated financial statements.

                                                      2
</TABLE>
<PAGE>

<TABLE>
World Access, Inc. and Subsidiaries

Consolidated Statement of Changes in Stockholders' Equity

(Unaudited)

<CAPTION>

                                                           Capital in          Note
                                            Common         Excess of        Receivable         Retained
                                            Stock          Par Value      from Affiliate       Earnings            Total
                                         ------------    -------------    --------------    --------------    -------------
<S>                                      <C>             <C>              <C>               <C>               <C>        
Balance at January 1, 1997               $    163,285    $  58,517,279    $    (571,634)    $  (5,734,713)    $  52,374,217

Net income                                                                                     10,411,541        10,411,541 

Issuance of 1,285,884 shares for 
  CIS acquisition                              12,859        2,580,215                                            2,593,074

Release of 304,615 shares from 
  escrow for CIS acquisition                                 3,021,345                                            3,021,345

Issuance of 393,304 shares for 
  Galaxy acquisition                            3,933        4,494,159                                            4,498,092 

Release of 159,327 shares from 
  escrow for AIT acquisition                                   892,231                                              892,231

Issuance of 121,182 shares for
  AIT acquisition                               1,212        2,168,788                                            2,170,000 

Repayment of loan by affiliate                                                  571,634                             571,634

Issuance of 1,051,113 shares for 
  stock options and warrants                   10,511        3,967,469                                            3,977,980

Tax benefit from exercises of stock
  options and warrants                                       5,468,000                                            5,468,000

Issuance of 5,681 shares for matching
  contribution to 401K plan                        57           68,956                                               69,013
                                         ------------    -------------    --------------    --------------    -------------
Balance at September 30, 1997            $    191,857    $  81,178,442    $      ---        $   4,676,828     $  86,047,127
                                         ============    =============    ==============    ==============    =============




The accompanying notes are an integral part of these consolidated financial statements.

                                                               3
</TABLE>
<PAGE>

<TABLE>
World Access, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

<CAPTION>
                                                             Nine Months Ended September 30
                                                                 1997              1996
                                                            -------------      ------------
<S>                                                         <C>                <C>        
Cash Flows From Operating Activities:
Net income                                                  $  10,411,541      $  4,271,408 
Adjustments to reconcile net income to net cash from
  (used by) operating activities:
     Depreciation and amortization                              1,977,681           996,495 
     Income tax benefit from stock options exercised            5,468,000            ---
     Provision for inventory reserves                             353,002           148,150 
     Provision for bad debts                                      142,755           117,356 
     Common stock contributed to 401k plan                         69,013            25,261 
     Changes in operating assets and liabilities, 
        net of effects from businesses acquired:
          Accounts receivable                                 (10,950,072)        1,158,614 
          Inventories                                          (8,427,898)       (6,394,590)
          Accounts payable                                      1,875,824           491,569 
          Other assets and liabilities                         (5,040,398)          674,865 
                                                            -------------      ------------
      Net Cash From (Used By) Operating Activities             (4,120,552)        1,489,128 
                                                            -------------      ------------

Cash Flows From Investing Activities:
Acquisitions of businesses                                     (5,294,398)         (583,621)
Repayments of loan by affiliate                                 1,165,000           833,022 
Expenditures for property and equipment                        (1,856,681)         (848,832)
Technology licenses                                               (21,898)         (531,733)
                                                            -------------      ------------
      Net Cash Used By Investing Activities                    (6,007,977)       (1,131,164)
                                                            -------------      ------------

Cash Flows From Financing Activities:
Repayments of short-term borrowings                              (567,867)       (4,935,220)
Proceeds from exercise of stock warrants and options            3,977,981         4,113,398 
Issuance of long-term debt for capital leases                     359,015            ---
Long-term debt repayments                                          ---             (325,000)
Debt issuance costs                                              (314,157)           ---
Equity offering costs                                              ---             (313,025)
                                                            -------------      ------------
      Net Cash From (Used By) Financing Activities              3,454,972        (1,459,847)
                                                            -------------      ------------

      Decrease in Cash and Equivalents                         (6,673,557)       (1,101,883)
     Cash and Equivalents at Beginning of Period               22,480,082         1,886,819 
                                                            -------------      ------------

     Cash and Equivalents at End of Period                  $  15,806,525      $    784,936 
                                                            =============      ============
Supplemental Schedule of Noncash Financing and
     Investing Activities:
Issuance of common stock for businesses acquired            $  13,174,742      $  4,332,130
Reduction in note receivable from affiliate to recognize
      contingent purchase price earned                                              582,500 
Conversion of accounts receivable to investment in
      technology license                                                            241,919 



The accompanying notes are an integral part of these consolidated financial statements.

                                                  4
</TABLE>

<PAGE>


                      World Access, Inc. and Subsidiaries

                   Notes To Consolidated Financial Statements

                               September 30, 1997

NOTE 1.  BASIS OF PRESENTATION

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance  with the  instructions  to Form 10-Q.  Accordingly,  the
financial  information  does  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.  For further  information,
refer to the audited consolidated financial statements and footnotes included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1996.

     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 sales and expenses  during the reporting
period. Actual results could differ from those estimates.

     The results of operations for the three and nine months ended September 30,
1997 are not necessarily indicative of the results of the full year.

     Certain  reclassifications  have been made to the prior period's  financial
information to conform with the presentations used in 1997.

NOTE 2.  PRO FORMA ADJUSTMENTS

     On October 1, 1997,  the Company  received  $97.0  million from the sale of
$100.0 million  convertible  subordinated  notes,  after the  application of the
initial  purchasers'  discount  fees.  In addition to these  notes,  the Company
granted the initial  purchasers an option to purchase up to an additional  $15.0
million in notes to cover  over-allotments.  On October  28,  1997,  the initial
purchasers exercised the over-allotment  option in full and the Company received
an additional  $14,550,000,  after the  application  of the initial  purchasers'
discount fees (see "Note 5"). The total discount fees of $3,450,000,  along with
$550,000 of legal, accounting,  printing and other expenses related to the notes
offering,  are included in Debt issue costs on the  September 30, 1997 pro forma
balance sheet.

         Since the initial  notes  issued  began  trading in the public  markets
prior to September 30, 1997 and proceeds  were  received by the Company  shortly
after  September 30, 1997 and prior to the filing of this Report,  the pro forma
balance sheet as of September 30, 1997 has been  presented to assist the readers
in  understanding  the impact of such  transaction  on the  Company's  financial
position as if the transaction had occurred as of September 30, 1997.


<PAGE>


NOTE 3.  ACQUISITIONS

Galaxy Acquisition

         On July 29,  1997,  the  Company  entered  into a letter  of  intent to
acquire  Galaxy  Personal   Communications   Services,  Inc.  ("Galaxy")  for  a
combination of cash and Company common stock. Galaxy, based in Norcross, Georgia
provides system design, implementation, optimization and other value-added radio
engineering  and  consulting  services  to  PCS,  cellular  and  other  wireless
telecommunications  service  providers.  On August 26,1997,  the transaction was
completed  in its final form  whereby  Galaxy was  merged  with and into  Galaxy
Acquisition  Corp.,  a  wholly-owned  subsidiary  of the  Company  (the  "Galaxy
Merger").  Galaxy  Acquisition  Corp.  subsequently  changed  its name to Galaxy
Personal Communications Services, Inc. In connection with the Galaxy Merger, the
former  stockholders of Galaxy received  approximately  $1.2 million in cash and
262,203  restricted  shares of the Company's  common stock.  These shares had an
initial fair value of approximately $4.5 million.

         In  addition to the  262,203  shares  noted  above,  the former  Galaxy
stockholders  were issued  131,101  restricted  shares of the  Company's  common
stock.  These shares were  immediately  placed into escrow,  and along with $3.5
million in  additional  consideration,  will be released  and paid to the former
stockholders of Galaxy  contingent upon the realization of predefined  levels of
pre-tax income from Galaxy's  operations during four measurement periods between
July 1, 1997 and December 31, 2000.

         The shares  placed in escrow  were  valued by the  Company at par value
only, or $1,311. Once conditions for release from escrow have been met, the fair
market value of the shares as measured at that time,  along with any  additional
consideration  earned, will be recorded as additional goodwill and stockholders'
equity, respectively.

         The  acquisition  of Galaxy has been  accounted  for using the purchase
method of accounting.  Accordingly, the results of Galaxy's operations have been
included in the  accompanying  consolidated  financial  statements  from July 1,
1997, the effective  date of acquisition as defined in the definitive  agreement
and plan of merger.  The purchase price was allocated to the assets acquired and
liabilities  assumed  based on their  estimated  fair  values  as of the date of
acquisition.  The  excess of  purchase  price  over the fair value of net assets
acquired,  currently estimated at approximately $4.8 million,  has been recorded
as goodwill and is being amortized over a 15 year period.

CIS Acquisition

     On March 11,  1997,  the  Company  entered  into an  agreement  to  acquire
Cellular  Infrastructure  Supply,  Inc.  ("CIS"),  a Burr Ridge,  Illinois based
provider of new and/or upgraded  equipment and related design,  installation and
technical  support  services  to  cellular,   PCS  and  other  wireless  service
providers.  On March 27, 1997, the  transaction  was completed in its final form
whereby  CIS was merged  with and into CIS  Acquisition  Corp.,  a  wholly-owned
subsidiary of the Company (the "CIS Merger"). CIS Acquisition Corp. subsequently
changed its name to Cellular  Infrastructure Supply, Inc. In connection with the
CIS Merger,  the three  stockholders  of CIS  received  $3.5 million in cash and
440,874  restricted  shares of the Company's  common stock.  These shares had an
initial fair value of approximately $2.6 million.

<PAGE>

     In addition to the 440,874 shares noted above, the stockholders of CIS were
issued 845,010  restricted  shares of the Company's  common stock.  These shares
were immediately  placed into escrow,  and along with $6.5 million in additional
consideration, will be released and paid to the stockholders of  CIS  contingent
upon  the  realization  of  predefined  levels  of  pre-tax  income  from  CIS's
operations  during three one-year  periods  beginning January 1, 1997.

     The shares  placed in escrow  were valued by the Company at par value only,
or $8,450.  Once  conditions  for release  from  escrow have been met,  the fair
market value of the shares as measured at that time,  along with any  additional
consideration  earned, will be recorded as additional goodwill and stockholders'
equity, respectively.

     The first measurement  period for purposes of releasing escrowed shares and
paying contingent cash consideration is January 1, 1997 to December 31, 1997. In
reviewing  CIS's pre-tax  income  performance  as of April 30, 1997, the Company
determined  that it was highly  probable  that the  conditions  for  release and
payment for this first period would be met. Accordingly, 304,615 escrowed shares
were  accounted for as if released and $3.5 million in contingent  cash payments
were  accounted  for as if paid as of April  30,  1997.  The net  effect of this
accounting was to increase  goodwill and  stockholders'  equity by approximately
$6.5 million at April 30,  1997.  These shares will be released and payment will
be made to the former stockholders of CIS on February 15, 1998.

     The  acquisition of CIS has been accounted for using the purchase method of
accounting.  Accordingly,  the results of CIS's operations have been included in
the  accompanying  consolidated  financial  statements from January 1, 1997, the
effective date of acquisition as defined in the definitive agreement and plan of
merger.  The purchase price was allocated to the assets acquired and liabilities
assumed based on their estimated fair values as of the date of acquisition.  The
excess of purchase price over the fair value of net assets  acquired,  currently
estimated at approximately  $12.5 million,  has been recorded as goodwill and is
being amortized over a 15 year period.

AIT Contingent Purchase Price Earned

     In May 1995, the Company acquired AIT, Inc. ("AIT"),  a provider of new and
used Northern  Telecom  switching  systems,  add-on  frames and related  circuit
boards to the  telecommunications  industry.  As part of the total consideration
paid by the Company,  the sole stockholder of AIT was issued 637,308  restricted
shares of the Company's common stock.  These shares were immediately placed into
escrow,  and along  with  $2,330,000  in  potential  cash  payments,  were to be
released to the sole  stockholder  over a two year  period  ending June 30, 1997
contingent upon the realization of predefined  levels of gross profit from AIT's
operations  during this same period.  To the extent cash  consideration is paid,
the sole stockholder will immediately be required to repay the equivalent amount
of borrowings  outstanding under a promissory note entered into with the Company
in connection with the acquisition. In addition, the sole stockholder of AIT was
eligible to receive an additional $3.1 million in purchase price if AIT achieved
predefined  levels of pre-tax  income during the periods of May 17, 1995 to June
30, 1996 and July 1, 1996 to June 30, 1997.

<PAGE>

     As of September 30, 1997,  the Company had released all 637,308 shares from
escrow and paid additional cash consideration of $2,330,000 based on AIT's gross
profit  performance.  Based on AIT's pre-tax income  performance,  an additional
$3.1 million in purchase  price was paid to the sole  stockholder in August 1997
in the form of 121,182  restricted shares of the Company's common stock. The net
effect of the above has been to increase  goodwill and  stockholders'  equity by
approximately $8.0 million as of September 30, 1997.

     As part of a final  purchase  price  settlement  agreement  entered into in
August  1997,  the sole  stockholder  of AIT has pledged  280,509  shares of the
Company common stock to the Company to effectively  guarantee the collectibility
of certain AIT accounts receivables,  the utilization of certain AIT inventories
and compliance with the sole stockholder's existing non-compete agreement.

Pro Forma Results of Operations

     On a pro forma,  unaudited basis, as if the acquisition of CIS had occurred
as of January 1, 1996, total sales,  operating income, net income and net income
per common  share for the nine months ended  September  30, 1996 would have been
approximately $44,058,000, $6,737,000, $5,181,000 and $.36, 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 CIS acquisition been in effect on the
date indicated.


NOTE 4. INVENTORIES

Inventories consist of the following:

                                                 September 30      December 31
                                                     1997              1996
                                                -------------     -------------

Telecom systems, frames and circuit boards      $  11,796,000     $   6,903,000
Electronic components                               4,307,000         2,539,000
Pay telephone parts                                   898,000           494,000
Work in progress                                    1,000,000           438,000
Other finished goods                                  898,000           283,000
                                                -------------     -------------
                                                $  18,899,000     $  10,657,000
                                                =============     =============
                                                                   


NOTE 5.  DEBT

     On October 1, 1997, the Company sold $100.0 million in aggregate  principal
amount of  convertible  subordinated  notes (the "Notes") under Rule 144A of the
Securities  Act of 1933.  The Notes bear interest at the rate of 4.5% per annum,
are  convertible  into Company  common  stock at an initial  price of $37.03 per
share and mature on October 1, 2002. The Notes are not redeemable by the Company
prior to  October  1,  2000.  Interest  on the Notes is  payable  on April 1 and
October 1 of each  year,  commencing  on April 1,  1998.  The Notes are  general
unsecured  obligations of the Company and are subordinate in right of payment to
all existing and future senior indebtedness.  The Company received $97.0 million
from the sale of the Notes,  after the  application  of the initial  purchasers'
discount fees.  Additional  expenses  incurred by the Company in connection with
this offering were estimated at $550,000 and are included in Debt issuance costs
on the September 30, 1997 balance sheet.

<PAGE>

     In addition to the Notes sold on October 1, 1997,  the Company  granted the
initial  purchasers an option to purchase up to an  additional  $15.0 million in
Notes to cover  over-allotments.  On October 28,  1997,  the initial  purchasers
exercised the over-allotment option in full.

     The  Company  has a $10  million  revolving  line  of  credit  with a large
European  bank.  As of  September  30,  1997,  the  Company  had  no  borrowings
outstanding  under the line.  The bank  agreement,  which expires in March 2001,
contains standard lending covenants including financial ratios,  restrictions on
dividends and  limitations  on additional  debt and the  disposition  of Company
assets. Interest is paid at the rate of prime plus 1 1/4% or LIBOR plus
2 1/2 %, at the option of the Company.


NOTE 6.  EARNINGS PER SHARE

     The  computation  of earnings  per share is based on the  weighted  average
number of outstanding common shares during the period plus, when their effect is
dilutive, common stock equivalents consisting of shares subject to stock options
and warrants.  A total of  approximately  1,073,000 common shares held in escrow
from certain  acquisitions  and a license  agreement have been excluded from the
earnings per share  calculations  for the three and nine months ended  September
30, 1997 because the  conditions for release of shares from escrow have not been
satisfied.

     Effective  December 27, 1997, the Company will adopt Statement of Financial
Accounting  Standards No. 128,  "Earnings per Share." At that time,  the Company
will be required to change the method  currently used to calculate  earnings per
share and to restate all prior  periods.  The new  requirements  will  include a
calculation of basic earnings per share, from which the dilutive effect of stock
options and warrants will be excluded. The basic earnings per share are expected
to  reflect  increases  of $.03 and $.01 per share for the three  month  periods
ended September 30, 1997 and 1996, respectively, and $.06 and $.04 per share for
the nine month periods ended September 30, 1997 and 1996, respectively.

     Common stock issued and  outstanding at September 30, 1997 and December 31,
1996 was 19,185,677 and 16,328,513 shares, respectively.


<PAGE>


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

Overview

         The Company develops,  manufactures,  and markets wireline and wireless
switching,  transport  and access  products  primarily  for the  United  States,
Caribbean  Basin and Latin  American  telecommunications  markets.  The products
offered by the  Company  include  those  manufactured  by the Company as well as
those  manufactured  by other  telecommunications  equipment  manufacturers.  To
support  and  complement  its  product  sales,  the Company  also  provides  its
customers  with a broad range of design,  engineering,  manufacturing,  testing,
installation, repair and other value-added services.

     During  1995 and  1996,  the  Company  completed  strategic  and  financial
restructuring programs to strengthen its management team, reposition the Company
as a provider of  telecommunications  products,  improve its financial position,
reduce its  operating  costs and position the Company for future  growth.  These
programs  were  undertaken  following  the  significant  losses  incurred by the
Company in the early  1990s,  primarily  due to a  discontinued  smart pay phone
business,  and to take advantage of the significant growth  opportunities within
the Company's existing customer base and related markets.  In November 1994, the
Company started to rebuild its management  team and change its strategic  focus.
The Company strengthened its management team by appointing a new Chief Executive
Officer  and by  recruiting  and  hiring a new  President  and  Chief  Operating
Officer,  Executive  Vice  President  of Business  Development  and  experienced
product development and manufacturing professionals. These individuals, together
with  other  key  managers  recruited  into  the  Company,  brought  significant
experience in manufacturing  and marketing  telecommunications  equipment to the
Company.

     The Company  acquired three  businesses in an effort to broaden its line of
switching,  transport  and access  products,  enhance  its  product  development
capabilities and strengthen its technical base.  Effective May 1995, the Company
acquired AIT, a full service  provider of Northern  Telecom  switching  systems,
add-on frames and related  circuit boards;  effective  October 1995, the Company
acquired Westec  Communications Inc., ("Westec") a provider of wireless products
and services primarily to the cable television  industry;  and effective January
1996, the Company acquired Sunrise Sierra,  Inc.,  ("Sunrise") a manufacturer of
intelligent transport and access products.

     In January  1997,  the Company  acquired  CIS, a provider of equipment  and
related design, installation and technical support services to cellular, PCS and
other wireless service providers. In August 1997, the Company acquired Galaxy, a
firm  of   approximately   30  RF   engineers   that  provide   system   design,
implementation,   optimization  and  other  value-added  radio  engineering  and
consulting services to the same wireless service markets.  The markets served by
CIS and Galaxy complement the Company's  traditional  telephone service provider
and private network operator markets. These two acquisitions, which are expected
to provide the Company with new cross-selling  opportunities,  also strengthened
the Company's ability to provide complete  telecommunications  network solutions
to its customers.

<PAGE>

     The Company  realized  significant  improvements in its sales and operating
results  since  1994  as a  result  of  the  acquisitions  and  internal  growth
initiatives.  The Company's  total sales increased by 97.2% in 1995 and 69.2% in
1996.  Total sales for the first nine months of 1997 increased by 85.8% over the
last nine months of 1996. As the Company  increased its product sales from 18.2%
of total  sales in 1994 to 78.2% in the first  nine  months  of 1997,  its gross
profit margin  increased from 12.9% in 1994 to 21.1% in 1995,  29.4% in 1996 and
35.0% in the first nine months of 1997.  As a  percentage  of total  sales,  the
Company's operating income (loss) increased from (8.5%) in 1994 to 5.0% in 1995,
14.4% in 1996 and  21.8% in the  first  nine  months  of 1997.  Management  will
continue to seek further  improvements  in gross profit  margin over time as the
Company's  product  offerings  include more internally  developed,  acquired and
licensed products containing proprietary technology.

     Since  January 1, 1995,  the Company  has  significantly  strengthened  its
balance sheet through  improved  operating  results,  a $26.2 million  secondary
public equity  offering,  a private equity offering and stock warrant  exercises
that  generated  approximately  $10 million in new capital,  and a five-year $10
million  credit  facility.  In September and October 1997, the Company sold $115
million in aggregate amount of convertible  subordinated  notes which netted the
Company approximately $111.6 in cash proceeds.

     The  Company  has used this  capital  for  acquisitions  and to support the
working capital requirements associated with the Company's growth. The Company's
working  capital and  stockholders'  equity have increased from $2.3 million and
$1.2  million,  respectively,  at December 31, 1994 to $160.7  million and $86.0
million, respectively,  on a pro forma  basis as if the sale of the  convertible
subordinated notes was completed at September 30, 1997.


<PAGE>

Results of Operations

         The  following  table sets forth  items in the  Company's  Consolidated
Statements of Operations as a percentage of total revenues:

                                    Three Months Ended    Nine Months Ended
                                       September 30          September 30
                                    ------------------    ------------------

                                      1997       1996       1997      1996
                                    -------    -------    -------   --------

Sales of products                     77.2%      65.4%      78.2%      66.4%
Service revenues                      22.8       34.6       21.8       33.6
                                    -------    -------    -------   --------
     Total sales                     100.0      100.0      100.0      100.0

Cost of products sold                 44.9       38.7       47.1       42.9
Cost of services                      17.2       29.0       17.9       29.0
                                    -------    -------    -------   --------
     Total cost of sales              62.1       67.7       65.0       71.9
                                    -------    -------    -------   --------
                                 
     Gross profit                     37.9       32.3       35.0       28.1

Engineering and development            2.2        2.0        1.9        1.7
Selling, general and administrative    9.2       13.5        9.6       12.0
Amortization of goodwill               2.0        1.1        1.7        1.1
                                    -------    -------    -------   --------
     Operating income                 24.5       15.7       21.8       13.3

Interest and other income              0.9        0.2        1.2        0.5

Interest and other expense            (0.1)      (0.8)      (0.1)      (0.8)
                                    -------    -------    -------   --------
                                        
    Income before income taxes        25.3       15.1       22.9       13.0

Income taxes                           9.4        1.9        8.4        1.3
                                    -------    -------    -------   --------
                                       
   Net income                         15.9%      13.2%      14.5%      11.7%
                                    =======    =======    =======   ========





Three Months Ended September 30, 1997 Compared to Three Months Ended 
September 30, 1996

         Sales. Total sales increased $15.1 million, or 121.1%, to $27.5 million
in the third  quarter of 1997 from $12.4  million in the third  quarter of 1996.
The  percentage of product sales to total sales  increased to 77.2% in the third
quarter of 1997 from 65.4% in the third quarter of 1996.

         Product sales increased  $13.1 million,  or 160.7%, to $21.2 million in
the third quarter of 1997 from $8.1 in the third  quarter of 1996.  The increase
related to $7.6 million of cellular  equipment  sold by CIS,  which was acquired
effective January 1, 1997, an additional $3.6 million of switching products sold
by AIT and  approximately  $1.8 in  sales  of the  Company's  new  international
product, the Compact Digital Exchange (TM) switch ("CDX").

<PAGE>

         Service revenues  increased $2.0 million,  or 46.0%, to $6.3 million in
the third quarter of 1997 from $4.3 in the third  quarter of 1996.  The increase
related to an additional  $1.5 million in pay telephone  refurbishment  revenues
and $1.1 million of revenues from Galaxy,  which was acquired  effective July 1,
1997. The increase was offset by a decline in electronic  manufacturing revenues
resulting   from  a  strategic   decision  to  begin   utilizing  the  Company's
manufacturing capacity for new World Access products rather than service outside
contract manufacturing customers.

         Gross Profit.  Gross profit increased $6.4 million, or 158.7%, to $10.4
million in the third  quarter of 1997 from $4.0 million in the third  quarter of
1996.  Gross profit margin  increased to 37.9% in the third quarter of 1997 from
32.3% in the third quarter of 1996. The improved  performance  resulted from the
121.1%  increase in total sales and the change in sales mix to  products,  which
generally carry a higher gross profit margin than service revenues.

     Gross  profit  margin on  products  sold  increased  to 41.9 % in the third
quarter of 1997 from 40.8% in the third  quarter of 1996.  The  improved  margin
performance  relates to the $7.6 million of cellular  and PCS  products  sold by
CIS, the $3.6 million increase in switching products sold by AIT and the sale of
the new international CDX.

     Gross  profit  margin on service  revenues  increased to 24.3% in the third
quarter of 1997 from 16.4% in the third quarter of 1996.  The increase is due to
$1.1 million of revenues from Galaxy, which was acquired effective July 1, 1997.
Gross margins related to the services  provided by Galaxy are  approximately two
times those of the Company's other service businesses.

         Engineering  and  Development.  Engineering  and  development  expenses
increased  $362,000,  or 149.1%,  to $605,000 in the third  quarter of 1997 from
$243,000 in the third quarter of 1996. The increase in expenses was attributable
to the formation of a corporate  product  development  function during the third
quarter of 1996.  Despite the  increase  in total  engineering  and  development
expenses,  engineering and development  expenses increased to only 2.2% of total
sales in the third quarter of 1997 from 2.0% of total sales in the third quarter
of 1996.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses  increased  $829,000,  or 49.4%, to $2.5 million in the
third  quarter  of 1997 from $1.7  million  in the third  quarter  of 1996.  The
increase primarily related to expenses associated with the operations of CIS and
Galaxy,  which  were  acquired  effective  January  1,  1997 and  July 1,  1997,
respectively,  the Company's  continued  expansion of a dedicated  international
sales and  marketing  group and  corporate  business  development  function  and
additional incentive  compensation expense recorded in 1997 as compared to 1996.
As a percentage of total sales,  selling,  general and  administrative  expenses
decreased to 9.2% in the third  quarter of 1997 from 13.5% in the third  quarter
of 1996.


<PAGE>

         Amortization of Goodwill.  Amortization of goodwill  increased $404,000
to $546,000 in the third  quarter of 1997 from  $142,000 in the third quarter of
1996, as a result of the goodwill acquired in connection with the CIS and Galaxy
acquisitions and contingent purchase price earned by CIS and AIT.

         Operating Income.  Operating income increased $4.7 million,  or 244.7%,
to $6.7  million  in the third  quarter  of 1997 from $2.0  million in the third
quarter of 1996. Operating income margin increased to 24.5% in the third quarter
of 1997 from 15.7% in the third quarter of 1996.

         Interest  and  Other  Income.   Interest  and  other  income  increased
$221,000,  or 896.1%,  in the third  quarter  of 1997 from  $25,000 in the third
quarter  of  1996  due to  increased  invested  cash  balances  of the  Company,
resulting primarily from proceeds received from a $26.2 million secondary public
equity offering completed in October 1996.

         Interest  and  Other  Expense.  Interest  and other  expense  decreased
$56,000,  or 55.3%, to $45,000 in the third quarter of 1997 from $101,000 in the
third  quarter of 1996.  The  decrease is due to the  reduction  in average debt
outstanding  during the third  quarter of 1997  resulting  from the October 1996
repayment of a $3.9 million bank term loan.


Nine Months Ended September 30, 1997 Compared to Nine Months Ended 
September 30, 1996

         Sales. Total sales increased $35.3 million,  or 97.2%, to $71.7 million
in the first nine months of 1997 from $36.4  million in the first nine months of
1996. The  percentage of product sales to total sales  increased to 78.2% in the
first nine months of 1997 from 66.4% in the first nine months of 1996.

         Product sales increased $31.9 million,  or 132.2%,  to $56.1 million in
the first  nine  months of 1997 from $24.2  million in the first nine  months of
1996. The increase  related to $23.9 million of cellular  equipment sold by CIS,
which was acquired  effective  January 1, 1997, an  additional  $10.9 million of
switching  products sold by AIT and  approximately  $2.3 million in sales of the
Company's new international  products,  the CDX and Wireless Local Loop-2000(TM)
system  ("WLL-2000").  Product  sales for the first nine months of 1996 included
approximately $4.7 million in special one-time sales of a distributed product.

         Service revenues increased $3.4 million,  or 27.9%, to $15.6 million in
the first  nine  months of 1997 from $12.2  million in the first nine  months of
1996.  The  increase  related to an  additional  $4.5  million in pay  telephone
refurbishment  revenues  and $1.1  million of revenues  from  Galaxy,  which was
acquired  effective  July 1,  1997.  This  increase  was  offset by a decline in
electronic  manufacturing  revenues resulting from a strategic decision to begin
utilizing the  Company's  manufacturing  capacity for new World Access  products
rather than service outside contract manufacturing customers.

         Gross Profit. Gross profit increased $14.9 million, or 145.7%, to $25.1
million  in the first nine  months of 1997 from $10.2  million in the first nine
months of 1996.  Gross profit margin increased to 35.0% in the first nine months
of 1997 from 28.1% in the first nine months of 1996.  The  improved  performance
resulted  from the 97.2%  increase in total sales and the change in sales mix to
products,  which  generally  carry a higher  gross  profit  margin than  service
revenues.

<PAGE>

         Gross profit  margin on products  sold  increased to 39.7% in the first
nine  months of 1997 from 35.3% in the first nine months of 1996.  The  improved
margin  performance  relates to the $23.9  million of cellular  and PCS products
sold by CIS, the $10.9  million  increase in switching  products sold by AIT and
the sale of the new international CDX and WLL-2000. In addition,  the first nine
months of 1996  included $4.7 million of  distributed  product sales which carry
margins substantially lower than the Company's other products.

         Gross profit margin on service revenues increased to 17.9% in the first
nine months of 1997 from 13.6% in the first nine months of 1996. The increase is
due to $1.1 million of revenues from Galaxy,  which was acquired  effective July
1,  1997.  Gross  margins  related  to  the  services  provided  by  Galaxy  are
approximately two times those of the Company's other service businesses.

         Engineering  and  Development.  Engineering  and  development  expenses
increased $732,000,  or 118.5%, to $1.4 million in the first nine months of 1997
from  $618,000 in the first nine months of 1996.  The  increase in expenses  was
attributable to the formation of a corporate product development function during
the third  quarter  of 1996.  Despite  the  increase  in total  engineering  and
development  expenses,  engineering and development  expenses  increased to only
1.9% of total sales in the first nine months of 1997 from 1.7% of total sales in
the first nine months of 1996.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative expenses increased $2,492,000, or 57.0%, in the first nine months
of 1997 to  $6,860,000  in the first nine months of 1997 from  $4,368,000 in the
first nine months of 1996. The increase primarily related to expenses associated
with the operations of CIS and Galaxy,  which were acquired effective January 1,
1997 and July 1, 1997, respectively,  and the Company's expansion of a dedicated
international  sales and  marketing  group and  corporate  business  development
function   formed  in  early  1996.  In  addition,   the  Company  has  recorded
approximately  $900,000  of  incentive  compensation  expense  in the first nine
months of 1997 as compared  to  $200,000 in the first nine months of 1996.  As a
percentage  of  total  sales,  selling,   general  and  administrative  expenses
decreased  to 9.6% in the first nine  months of 1997 from 12.0 in the first nine
months of 1996.

         Amortization of Goodwill.  Amortization of goodwill  increased $846,000
to $1.2 million in the first nine months of 1997 from $364,000 in the first nine
months of 1996, as a result of the goodwill  acquired in connection with the CIS
and Galaxy acquisitions and contingent purchase price earned by CIS and AIT.

         Operating Income.  Operating income increased $10.8 million, or 222.5%,
to $15.7 million in the first nine months of 1997 from $4.9 million in the first
nine months of 1996.  Operating  income  margin  increased to 21.8% in the first
nine months of 1997 from 13.3% in the first nine months of 1996.


<PAGE>

         Interest  and  Other  Income.   Interest  and  other  income  increased
$652,000,  or 356.6%, to $835,000 in the first nine months of 1997 from $183,000
in the first nine months of 1996 due to increased  invested cash balances of the
Company,  resulting  primarily  from  proceeds  received  from a  $26.2  million
secondary public equity offering completed in October 1996.

         Interest  and  Other  Expense.  Interest  and other  expense  decreased
$214,000, or 69.4%, to $95,000 in the first nine months of 1997 from $309,000 in
the first nine months of 1996.  The decrease is due to the  reduction in average
debt  outstanding  during the second  quarter of 1997 resulting from the October
1996 repayment of a $3.9 million bank term loan.



Liquidity and Capital Resources

Overview

         Cash management is a key element of the Company's operating  philosophy
and  future  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  product  development,
marketing  programs  and working  capital  normally  associated  with the growth
initiatives of acquired businesses.  The 1997 Salary Incentive Program discussed
below is another example of the Company's efforts to effectively manage its cash
position as cash  payments  related to certain  salary  costs are not made until
sufficient  pre-tax  profits and  accompanying  cash flow are  generated  by the
Company.   In  October  1997,   the  Company   received  net  cash  proceeds  of
approximately $111.6 million from the sale of convertible subordinated notes. As
of the date of this Report, the Company has approximately $123.0 million of cash
and equivalents and $10.0 million available under its credit line to support its
working capital requirements and strategic growth initiatives.


Operating Activities

     Cash used by operating activities was $4.1 million in the first nine months
of 1997 as compared to cash  provided  from  operations  of $1.5  million in the
first nine months of 1996.  The increase use of cash in 1997  resulted  from the
Company's  need to finance  increased  accounts  receivable  and  inventories to
support its growth.

     Accounts  receivable  increased  $12.7  million,  or  132.6%,  to  $22.4 at
September  30, 1997 from $9.7 million at December 31, 1996.  This was due to the
acquisitions of CIS and Galaxy and increased sales activity at the Company,  ie.
third  quarter  1997 sales of $27.5  million as compared to fourth  quarter 1996
sales of $14.6  million.  Average days sales  outstanding  at September 30, 1997
were  approximately  74 days as compared to 50 days at December  31,  1996.  The
increased  days is primarily  due to extended  terms granted  certain  switching
products customers.


<PAGE>


     Inventories increased $8.2 million, or 77.3%, to $18.9 million at September
30, 1997 from $10.7  million at December 31, 1996.  This  increase is due to the
acquisition  of CIS,  a planned  build-up  of AIT  inventories  to  support  the
increased demand for its switching products and inventories  required to support
the roll out of the Company's new products,  including the CDX, WLL-2000 and the
WX-5501 line card.

Investing Activities

     Cash  used by  investing  activities  (primarily  for the  acquisitions  of
businesses  and  technology  licenses,  manufacturing  and  test  equipment  and
computer networking equipment) was $6.0 million in the first nine months of 1997
as compared to $1.1 million in the first nine months of 1996.

     Between May 1995 and July 1997, the Company  completed  five  acquisitions,
which were designed to bring new wireline and wireless switching,  transport and
access  products  and  technology  into the  Company as well as  strengthen  the
Company's  ability to provide complete  telecommunications  network solutions to
its customers.  All of the acquisitions were relatively  similar in structure in
that  the  former  owners  received  initial   consideration   consisting  of  a
combination   of  Company   common  stock  and  cash,   as  well  as  contingent
consideration  tied to the future  profitability  of the ongoing  business.  The
majority  of the  contingent  consideration  may be paid,  at the  option of the
Company, in the form of common stock valued at its then-current market price. At
the time it  becomes  highly  probable  that  contingent  consideration  will be
earned,  the fair market value is measured and recorded on the Company's balance
sheet  as  additional  goodwill  and  stockholders'  equity.  See  Note 3 to the
Consolidated financial statements.

     Through September 30, 1997, the Company has paid approximately $6.5 million
in cash consideration in connection with five  acquisitions,  including $500,000
(net of $700,000 held by Galaxy on its effective  date of  acquisition)  for the
Galaxy  acquisition  during the third quarter of 1997,  $3.5 million for the CIS
acquisition in early 1997 and $2.3 million in contingent  consideration  paid to
the former  stockholder of AIT ($1.2 million paid in 1997).  The impact of these
payments  on the  Company's  cash  position  has been  partially  offset  by the
addition  of  $805,000  in  cash  owned  by  Sunrise  on its  effective  date of
acquisition.

     In addition to the $1.2 million in cash and 262,203  shares of common stock
issued up front,  with an  initial  value of  approximately  $4.5  million,  the
stockholders  of Galaxy were issued 131,101  restricted  shares of the Company's
common stock.  These shares were  immediately  placed into escrow,  and together
with $3.5  million in additional consideration, will be released and paid to the
stockholders of Galaxy  contingent upon the realization of predefined  levels of
pre-tax income from Galaxy's  operations  during four periods  beginning July 1,
1997.

     In addition to the $3.5 million in cash and 440,874  shares of common stock
issued up front, with an initial fair value of approximately  $2.5 million,  the
stockholders  of CIS were  issued  845,010  restricted  shares of the  Company's
common stock.  These shares were immediately  placed into escrow, and along with
$6.5  million in  additional  purchase  price,  will be released and paid to the
stockholders  of CIS contingent  upon the  realization  of predefined  levels of
pre-tax income from CIS's  operations  during three one-year  periods  beginning
January 1, 1997.

<PAGE>

     The first measurement  period for purposes of releasing escrowed shares and
paying contingent cash consideration is January 1, 1997 to December 31, 1997. In
reviewing  CIS's pre-tax  income  performance  as of April 30, 1997, the Company
determined  that it was highly  probable  that the  conditions  for  release and
payment for this first period would be met. Accordingly, 304,615 escrowed shares
were  accounted for as if released and $3.5 million in contingent  cash payments
were  accounted  for as if paid as of April  30,  1997.  The net  effect of this
accounting was to increase  goodwill and  stockholders'  equity by approximately
$6.5 million at April 30,  1997.  These shares will be released and payment will
be made to the former stockholders of CIS on February 15, 1998.

     During the first nine months of 1997 and 1996,  the Company  invested  $1.9
million and $849,000,  respectively, in capital expenditures. These expenditures
were primarily used for new manufacturing  and test equipment,  computer network
and  related   communications   equipment  designed  to  upgrade  the  Company's
management   information   systems  and  facilitate   the   integration  of  the
acquisitions,  and facility  improvements  required in connection with Company's
growth.

     In July 1996,  the  Company  entered  into a long-term  technology  license
agreement with International Communications Technologies, Inc. ("ICT") and Eagle
Telephonics,  Inc.  ("Eagle")  to  manufacture,  market  and sell the CDX, a new
modular,  digital  central  office  switch  originally  developed  by Eagle.  As
consideration  for this  license,  the Company  paid Eagle  $250,000 in cash and
agreed to provide $450,000 of manufacturing  services. In addition,  The Company
agreed to pay ICT certain  royalties  based on future sales of the switch by the
Company.


Financing Activities

          Cash provided from financing  activities was $3.5 million in the first
nine  months of 1997 as compared to cash used by  financing  activities  of $1.5
million in the first nine months of 1996.

         During the first nine months of 1997 and 1996, the Company has received
approximately  $4.0  million  and  $4.1  million,   respectively,   in  proceeds
from the exercise of  previously  issued  stock  options  and  warrants  by  the
Company's directors and employees.

          During  the  first  nine  months of 1997 and 1996,  the  Company  made
approximately  $568,000 and $4.9 million,  respectively,  in net short-term debt
repayments.  As of September 30, 1997, there were no amounts  outstanding on the
Company's line of credit.

     During October 1997, the Company sold $115.0 million in aggregate principal
amount of  convertible  subordinated  notes (the "notes") under Rule 144A of the
Securities  Act of 1933.  The notes bear interest at the rate of 4.5% per annum,
are  convertible  into Company  common  stock at an initial  price of $37.03 per
share and mature on October 1, 2002. The notes are not redeemable by the Company
prior to  October  1,  2000.  Interest  on the notes is  payable  on April 1 and
October 1 of each  year,  commencing  on April 1,  1998.  The notes are  general
unsecured obligations of the Company and will be subordinate in right of payment
to all existing and future  senior  indebtedness.  The Company  received  $111.6
million  from  the sale of the  notes,  after  the  application  of the  initial
purchasers'  discount  fees.  Additional  expenses  incurred  by the  Company in
connection  with this  offering  were  estimated at $550,000 and are included in
Debt issue costs on the September 30, 1997 consolidated balance sheet.

<PAGE>

Income Taxes

     As of December 31, 1996, the Company had approximately  $4.0 million in tax
net  operating  loss  carryforwards  available to reduce future  taxable  income
through  the year 2010,  all of which  will be  utilized  during  1997 to reduce
taxable  income  realized by the Company.  In addition,  the Company has capital
loss carryforwards of approximately $1.2 million expiring in 1998.

         As a  result  of the  exercises  of  non-qualified  stock  options  and
warrants by the Company's  directors and  employees,  the Company has realized a
federal  income tax benefit of  approximately  $5.5  million for the nine months
ended September 30, 1997.  Although this benefit does not have any effect on the
Company's provision for income tax expense for 1997, it represents a significant
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.
Based  upon  the  $5.5  million  tax  benefit  derived  from  the  exercises  of
non-qualified  options and  warrants as of September 30, 1997 and the  remaining
$4.0 million tax net operating loss carryforward available, the  Company expects
to pay little or no federal income taxes for the year ended December 31, 1997.


Salary Incentive Program

     In December  1996,  the Company  implemented a voluntary  salary  reduction
program  designed to improve the Company's cash flow during 1997,  further align
the objectives of the Company's  management and salaried employees with those of
the Company's  stockholders and potentially provide the Company with significant
future tax deductions. Under the program, 72 exempt salaried employees agreed to
forego $826,038 of their 1997 compensation in exchange for 413,019 non-qualified
options to purchase shares of the Company's common stock at $8.00 per share, its
then-current market value (i.e., one stock option for every $2 of compensation).
The vesting is tied to the Company meeting  specific  operational  objectives in
1997,  including  the Company  achieving  pre-defined  levels of internal  sales
growth, ISO 9002 certification and specific cash management objectives,  as well
as the installation of certain upgraded information systems.

     Under the 1997 program,  employees could  participate to a maximum level of
50% of  their  1997  salaries.  The  Company's  Chairman,  President  and  Chief
Financial Officer each elected to forego 50% of their salary under this program.
This program  also  provides  that if certain  levels of pre-tax  income  before
special  charges are achieved for 1997, a partial or full  repayment of salaries
will be made. Full repayment is based on the Company  realizing $23.4 million of
pre-tax  income during 1997, a $15.9 million or  approximately  211.0%  increase
over 1996 actual pre-tax  income.  Compensation  expense related to this program
will be recorded  in 1997 when it becomes  highly  probable a repayment  will be
earned. In connection with the Company's pre-tax income performance in the first
nine months of 1997, a $620,000  expense was recorded for the prorata portion of
the  potential  repayment  of 1997  salaries  under this  program.  The  related
liability is included in Accrued payroll and benefits on the Company's September
30, 1997 balance sheet.

<PAGE>

 Summary

     The Company's improved  operating  performance and completion of the recent
sale convertible  subordinated  notes has  significantly  enhanced its financial
strength and improved its liquidity.  As of the date of this Report, the Company
has no  bank  debt,  approximately  $123.0  million  of cash  and a $10  million
revolving  line of credit  available.  Management  believes that the Company has
sufficient  financial resources to support its working capital  requirements and
business plans for at least the next 12 months.

Item 2.      Changes in Securities

         On October 1, 1997,  the  Company  completed  the sale of  $100,000,000
aggregate  principal  amount  of its 4.5%  convertible  subordinated  notes  due
October 1, 2002 (the  "Notes") to BT Alex.  Brown  Incorporated  and  Prudential
Securities  Incorporated  (collectively,  the "Initial  Purchasers") pursuant to
that  certain  Purchase  Agreement  by and  between  the Company and the Initial
Purchasers  dated as of  September  26, 1997 (the  "Purchase  Agreement"),  at a
purchase  price  of  97%  of  the  aggregate  principal  amount  of  the  Notes,
representing  an aggregate  discount of  $3,000,000  to the Initial  Purchasers.
Under the terms of the  Purchase  Agreement,  the  Company  granted  the Initial
Purchasers an option  exercisable  for 30 days to purchase up to an aggregate of
$15,000,000  additional principal amount of Notes to cover  over-allotments,  if
any. The Initial  Purchasers  exercised  this option in full, and on October 28,
1997,  the Company sold an  additional  $15,000,000  in principal  amount of the
Notes to the Initial Purchasers. The Notes are convertible into shares of Common
Stock at a conversion  price of $37.03125 per share,  subject to adjustment (the
"Conversion Price").

         The Notes were issued  pursuant to an Indenture  dated as of October 1,
1997 by and between the Company and First Union  National  Bank, as trustee (the
"Indenture").  The Notes bear  interest at the rate of 4.5% per annum and mature
on October 1, 2002.  The Notes are  convertible  into  Common  Stock at any time
prior to the close of business on the maturity date, unless previously  redeemed
or  repurchased,   at  the  Conversion   Price.  The  Notes  are  unsecured  and
subordinated  in right of payment  in full to all  existing  and  future  Senior
Indebtedness  (as  defined  in the  Indenture)  of the  Company.  If a Change of
Control (as defined in the  Indenture)  of the  Company  occurs,  each holder of
Notes may require the Company to  repurchase  all or a portion of such  holder's
Notes at 100% of the principal amount thereof, together with accrued interest to
the  repurchase  date.  The Notes are  redeemable  by the Company any time after
October 1, 2000.

         The sale of the  Notes to the  Initial  Purchasers  was not  registered
under the Securities Act of 1933, as amended (the "Securities Act"), in reliance
on the  exemption  provided by Section 4(2) of the  Securities  Act. The Initial
Purchasers  resold a  portion  of the  Notes in the  United  States  to  certain
"qualified  institutional buyers" pursuant to Rule 144A under the Securities Act
and a portion of the Notes outside of the United States to "non-U.S. persons" in
reliance on Regulation S under the Securities Act.

Item 3.      Quantitative and Qualitative Disclosures about Market Risk

         Not Applicable


<PAGE>


PART II. OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

27.1     Financial Data Schedule





(b)      Reports on Form 8-K

         On  September  19,  1997,  the  Company  filed a  Report  on Form  8-K,
announcing  that it was pursuing a private  placement of $100 million  aggregate
principal  amount of  convertible  subordinated  notes.  On October 8, 1997, the
Company  filed a Report on Form 8-K,  announcing  that it had sold $100  million
aggregate principal amount of convertible subordinated notes.











                                   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.



                                             By:   /s/ Mark A. Gergel
                                                   ----------------------------
                                                   Mark A. Gergel
                                                   Executive Vice President and
                                                   Chief Financial Officer

Dated:  November 13, 1997