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, 1996.

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, 1996 was 16,163,069.


<PAGE>


PART 1.  FINANCIAL INFORMATION

ITEM 1.  Financial Statements

World Access, Inc. and Subsidiaries

Consolidated Balance Sheets

                                               September 30        December 31
                                                    1996                1995
                                               ------------        ------------
                                                (Unaudited)

ASSETS
Current Assets
     Cash and equivalents                     $     784,936       $   1,886,819
     Proceeds receivable from stock offering     22,500,000               ---
     Accounts receivable                          8,285,359           9,648,817
     Inventories                                 11,112,876           4,549,721
     Notes receivable from stockholders               ---             3,879,728
     Other current assets                           774,294             688,367
                                               ------------        ------------
           Total Current Assets                  43,457,465          20,653,452
Property and equipment                            2,570,181           2,062,749
Technology license                                  773,652               ---
Intangible assets                                 9,404,546           5,084,184
Other assets                                        674,063             714,848
                                               ------------        ------------
           Total Assets                       $  56,879,907       $  28,515,233
                                               ============        ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
    Short-term debt                           $     575,000       $   5,385,220
    Accounts payable                              4,294,960           3,648,734
    Accrued payroll and benefits                  1,671,442             731,659
    Accrued stock offering costs                    511,975               ---
    Other accrued liabilities                       816,032             665,585
                                               ------------        ------------
           Total Current Liabilities              7,869,409          10,431,198
Long-term debt                                    3,300,000           3,750,000
                                               ------------        ------------
           Total Liabilities                     11,169,409          14,181,198
                                               ------------        ------------
Stockholders' Equity
    Common stock                                    156,280             125,583
    Capital in excess of par value               53,882,879          27,641,543
    Note receivable from affiliate                  (86,814)           (919,836)
    Accumulated deficit                          (8,241,847)        (12,513,255)
                                               ------------        ------------
           Total Stockholders' Equity            45,710,498          14,334,035
                                               ------------        ------------
           Total Liabilities and
           Stockholders' Equity               $  56,879,907       $  28,515,233
                                               ============        ============




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

                   
<PAGE>
<TABLE>

World Access, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

<CAPTION>

                               Quarter  Ended September 30    Nine Months Ended September 30
                              ----------------------------    ------------------------------
                                  1996             1995             1996            1995
                              -----------      -----------      -----------      ----------
<S>                          <C>              <C>              <C>              <C>
Sales of products            $  8,125,467     $  3,392,346     $ 24,161,765     $ 6,861,884
Service revenues                4,293,899        3,268,166       12,213,764       9,176,565
                              -----------      -----------      -----------      ----------
   Total Sales                 12,419,366        6,660,512       36,375,529      16,038,449

Cost of products sold           4,810,170        1,924,593       15,621,931       4,237,694
Cost of services                3,591,677        2,891,891       10,547,681       8,122,112
                              -----------      -----------      -----------      ----------
   Total Cost of Sales          8,401,847        4,816,484       26,169,612      12,359,806
                              -----------      -----------      -----------      ----------
   Gross Profit                 4,017,519        1,844,028       10,205,917       3,678,643

Engineering and development       242,983          165,237          618,001         451,741
Selling, general 
 and administrative             1,678,647          938,986        4,368,365       2,106,832
Amortization of goodwill          141,962           44,112          364,306          66,836
Special charges                     ---              ---              ---           980,000
                              -----------      -----------      -----------      ----------
   Operating Income             1,953,927          695,693        4,855,245          73,234

Interest expense                  101,360          109,573          308,592         356,173
Interest and other income         (24,700)         (40,534)        (182,785)        (52,676)
                              -----------      -----------      -----------      ----------
   Income (Loss) Before 
   Income Taxes                 1,877,267          626,654        4,729,438        (230,263)

Income taxes                      233,930            ---            458,030           ---
                              -----------      -----------      -----------      ----------
   Net Income (Loss)         $  1,643,337     $    626,654     $  4,271,408     $  (230,263)
                              ===========      ===========      ===========      ==========

Net Income (Loss) Per 
Common Share                 $        .12     $        .10     $        .31     $      (.03)
                              ===========      ===========      ===========      ==========


Weighted Average 
Shares Outstanding             13,835,374        7,930,871      13,694,591        6,967,960
                              ===========      ===========      ===========      ==========


<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>

<PAGE>

<TABLE>
World Access, Inc. and Subsidiaries

Consolidated Statement of Changes in Stockholders' Equity

(Unaudited)

<CAPTION>


                                                        Capital In         Note
                                            Common      Excess of       Receivable      Accumulated
                                            Stock       Par Value     from Affiliate      Deficit           Total
                                          ----------    -----------    ------------     ------------     -----------
<S>                                      <C>           <C>            <C>              <C>              <C> 
Balance at January 1, 1996               $   125,583   $ 27,641,543   $    (919,836)   $ (12,513,255)   $ 14,334,035

Net income                                                                                 4,271,408       4,271,408

Issuance of 3,000,000 shares for
  secondary public offering,net               30,000     21,645,000                                       21,675,000

Issuance of 597,246 shares for
  Sunrise acquisition                          5,972      2,289,757                                        2,295,729

Release of 318,654 shares from
  escrow for AIT acquisition                              2,042,373                                        2,042,373
   
Repayment of loans by affiliate, net                                        833,022                          833,022

Issuance of 141,980 shares for
  stock options and warrants                   1,420        232,250                                          233,670

Retirement of 672,419 escrowed
   shares from initial public offering        (6,724)         6,724                                            ---

Issuance of 2,883 shares for
  matching contribution to 401K plan              29         25,232                                           25,261
                                          ----------    -----------    ------------     ------------     -----------
Balance at September 30, 1996            $   156,280   $ 53,882,879   $     (86,814)   $  (8,241,847)   $ 45,710,498
                                          ==========    ===========    ============     ============     ===========  



<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>

<PAGE>


World Access, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

                                                  Nine Months Ended September 30
                                                  ------------------------------
                                                       1996            1995
                                                   ------------    ------------
Cash  Flows From Operating Activities:
Net income (loss)                                 $   4,271,408   $    (230,263)
Adjustments to reconcile net income
 (loss) to net cash from (used by) 
 operating activities:
   Depreciation and amortization                        996,495         674,334
   Provision for inventory reserves                     148,150         113,970
   Provision for bad debts                              117,356          33,000
   Stock contributed to employee benefit plan            25,261          12,742
   Special charges                                        ---           866,112
   Changes in operating assets and 
    liabilities, net of effects from
    businesses acquired:
      Accounts receivable                             1,158,614      (1,167,007)
      Inventories                                    (6,394,590)       (503,915)
      Accounts payable                                  491,569        (709,481)
      Accrued payroll and benefits                      939,783         484,070
      Other assets and liabilities                     (214,278)       (771,110)
                                                   ------------    ------------
   Net Cash From (Used By) Operating Activities       1,539,768      (1,197,548)
                                                   ------------    ------------

Cash Flows From Investing Activities:
Acquisition of businesses                              (583,621)         (1,517)
Repayments by (loans to) affiliate                      833,022      (1,386,500)
Technology license                                     (531,733)          ---
Expenditures for property and equipment                (848,832)       (155,323)
Prepaid rent on equipment lease                           5,906        (274,300)
                                                   ------------    ------------
   Net Cash Used By Investing Activities             (1,125,258)     (1,817,640)
                                                   ------------    ------------

Cash Flows From Financing Activities:
Net proceeds from private equity offerings                ---         2,835,000
Short-term debt borrowings (repayments)              (4,935,220)        101,851
Long-term debt repayments                              (325,000)       (125,000)
Proceeds from exercise of stock 
 warrants and options                                 4,113,398         212,615
Stock offering costs                                   (313,025)          ---
Debt issue costs                                        (56,546)          ---
                                                   ------------    ------------
   Net Cash From (Used By) Financing Activities      (1,516,393)      3,024,466
                                                   ------------    ------------

   Increase (Decrease) in Cash and Equivalents       (1,101,883)          9,278
   Cash and Equivalents at Beginning of Period        1,886,819         753,264
                                                   ------------    ------------
   Cash and Equivalents at End of Period          $     784,936   $     762,542
                                                   ============    ============

Supplemental Schedule of Noncash Financing and
  Investing Activities:
Issuance of common stock for businesses acquired  $   4,332,130   $   2,273,418
Reduction in note receivable from affiliate 
  to recognize contingent purchase price earned         582,500         582,500
Conversion of accounts receivable to investment 
  in technology license                                 241,919           ---

     

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

                                                                       

<PAGE>



                      World Access, Inc. and Subsidiaries

                   Notes To Consolidated Financial Statements

                               September 30, 1996

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, 1995.

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, 1996
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 1996.

NOTE 2.  ACQUISITIONS

Sunrise Acquisition

On February 21, 1996, the Company  entered into an agreement to acquire  Comtech
Sunrise,  Inc.  ("Sunrise"),  a  Livermore,  California  based  manufacturer  of
multiplexers,  digital loop  carriers  and other  intelligent  transmission  and
access products.  On June 18, 1996, after a mandatory  registration  process was
completed in the State of California, the transaction was completed in its final
form  whereby  Sunrise was merged with and into  Restor-Comtech,  Inc., a wholly
owned subsidiary of the Company (the "Sunrise Merger").  Restor - Comtech,  Inc.
subsequently  changed its name to Sunrise  Sierra,  Inc. In connection  with the
Sunrise Merger, the stockholders of Sunrise received  approximately  $100,000 in
cash and 385,481  restricted shares of the Company's common stock.  These shares
had an initial fair value of approximately $6.00 a share or $2.3 million.

In addition to the 385,481 shares noted above,  the stockholders of Sunrise were
issued 211,765  restricted  shares of the Company's  common stock.  These shares
were immediately  placed into escrow,  and along with $1.8 million in additional
purchase price (the  "Additional  Consideration"),  will be released and paid to
the stockholders of Sunrise contingent upon the realization of predefined levels
of pre-tax  income from  Sunrise's  operations  during  three  one-year  periods
beginning  January 1, 1996.  This Additional  Consideration  may be paid, at the
option of the Company, in the form of cash or restricted shares of the Company's
common stock valued at the then current market prices.

<PAGE>

The shares  placed in escrow were  valued by the  Company at par value only,  or
$2,118.  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 Sunrise has been accounted for using the purchase  method of
accounting.  Accordingly, the results of Sunrise's operations have been included
in the accompanying  consolidated financial statements from January 1, 1996, 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  $1.5 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 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,  may 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.  Once repaid, the stockholder will not be entitled to reborrow such
funds.

The first  measurement  period for  purposes of  releasing  escrowed  shares and
paying  contingent cash  consideration was May 17, 1995 to December 31, 1995. In
reviewing  AIT's gross profit  performance as of September 30, 1995, the Company
determined  that it was highly  probable  that the  conditions  for  release and
payment for this first period would be met. Accordingly, 159,327 escrowed shares
were accounted for as if released and $582,500 in contingent  cash payments were
accounted  for as if paid as of  September  30,  1995.  The net  effect  of this
accounting was to increase  goodwill and  stockholders'  equity by approximately
$1.1 million at September  30, 1995.  These shares were released and payment was
made to the former stockholder of AIT on February 15, 1996.

The second  measurement  period for  purposes of releasing  escrowed  shares and
paying  contingent cash  consideration  was January 1, 1996 to June 30, 1996. In
reviewing AIT's gross profit performance for this period, the Company determined
that the  conditions  for release  and payment for this second  period were met.
Accordingly,  159,327  escrowed  shares were  accounted  for as if released  and
$582,500 in contingent  cash  payments were  accounted for as if paid as of June
30,  1996.  The net  effect of this  accounting  was to  increase  goodwill  and
stockholders'  equity by  approximately  $1.7  million at June 30,  1996.  These
shares were  released and payment was made to the former  stockholder  of AIT on
August 15, 1996.

<PAGE>

The third  measurement  period for  purposes of  releasing  escrowed  shares and
paying contingent cash  consideration is July 1, 1996 to December 31, 1996, with
actual  release and payment to be made on February 15, 1997. In reviewing  AIT's
gross profit  performance as of September 30, 1996, the Company  determined that
it was highly  probable  that the  conditions  for  release and payment for this
third period would be met.  Accordingly,  159,327 escrowed shares were accounted
for as if released and $582,500 in contingent  cash payments were  accounted for
as if paid as of September 30, 1996.  The net effect of this  accounting  was to
increase  goodwill and  stockholder's  equity by  approximately  $1.5 million at
September 30, 1996.

Pro Forma Results of Operations

In  addition  to the  Sunrise  and AIT  acquisitions  noted  above,  the Company
acquired Westec Communications,  Inc. ("Westec"), a provider of wireless systems
and repair services to the cable television and  telecommunications  industries,
in October 1995.  The results of operations  for AIT,  Westec,  and Sunrise have
been  included in the Company's  consolidated  financial  statements  from their
respective  dates  of  acquisition.  A  detailed  discussion  of the  terms  and
conditions  of the AIT and Westec  acquisitions  is  included  in the  Company's
Annual Report on Form 10-K for the year ended December 31, 1995.

On a pro forma,  unaudited  basis,  as if the  acquisitions  of AIT,  Westec and
Sunrise had  occurred  as of January 1, 1995,  total  sales,  net income and net
income per common share for the nine months ended  September 30, 1995 would have
been $22,898,000,  $229,000 and $.02, respectively. These pro forma results have
been prepared for  comparative  purposes only and do not purport to indicate the
results of operations  which would  actually have occurred had the  acquisitions
been in effect on the date indicated, or which may occur in the future.

<PAGE>

NOTE 3.  SPECIAL CHARGE

In the second quarter of 1995, the Company recorded a one-time special charge of
$980,000 for the following items:


      Write-down of test equipment and related tooling           $      675,000
      Consolidation of repair operations                                 95,000
      Retirement benefits, search and relocation costs
         for Company President                                          150,000
      Other                                                              60,000
                                                                  -------------
                                                                 $      980,000
                                                                  =============

As a  result  of the  significant  decline  in  circuit  board  repair  revenues
experienced by the Company in recent years,  the shift in strategic focus to new
digital  repair  services  and  programs  offered by the  Company  in 1995,  the
acquisition  of AIT and other  market  considerations,  the  Company  elected to
significantly  write-down the net book value of certain assets related to repair
operations  by  $675,000.  These  assets  primarily  represent  test  equipment,
tooling,   dies   and   diagnostic   programs   for   the   repair   of   analog
telecommunications  equipment.  All of these assets were  capitalized in 1988 to
1990 in connection with acquisitions made by the Company.

In addition to the write-down of selected  repair  assets,  a $95,000 charge was
recorded  to  provide  for the  estimated  costs of  further  consolidating  the
Company's  Beaverton,   Oregon  repair  operations  into  its  Orlando,  Florida
facility.  This charge  consists of severance  benefits,  equipment  relocation,
lease termination and other costs related to the consolidated plan.

In June 1995, the Company's  President and Chief  Executive  Officer  elected to
retire.  In connection  with his  retirement,  the Company's  Board of Directors
elected  to award  approximately  $100,000  in  retirement  benefits  consisting
primarily  of salary  and  health  care  insurance  through  February  1996.  An
additional provision of $50,000 was also charged to operations for the estimated
search and relocation costs expected to be incurred in hiring a replacement.


NOTE 4.  INVENTORIES

Inventories consist of the following:

                                                    September 30   December 31
                                                        1996          1995
                                                    ------------   ------------

Switching systems, frames and 
  related circuit boards                           $   7,058,369  $   2,127,653
Electronic components                                  2,737,498      1,595,281
Pay telephone parts                                      422,303        346,978
Work in progress                                         636,047        307,438
Other finished goods                                     258,659        172,371
                                                    ------------   ------------
                                                   $  11,112,876  $   4,549,721
                                                    ============   ============


<PAGE>

NOTE 5.  TECHNOLOGY LICENSE

In March 1996,  the Company  entered into a  memorandum  of  understanding  with
International  Communication  Technologies,  Inc. ("ICT") and Eagle Telephonics,
Inc.  ("Eagle") to manufacture,  market and sell a new modular,  digital central
office switch recently developed by Eagle. In July 1996, a long-term  technology
licensing agreement was executed by all three parties. As consideration for this
license,  the  Company  paid  Eagle  $250,000  in cash and  agreed to provide it
$450,000 of manufacturing  services,  the majority of which were performed prior
to July 1996.  Effective  January 1, 1997,  the license  fees paid Eagle will be
amortized to expense over the estimated useful life of the license.

In addition to the up front  consideration,  the  Company  will  pay ICT certain
royalties based on future sales  of  the switch by the Company.  In August 1996,
the Company agreed  to  prepay  up  to  $270,000  in royalties related to future
switch sales at a  significantly  discounted  royalty  rate. As of September 30,
1996, $75,000 of prepayments had been made.

In connection with this license and the up front consideration paid, the Company
received 1.2 million  restricted shares of Eagle common stock. The fair value of
these shares was not material as of September 30, 1996.


NOTE 6.  DEBT

Debt outstanding consists of the following:

                                                September 30      December 31
                                                    1996              1995
                                                 -----------      -----------

Revolving credit loans payable to bank          $      ---       $  4,926,142
Term loan payable to bank                          3,875,000        4,200,500
Other notes payable                                    ---              8,578
                                                 -----------      -----------
Total debt                                         3,875,000        9,135,220
Amount due within one year                          (575,000)      (5,385,220)
                                                 -----------      -----------
Long-term debt                                  $  3,300,000     $  3,750,000
                                                 ===========      ===========

In March 1996,  the Company and its primary  lender  amended their existing bank
credit  facility  to increase  the  Company's  revolving  line of credit from $2
million to $6 million,  reduce the  interest  rate by one percent and extend the
bank's  commitment  until  March  2001.  The  existing  $4  million  term  loan,
originally  scheduled to mature in November  1997,  was  replaced  with a new $4
million term loan requiring escalating quarterly payments through March 2001.

In October 1996, the Company repaid the  $3,875,000  outstanding  under the term
loan from proceeds  received in connection with the Company's  secondary  public
offering (see "Note 7").In connection with the completion of the public offering
and the repayment of the term loan, the Company's  primary  lender  committed to
increase the Company's available revolving line of credit from $6 million to $10
million.

Interest  on the new bank  facility  is set at prime plus 1 1/4% or Libor plus 2
1/2%, at the option of the Company.  As of September 30, 1996, the interest rate
on all bank debt was 8%.

Interest paid was $305,769 and $311,753 for the nine months ended  September 30,
1996 and 1995, respectively.

<PAGE>

NOTE 7.  EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

On August 12, 1996, an Escrow Agreement entered into by certain  stockholders of
the Company in connection  with the Company's  initial public offering in August
1991 expired.  Since  conditions for release during this five year term were not
met,  672,419  escrowed  shares of Company  common  stock were  returned  to the
Company and are now authorized but unissued shares.

On September 25, 1996, 3.0 million shares of Company common stock were sold in a
secondary public offering at a price of $8.00 per share. On October 2, 1996, the
Company  received $22.5 million from this offering,  after the  application of a
6.25% underwriter  discount fee.  Additional expenses incurred by the Company in
connection  with this  offering  were  estimated at $825,000 as of September 30,
1996.

In addition  to the shares  sold in  September  1996,  the  Company  granted the
underwriters an option to purchase up to an additional  487,500 shares of common
stock to cover over-allotments.  In October 1996, the underwriters exercised the
over-allotment option in full (see "Note 8").

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  435,090  common  shares  held  in  escrow  from  certain
acquisitions have been excluded from the earnings per share calculations because
the conditions for release of shares from escrow have not been satisfied.

Common stock issued and  outstanding at September 30, 1996 and December 31, 1995
was 15,627,969 and 12,558,279 shares, respectively.

NOTE 8.           SUBSEQUENT EVENT

In October 1996, the underwriters of the Company's  secondary offering exercised
the  over-allotment  option in full and purchased from the Company an additional
487,500 shares of common stock at a price of $8.00 per share.  As a result,  the
Company received additional cash proceeds of approximately $3.7 million.

<PAGE>


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

Overview

         The Company develops,  manufacturers, and markets wireline and wireless
switching,  transmission  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  companies.  To support and complement its product
sales,  the Company also  provides its  customers  with a broad range of design,
manufacturing, testing, installation, repair and other value-added services.

         The  Company   has   recently   completed   strategic   and   financial
restructuring  programs  designed to strengthen its management team,  reposition
the Company as a provider of telecommunications  products, improve its financial
condition,  reduce its  operating  costs and  position  the  Company  for future
growth.  These  programs were  undertaken  following the losses  incurred by the
Company in the early 1990s,  primarily due to a discontinued smart pay telephone
business,  and to take advantage of the significant growth opportunities present
within the Company's existing customer base and related markets.

         In November 1994, the Company began to rebuild its management  team and
change its  strategic  focus by  appointing  a new  Chairman  of the  Board.  In
December 1994, three experienced  telecommunications  executives agreed to serve
on the  Company's  Board of  Directors.  Throughout  1995 and early 1996, as the
Company  was  changing  from   providing   principally   services  to  providing
telecommunications   products  and  related   services,   the  Company   further
strengthened  its  management  team by recruiting and hiring a new President and
Chief  Operating  Officer,  Vice  President  of  Business  Development  and Vice
President  of  Operations.  These  individuals,  along with  other key  managers
recruited  into the  Company  during  this  time  frame,  bring  to the  Company
significant   experience  in  manufacturing  and  marketing   telecommunications
equipment.

         During 1995 and early 1996, the Company  acquired three businesses (the
"Acquisitions") in an effort to broaden its line of switching,  transmission 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, a provider
of wireless  products and services  primarily to the cable television  industry.
Effective  January  1996,  the  Company  acquired  Sunrise,  a  manufacturer  of
intelligent transmission and access products.

         The  Company  realized  significant   improvements  in  its  sales  and
operating  results  during 1995 and the nine months  ended  September  30, 1996,
primarily  as  a  result  of  the  three   acquisitions  and  the  sale  of  DSC
Communications   Corporation   ("DSC")  access  products  under  a  distribution
agreement entered into in September 1995. The Company's total sales increased by
97.2% in 1995 and 126.8% in the first nine months of 1996 when  compared to 1994
and the first nine  months of 1995,  respectively.  As the  Company's  sales mix
shifted from a majority of service  revenues in 1994 (81.8% of total sales) to a
majority  of product  sales in 1995 and the first nine months of 1996 (57.7% and
66.4% of total sales, respectively), the Company's gross profit margin increased
from 12.9% in 1994 to 21.1% in 1995 and 28.1% in the first nine  months of 1996.
As a percentage  of total sales,  the Company's  operating  income (loss) before
special  charges  increased from (8.5%) in 1994 to 8.3% in 1995 and 13.3% in the
first nine months of 1996. Management will continue to seek further improvements
in gross profit margin over time as the Company's product offerings include more
internally developed and acquired products containing proprietary technology.

<PAGE>

         Since January 1, 1995, the Company has  significantly  strengthened its
balance sheet through  improved  operating  results,  $10 million in new capital
from private  placements of the Company's common stock, and a recently completed
secondary  public stock offering that provided the Company  approximately  $25.5
million in cash proceeds.  The Company has used this improved financial strength
to  facilitate   acquisitions  and  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  $35.6  million  and  $45.7  million,
respectively, at September 30, 1996.

Results of Operations

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

<TABLE>
<CAPTION>
                                                         Three Months Ended                  Nine Months Ended
                                                            September 30                       September 30
                                                  -------------------------------   -------------------------------
<S>                                               <C>                <C>             <C>               <C> 
                                                       1996             1995              1996            1995
                                                  -------------      -----------     ------------      ------------

Sales of products                                       65.4%            50.9%            66.4%            42.8%
Service revenues                                        34.6             49.1             33.6             57.2
                                                  -------------      -----------     ------------      ------------
     Total sales                                       100.0            100.0            100.0            100.0

Cost of products sold                                   38.7             28.9             42.9             26.4
Cost of services                                        29.0             43.4             29.0             50.7
                                                  -------------      -----------    -------------      ------------
     Total cost of sales                                67.7             72.3             71.9             77.1
                                                  -------------      -----------    -------------      ------------

     Gross profit                                       32.3             27.7             28.1             22.9

Engineering and development                              2.0              2.5              1.7              2.8
Selling, general and administrative                     13.5             14.1             12.0             13.1
Amortization of goodwill                                 1.1              0.7              1.1              0.4
Special charges                                          ---              ---              ---              6.1
                                                  -------------      -----------    ------------       ------------

     Operating income                                   15.7             10.4             13.3              0.5

Interest expense                                         0.8              1.6              0.8              2.2
Interest and other income                               (0.2)            (0.6)            (0.5)            (0.3)
                                                  -------------      -----------    -------------      -------------

    Income (loss) before income taxes                   15.1              9.4             13.0             (1.4)

Income taxes                                             1.9              ---              1.3              ---
                                                  -------------      -----------    -------------      -------------

   Net income (loss)                                    13.2%             9.4%            11.7%            (1.4)%
                                                  =============      ===========    =============      =============

</TABLE>

<PAGE>

Three Months Ended September 30, 1996 Compared to Three Months Ended 
September 30, 1995

         Sales.  Total sales increased  $5,758,000,  or 86.5%, to $12,419,000 in
the third  quarter of 1996 from  $6,661,000  in the third  quarter of 1995.  The
percentage  of  product  sales to total  sales  increased  to 65.4% in the third
quarter of 1996 from 50.9% in the third quarter of 1995.

         Product sales  increased  $4,733,000,  or 139.5% , to $8,125,000 in the
third quarter of 1996 from $3,392,000 in the third quarter of 1995. The increase
related  primarily to an additional  $3.6 million of switching  products sold by
AIT and $1.0  million of  transmission  and access  products  sold by Westec and
Sunrise, both of which were acquired subsequent to September 30, 1995.

         Service revenues increased  $1,026,000,  or 31.4%, to $4,294,000 in the
third quarter of 1996 from $3,268,000 in the third quarter of 1995. The increase
related to  approximately  $464,000  of Westec  repair  revenues  following  its
acquisition and $547,000 of increased  circuit board repair revenues,  primarily
from a new repair agent contract executed with Century Telephone in July 1995.

         Gross  Profit.  Gross  profit  increased  $2,174,000,   or  117.9%,  to
$4,018,000 in the third quarter of 1996 from  $1,844,000 in the third quarter of
1995.  Gross profit margin  increased to 32.3% in the third quarter of 1996 from
27.7% in the third quarter of 1995. The improved  performance  resulted from the
86.5%  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  declined to 40.8% in the third
quarter of 1996 from  43.3% in the third  quarter of 1995.  The  reduction  is a
result of $300,000 in high margin AIT revenues  reported in the third quarter of
1995 for product shipments to Madagascar. Excluding these revenues, gross profit
margin for products sold in the third quarter of 1995 were 39.2%.

         Gross profit margin on service revenues increased to 16.4% in the third
quarter  of 1996  from  11.5% in the third  quarter  of 1995,  primarily  due to
increased gross profit margins generated by Westec's wireless  equipment repair,
which was acquired  subsequent  to  September  30,  1995,  and  improved  margin
performance from the Company's other service operations.

         Engineering  and  Development.  Engineering  and  development  expenses
increased  $78,000,  or 47.1%,  to  $243,000  in the third  quarter of 1996 from
$165,000 in the third quarter of 1995. The increase in expenses was attributable
to the research and product  development  activities acquired in connection with
the acquisition of Sunrise and  the formation of a corporate product development
group during the third quarter of 1996. As a result  of  the  86.5%  increase in
total sales,  engineering  and development  expenses  decreased to 2.0% of total
sales in the third quarter of 1996 from 2.5% of total sales in the third quarter
of 1995.

<PAGE>


         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative expenses increased $740,000, or 78.8%, to $1,679,000 in the third
quarter  of 1996  from  $939,000  in the third  quarter  of 1995.  The  increase
primarily   related  to  expenses   associated   with  the   operations  of  the
Acquisitions,  additional  salary and related costs for the  Company's  Chairman
(who  took no  salary  during  1995) and its new  President,  and the  Company's
establishment  of a  dedicated  international  sales  and  marketing  group  and
corporate  business  development  function  in the first  quarter of 1996.  As a
percentage  of  total  sales,  selling,   general  and  administrative  expenses
decreased to 13.5% in the third  quarter of 1996 from 14.1% in the third quarter
of 1995.

         Amortization of Goodwill. Amortization of goodwill increased $98,000 to
$142,000 in the third quarter of 1996 from $44,000 in the third quarter of 1995,
as a result of the goodwill acquired in connection with the Acquisitions.

         Operating Income. Operating income increased $1,258,000,  or 180.9%, to
$1,954,000  in the third  quarter of 1996 from  $696,000 in the third quarter of
1995.  Operating  income margin  increased to 15.7% in the third quarter of 1996
from 10.4% in the third quarter of 1995.

         Interest  Expense.  Interest  expense  decreased  $9,000,  or 7.5%,  to
$101,000  in the third  quarter of 1996 from  $110,000  in the third  quarter of
1995. The decrease  resulted from a reduction in the average debt outstanding of
approximately  $540,000  in the third  quarter of 1996 as  compared to the third
quarter of 1995.

         Interest and Other Income.  Interest and other income decreased $16,000
to $25,000 in the third  quarter  of 1996 from  $41,000 in the third  quarter of
1995 primarily due to the reduction in notes receivable from the former owner of
AIT.


Nine Months Ended September 30, 1996 Compared to Nine Months Ended 
September 30, 1995

         Sales. Total sales increased $20,338,000,  or 126.8%, to $36,376,000 in
the first nine months of 1996 from $16,038,000 in the first nine months of 1995.
The  percentage of product sales to total sales  increased to 66.4% in the first
nine months of 1996 from 42.8% in the first nine months of 1995.

         Product sales increased  $17,300,000,  or 252.1%, to $24,162,000 in the
first nine months of 1996 from  $6,862,000 in the first nine months of 1995. The
increase related primarily to an additional $10.9 million of switching  products
sold by AIT,  which was acquired in May 1995,  and $3.0 million of  transmission
and access  products  sold by Westec and  Sunrise,  both of which were  acquired
subsequent  to September  30, 1995.  Sales in the first nine months of 1996 also
included $4.7 million of DSC access  products  sold  pursuant to a  distribution
agreement entered into in the third quarter of 1995.

         Service revenues increased $3,037,000,  or 33.1%, to $12,214,000 in the
first nine months of 1996 from  $9,177,000 in the first nine months of 1995. The
increase  related  to  approximately  $1.2  million  of Westec  repair  revenues
following  its  acquisition  and $1.4 million of increased  circuit board repair
revenues  generated by the  introduction of new repair services and a new repair
agent contract executed with Century Telephone in July 1995.

<PAGE>

         Gross  Profit.  Gross  profit  increased  $6,527,000,   or  177.4%,  to
$10,206,000  in the first nine months of 1996 from  $3,679,000 in the first nine
months of 1995.  Gross profit margin increased to 28.1% in the first nine months
of 1996 from 22.9% in the first nine months of 1995.  The  improved  performance
resulted from the 126.8%  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  decreased to 35.3% in the first
nine months of 1996 from 38.2% in the first nine months of 1995,  primarily as a
result  of the  sale of DSC  access  products  during  the  first  half of 1996.
Excluding the sale of these  distributed  DSC products,  gross profit margin for
products sold was 41.4%.  The improved  margin  performance  on  non-distributed
products related  primarily to the $10.9 million or 311.4% increase in switching
products sold by AIT.

         Gross profit margin on service revenues increased to 13.6% in the first
nine  months  of 1996  from  11.5%  in the  first  nine  months  of  1995.  This
improvement  related  primarily to the  economies of scale  associated  with the
33.1%  increase  in  service  revenues  and  reduced   depreciation  expense  of
approximately  $225,000  resulting  from the special  charge taken in the second
quarter of 1995 to write down the net book value of certain  fixed assets of the
Company's repair operations.

         Engineering  and  Development.  Engineering  and  development  expenses
increased $166,000,  or 36.8%, to $618,000 in the first nine months of 1996 from
$452,000  in the first  nine  months  of 1995.  The  increase  in  expenses  was
attributable  to the research  and product  development  activities  acquired in
connection  with the  acquisition  of Sunrise,  and the formation of a corporate
product  development  function  during the third quarter of 1996. As a result of
the  126.8%  increase  in total  sales,  engineering  and  development  expenses
decreased  to 1.7% of total  sales in the first nine months of 1996 from 2.8% of
total sales in the first nine months of 1995.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses increased  $2,261,000,  or 107.3%, to $4,368,000 in the
first nine months of 1996 from  $2,107,000 in the first nine months of 1995. The
increase  primarily  related to expenses  associated  with the operations of the
Acquisitions,  additional  salary and related costs for the  Company's  Chairman
(who  took no  salary  during  1995) and its new  President,  and the  Company's
establishment  of a  dedicated  international  sales  and  marketing  group  and
corporate  business  development  function  in the first  quarter of 1996.  As a
percentage  of  total  sales,  selling,   general  and  administrative  expenses
decreased to 12.0% in the first nine months of 1996 from 13.1% in the first nine
months of 1995.

         Amortization of Goodwill.  Amortization of goodwill  increased $297,000
to  $364,000  in the first  nine  months of 1996 from  $67,000 in the first nine
months of 1995 as a result  of the  goodwill  acquired  in  connection  with the
Acquisitions.

<PAGE>

         Special Charge.  In the second quarter of 1995, the Company  recorded a
one-time charge of $980,000,  primarily for the write-down of test equipment and
related tooling used in certain repair  operations.  As a result of a decline in
analog circuit board repair  revenues,  the shift in strategic  focus to product
sales,  new digital  repair  services and programs  offered by the Company,  the
acquisition  of AIT and  other  market  considerations,  management  elected  to
significantly write-down the net book value of certain test equipment,  tooling,
dies and diagnostic programs used to repair analog telecommunications equipment.

         Operating Income.  Operating income increased  $4,782,000 to $4,855,000
in the first nine months of 1996 from  $73,000 in the first nine months of 1995.
Operating income margin increased to 13.3% in the first nine months of 1996 from
0.5% in the first nine months of 1995.

         Interest  Expense.  Interest expense  decreased  $47,000,  or 13.4%, to
$309,000 in the first nine months of 1996 from $356,000 in the first nine months
of 1995.  The decrease  resulted  from a reduction  in the interest  rate on the
Company's bank debt due to the lender's  reinstatement of a Libor-based interest
rate  option in July  1995 and an  additional  one  percentage  point  reduction
obtained with the Company's new bank agreement in March 1996.

         Interest and Other Income. Interest and other income increased $130,000
to  $183,000  in the first  nine  months of 1996 from  $53,000 in the first nine
months of 1995 due to interest earned on notes receivable from stockholders, the
note  receivable  from the former owner of AIT and the  Company's  invested cash
balances. As of March 31, 1996, the notes receivable from stockholders were paid
in full.

<PAGE>

Liquidity and Capital Resources

         Overview.  The Company has  traditionally  financed its  operations and
growth through private  placements of equity, the exercise of stock warrants and
options and bank loans from its primary lender. With the significant increase in
total sales and net income in 1995 and the first nine months of 1996, cash flows
from operations are also becoming a primary cash resource for the Company.

         In October 1996,  the  Company  received  approximately  $26 million in
cash  from  the  sale  of  3,487,500  shares  of its common stock in a secondary
public offering at a price of $8.00 per share. In October 1996, the Company used
$3,875,000  of the net proceeds to pay off all debt owed to its  bank under  the
Company's term loan. In  consideration  of the repayment of the amounts borrowed
under the term loan,  the  Company's  primary  lender  committed to increase the
amount  available  to the  Company  under its  revolving  line of credit from $6
million to $10 million.  The Company  intends to use the  remaining net proceeds
from the offering for the acquisition of businesses and technology  licenses and
other  strategic  initiatives  related  to the  growth  and  development  of the
Company's   telecommunications  products  business  and  for  general  corporate
purposes, including  new product  development,  the  expansion  of domestic  and
international sales and marketing efforts and working capital.

         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 1996 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.

         Operating Activities.  Cash generated by operating activities increased
$2,738,000 to $1,540,000 in the first nine months of 1996 from  $(1,198,000)  in
the first nine months of 1995  primarily  as a result of the improved net income
performance of the Company.

         Accounts receivable  decreased  $1,364,000,  or 14.1%, to $8,285,000 at
September  30, 1996 from  $9,649,000  at December  31,  1995.  Average day sales
outstanding at September 30, 1996 and December 31, 1995 were 49 days.

         Inventories at September 30, 1996 increased $6,563,000, or 144.3%, over
December 31, 1995 levels to  $11,113,000.  This  increase was due primarily to a
planned $4.8 million build-up of AIT inventories to support the increased demand
for  its  switching  products.  The  remaining  increase  related  primarily  to
inventories  from the acquisition of Sunrise and an  approximately  $1.0 million
increase in electronic manufacturing  inventories to service fourth quarter 1996
production backlog.

<PAGE>

                  Investing  Activities.  In the first nine months of 1996,  the
Company   invested   $849,000  in  capital   expenditures,   primarily  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 new acquisitions and facility  improvements at the
AIT subsidiary.

         In March 1995, the Company  entered into a four year agreement to lease
approximately  $1 million  of new  surface  mount  manufacturing  and  automated
testing   equipment.   As  part  of  the  lease  agreement,   the  Company  paid
approximately  $220,000 as a first  payment and $24,000 for a security  deposit.
Other Assets on the  September  30, 1996 balance  sheet  includes  approximately
$248,000 in prepaid rent relating to this lease.

         From May 1995 to January 1996, the Company  completed the Acquisitions,
which were designed to bring new wireline and wireless  switching,  transmission
and access  products and technology  into the Company.  All of the  Acquisitions
were  relatively  similar  in  structure  in that the former  owner(s)  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, it will be measured and recorded on the
Company's balance sheet as additional goodwill and stockholders' equity.

         To date,  the  Company  has paid  approximately  $2.0  million  in cash
consideration  in  connection  with the  Acquisitions,  including  $1,165,000 in
contingent  consideration  paid to the previous owner of AIT in 1996 as a result
of AIT's gross profit  performance  to date. The impact of these payments on the
Company's cash position has been  partially  offset by $805,000 in cash owned by
Sunrise on the effective date of its acquisition.

         In July  1995,  the  Company  loaned the sole  stockholder  of AIT $1.3
million in cash in  connection  with a secured  promissory  note  executed as an
integral part of the acquisition of AIT. An additional  $1,030,000 may be loaned
to the  stockholder  as  specific  fully  reserved  accounts  receivable,  notes
receivable and  inventories on AIT's May 17, 1995 balance sheet are collected or
realized by the Company.  Through  September 30, 1996, the Company had loaned an
aggregate of  $1,835,000 to the  stockholder,  of which $87,000 had not yet been
repaid.

         In March 1996, the Company  entered into a memorandum of  understanding
with   International   Communication   Technologies,   Inc.  ("ICT")  and  Eagle
Telephonics,  Inc.  ("Eagle")  to  manufacture,  market and sell a new  modular,
digital  central  office  switch  recently  developed by Eagle.  In July 1996, a
long-term  technology  licensing agreement was executed by all three parties. As
consideration  for this  license,  the Company  paid Eagle  $250,000 in cash and
agreed to provide it $450,000 of manufacturing  services,  the majority of which
were  performed  prior to July 1996. In  addition,  the  Company  will  pay  ICT
certain royalties based on future sales of the switch by the Company.  In August
1996, the Company agreed to prepay up to $270,000 in royalties related to future
switch sales at a  significantly  discounted  royalty  rate. As of September 30,
1996, $75,000 of prepayments had been made.

<PAGE>

         The switch has been designed using advanced digital and  microprocessor
based  technology  which  permits the provision of complete  telephony  services
including  custom  features  such  as  call  waiting,   call  forwarding,   call
conferencing,  operator  assistance,  etc. The switch contains  detailed billing
software and can also be configured as a Subscriber,  Tandem or Gateway  switch.
The current switch design serves  applications up to 4,000  subscriber lines and
will be expandable to over 60,000 lines through  future  software  enhancements.
Initially,  the  Company  expects  to market  the  switch  in the  International
marketplace due to its  compatibility  with  international  standards,  flexible
programming,  modular design,  small physical size and tolerance of a wide range
of environmental conditions. The Company expects to begin selling and delivering
this switch in the first half of 1997.

         Financing  Activities.  Since  February  1993,  the  Company has raised
approximately  $6.2  million  from four  placements  of common  stock to private
investors.  During June 1995,  306,400 restricted shares of the Company's common
stock were sold in a private offering for a gross consideration of $766,000,  or
$2.50 per share. Participants in the offering also received warrants to purchase
a total of 306,400 of additional  shares of restricted common stock at $3.50 per
share on or prior to June 30, 2000. An additional 861,600 of shares and warrants
were sold through  this  offering in July 1995.  Net proceeds  from this private
placement were used for operational  purposes and to complete the acquisition of
AIT.

         In October 1995, the Company raised  approximately $6.5 million through
the exercise of previously issued warrants and non-qualified options to purchase
shares of  common  stock.  The vast  majority  of these  securities  related  to
warrants  issued in connection  with the private  offerings  discussed above and
bank financing  agreements.  In exercising their warrants or options,  investors
had the option of paying  cash or  executing  an 8% interest  bearing  note made
payable to the Company.  Approximately  $2.4  million of the total  proceeds was
paid in cash and $4.1 million through notes, which were paid in full as of March
31, 1996. There are currently no significant  warrants or options outstanding to
purchase  common stock except those issued under the Company's 1991 Stock Option
Plan and a Director warrant plan.

         On  September  25,  1996,  the Company  sold 3.0 million  shares of its
common stock in a secondary  public  offering at a price of $8.00 per share.  In
October 1996, the underwriters  exercised the over-allotment  option in full and
purchased  from the Company an  additional  487,500  shares of common stock at a
price of $8.00 per share.  After deducting  expenses,  the Company  received net
proceeds from the offering of approximately $25.5 million.

         Net Operating Loss Carryforwards.  As of December 31, 1995, the Company
had approximately $8.5 million in tax net operating loss carryforwards available
to reduce future taxable income through the year 2010. In addition,  the Company
has capital loss  carryforwards of approximately  $1.2 million expiring in 1998.
Due to the  exercise of certain  stock  options and warrants and the issuance of
common  stock  relating  to the AIT and Westec  acquisitions  during  1995,  the
Company may have undergone an ownership  change under Internal  Revenue  Service
regulations  which  would limit the annual  utilization  of net  operating  loss
carryforwards.  If an ownership change has occurred, the annual limitation would
currently be approximately $4.4 million.  The Company began recording income tax
expense in the  second  quarter  of 1996  under the  assumption  that the annual
limitation will be in effect for 1996.

<PAGE>

         Salary Incentive Program.  In December 1995, the Company  implemented a
voluntary salary  reduction  program designed to improve the Company's cash flow
during 1996,  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,
61 of  the  Company's  66  salaried  employees  agreed  to  forego  $849,254  of
their  1996  compensation  in  exchange  for  424,627  non-qualified  options to
purchase Common Stock at $7.00 per share, the  then-current  market value of the
Common  Stock  (i.e.,  one stock  option  for every $2 of  compensation).  These
options  vest 15% for each  quarter in 1996 that the  Company  achieves  certain
levels of pre-tax  profitability.  The remaining  vesting is tied to the Company
meeting   specific   operational   objectives   in  1996,   including  ISO  9002
certification,  25% internal  sales  growth,  return to NASDAQ  National  Market
listing and upgraded information systems that will support accelerated growth.

         Under the 1996 program,  employees could participate to a maximum level
of 50% of their 1996  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 is achieved  for 1996 in excess of that  reported  for 1995,  a
partial  or  full   repayment  of  salaries  will  be  made  in  February  1997.
Compensation  expense  for this  program  will be recorded in 1996 as 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 1996, a $650,000 expense
was  recorded  for the  pro-rata  portion  of the  potential  repayment  of 1996
salaries  under this  program.  The  related  liability  is  included in Accrued
Payroll and Benefits on the Company's September 30, 1996 balance sheet.

         Summary. The Company's improved operating performance and completion of
the secondary public offering has significantly  enhanced its financial strength
and improved its liquidity.  Currently,  the Company has no bank debt,  over $20
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.

<PAGE>

PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

27.1     Financial Data Schedule

(b)      Report on Form 8-K

None
















                                   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
                                      Vice President and Chief Financial Officer


Dated:  November 13, 1996