<PAGE>



                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549

                              Form 10-KSB/A2



  X   ANNUAL REPORT UNDER SECTION 13 or 15(d) of the SECURITIES
----  EXCHANGE ACT OF 1934 (Fee Required)

             For the fiscal year ended December 31, 1995
                                       -----------------

      TRANSITION REPORT UNDER SECTION 13 or 15(d) of the SECURITIES
----- EXCHANGE ACT OF 1934 (No Fee Required)
           For the transitional period from            to             
                                            ----------    -----------
Commission File Number 0-24622
                       -------




                  POLISH TELEPHONES AND MICROWAVE CORPORATION          
     ---------------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)
                     (d/b/a Telscape International, Ltd.)



                Texas                                75-2433637 
    -------------------------------            ----------------------
    (State or other jurisdiction of               (I.R.S. Employer
     incorporation or organization)            identification number)


    4635 Southwest Freeway, Suite 800, Houston, Texas            75075
   ----------------------------------------------------------------------
   (Address of principal executive offices)                    (Zip Code)

Issuer's telephone number including area code -- 713/968-0968
                                                 ------------

Securities registered under Section 12(b) of the Exchange Act:

                                             Name of each exchange on
          Title of each class                       which traded
          -------------------                ------------------------
                None                                     -

Securities registered under Section 12(g) of the Exchange Act:

                  Common Stock ($.001 Par Value)
                  ------------------------------
                         (Title of class)

             Redeemable Common Stock Purchase Warrant
             ----------------------------------------
                         (Title of class)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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
               -----      -----

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to 
the best of the registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-KSB or any 
amendment to this Form 10-KSB.       
                               -----

Issuer's revenues for its most recent fiscal year     $1,108,473     
                                                    --------------

Aggregate market value of the common stock held by non-affiliates of the 
registrant on March 20, 1996, based on the closing price of the common stock on
the NASDAQ Small-Cap Market on that date was approximately $8,036,213

1,890,442 shares of registrant's common stock($.001 Par Value) were outstanding
as of March 28, 1996.

Transitional Small Business disclosure format   Yes        No   X
                                                    -----     -----


<PAGE>
                   Polish Telephones and Microwave Corporation
                              Table of Contents
                              Form 10-KSB Report
                              December 31, 1995



                                                            Page
                                                            ----
Part I.

     Item 1.  Description of Business                         2

     Item 2.  Description of Property                        13

     Item 3.  Legal Proceedings                              13

     Item 4.  Submission of Matters to a vote of
               Security Holders                              13


Part II.

     Item 5.  Market for Common Equity and Related
               Stockholder Matters                           14

     Item 6.  Management's Discussion and Analysis
               of Financial Condition and Results
               of Operations                                 15

     Item 7.  Financial Statements                           18

     Item 8.  Changes in and Disagreements with
               Accountants on Accounting and
               Financial Disclosure                          39


Part III.

     Item 9.  Directors, Executive Officers,
               Promoters and Control Persons;
               Compliance With Section 16(a)
               of the Exchange Act                           40

     Item 10. Executive Compensation                         48

     Item 11. Security Ownership of Certain
               Beneficial Owners and Management              52

     Item 12. Certain Relationships and Related
               Transactions                                  57


     Item 13. Exhibits and Reports on Form 8-K               60

<PAGE>
                            PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

DIRECTORS AND EXECUTIVE OFFICERS

     The following tables set forth certain information as with respect to the 
directors and executive officers of the Company, certain officers of Digital 
Telecommunications Systems/ZWUT, a Polish limited liability company, the 
Company's 90% held subsidiary ("DTS/ZWUT"), certain officers of Telereunion, 
Inc. ("Telereunion"), a Delaware corporation, the Company's 100% owned 
subsidiary, and Vextro de Mexico, S.A. De C.V. and Servicios Corporativos 
Vextro, S.A. de C.V. (collectively, "Vextro"), Mexican corporations, 
Telereunion, Inc.'s 97% owned subsidiaries.

DIRECTORS AND EXECUTIVE OFFICERS DURING 1995 FISCAL YEAR:

                              Period with
Name              Age           Company          Position
----              ---         -----------        --------

Gary Panno (2)     40      March 1993 to       Director
                           Present            

W. Dal Berry       59      March 1992 to       Chief Executive
                           June 1995           Officer and Director


S.P. Krishna       56      March 1992 to       Chairman of the Board,
Murthy                     February 1996       President and Chief
                                               Executive Officer 

Christopher H.     32      November 1995 to    Vice Chairman of the
Efird (1)                  Present             Board

Roy A. Varghese(1) 38      1992 to Present     Director and Secretary

Leszek Wronski     33      March 1995 to       Director
                           April 1996

Mamal Khorouzan    67      May 1992 to         Vice President for
                           Present             Manufacturing
                                               Operations for DTS/ZWUT

Kenneth Gregson    67      November 1995 to    Director
                           April 1996

William Vetter     38      1992 to August      Chief Financial
                           1996                Officer of DTS/ZWUT
-------------------------------
(1)  Member of Compensation Committee and the Option Committee of the Board of
     Directors.
(2)  Member of Audit Committee.

                                      40
<PAGE>
PRESENT EXECUTIVE OFFICERS AND DIRECTORS

                             Period with
Name              Age           Company          Position
----              ---         -----------        --------

Gary Panno (2)     40      March 1993 to       Chairman of the Board
                           Present            

Christopher H.     32      November 1995 to    Vice Chairman of the
Efird (1)                  Present             Board and Secretary

E. Scott Crist     32      August 1996 to      President and Chief
                           Present             Executive Officer 

Mark Vance         42      August 1996 to      Executive Vice President 
                           Present             and Chief Financial Officer

Manuel Landa (2)   35      May 1996 to         Director and Executive
                           Present             Vice President of Operations;
                                               President and Chief Executive
                                               Officer of Telereunion and
                                               Vextro

Oscar Garcia       35      May 1996 to         Director; Vice President of 
                           Present             Telereunion; Vice President of
                                               Operations of Vextro

Ricardo Orea       35      May 1996 to         Director; Vice President of 
                           Present             Telereunion; Vice President of
                                               Sales and Marketing of Vextro

Roy A. Varghese    38      1992 to Present     Director
(1)

Darrel O. Kirkland 57      March 1996 to       Director
                           Present
-------------------------------
(1)  Member of Compensation Committee and the Option Committee of the Board of 
     Directors.
(2)  Member of Audit Committee.


BUSINESS EXPERIENCE

GARY PANNO has been a member of the Board of Directors of the Company since 
March 1993.  He has served as Chairman of the Board since March 1996 and 
President and CEO from March 1996 to August 1996.  Mr. Panno was one of the 
initial investors in the Company and has been a home builder in the Dallas-Fort
Worth metroplex since 1985.  Mr. Panno received a B.S. in Industrial 
Engineering from Northeastern University in 1978.


                                      41
<PAGE>

CHRISTOPHER H. EFIRD has been a member of the Board of Directors of the Company
since November 1995 and Secretary since August 1996.  Mr. Efird has been 
employed by Benchmark Equity Group, Inc., an investment banking firm, since May
1994 and is a Principal thereof. From May 1992 to May 1994, he served as 
National Marketing Manager of AquaNatural Company, a provider of water 
purification, dispensing and marketing programs.  From February 1992 to May 
1992, he served as Sales and Marketing Manager of Licon, Inc., a subsidiary of 
Licon International, Inc. and a manufacturer of industrial waste purification 
equipment.  From October 1991 to May 1992, he served as Marketing Manager of 
Critical Industries, Inc. a manufacturer and distributor of equipment and 
supplies to the environmental remediation industry.  From February 1987 to May 
1990, Mr. Efird served as Vice President of Multiplex Systems, a 
telecommunications contracting company he co-founded. Mr. Efird holds a Master 
of Arts degree from Sam Houston State University and a B.S. from Texas A&M 
University.

E. SCOTT CRIST has served as President and CEO of the Company since August 
1996.  Mr. Crist served as President of Orion Communications, Inc., a reseller
of long distance and internet access services, from June 1996 to September
1996.  He was President and CEO for Matrix Telecom, a long-distance reseller,
from September 1995 through June 1996. He also was a founder of DNS 
Communications, a long-distance reseller, in May 1993 and served as its CEO 
from inception through September 1995.  He was formerly Vice President of 
Acquisitions for Trammell Crow Group from March 1991 to January 1993 with 
specific focus on U.S. capital market transactions.  Prior to joining Trammell 
Crow, Mr. Crist worked in acquisitions for AMLI Corporation of Chicago, an 
investment company, from August 1990 to March 1993 and was responsible for 
sourcing and underwriting income-producing assets on behalf of the firm's 
institutional clients.  Prior to that, he worked from June 1987 to September 
1988 in New York as a strategy consultant for KSM, Inc., where he was 
responsible for investigating competitive business situations for Fortune 200 
technology companies.  In addition, he was a design engineer for IBM 
corporation in Research Triangle, North Carolina.  Mr. Crist has an MBA from 
the J. L. Kellogg School at Northwestern University, and received a B.S. magna 
cum laude in Electrical Engineering with emphasis on telecommunications design 
from North Carolina State University. 

MARK VANCE has been Executive Vice President and CFO of the Company since 
August 1996. Mr. Vance served as Secretary/Treasurer of Orion Communications,
Inc., a reseller of long distance and internet access services, from April 1996
to September 1996.  He was Executive Vice President, COO and CFO for Matrix
Telecom, a long-distance reseller, from September 1995 to April 1996.  He also 
was a founder of DNS Communications, a long-distance reseller, and served as 
its CFO from May 1993 to September 1995.  He served as Director of Finance for 
WilTel Long Distance Services, a facilities-based long-distance carrier from 
April 1990 to March 1992.  As a Business Consultant, from April 1992 to April 


                                      42
<PAGE>

1993, he has developed plans and marketing programs for companies in 
telecommunications, including Southern Pacific Telecom.  Prior to joining 
WilTel, he held management positions with Mitchell Energy & Development, Texas
Energy, Quintana Petroleum and Texaco.  He has over 15 years' experience in 
management and business development, and received his B.S. in Finance from 
Louisiana State University, and an MBA from the University of Houston.

MANUEL LANDA has been a member of the Board of Directors of the Company since 
May 1996.  Mr. Landa is a co-founder of Telereunion and has been President of 
Vextro since 1989, President, CEO and Director of Telereunion since August 
1995.  From 1986 until he joined Telereunion, Mr. Landa served as Export Sales 
Manager for Condumex, the largest Mexican manufacturer of electrical products 
with exports to the USA, Canada, Latin America and Europe.  Also within 
Condumex (1984-1986), Mr. Landa was in charge of the Insulating Materials 
Division as Plant Manager.  Prior to that (1983-1984), Mr. Landa worked for 
Philips, a Dutch company in the consumer and industrial electronics business, 
serving as Design Engineer for its Industrial Audio-Video Division.  From 1981 
to 1983, Mr. Landa occupied the position of Project Engineer for IPESA, a 
Mexican construction and engineering firm, with projects in the petrochemical, 
industrial and touristic sectors of Mexico.  Manuel Landa received an 
undergraduate degree in Electronic and Communications Engineering (1984) from 
La Salle University in Mexico City, and has a diploma in Total Quality 
Management from the Instituto Tecnologico de Estudios Superiores Monterrey 
(1986).

OSCAR GARCIA has been a member of the Board of Directors of the Company since 
May 1996.  Mr. Garcia is a co-founder of Vextro and Telereunion and has been 
Vice President of Operations since 1988 for Vextro, and a Director of 
Telereunion since August 1995.  From 1987 until he co-founded Vextro, Mr. 
Garcia served as Engineering Manager for Infosistemas, at that time the 
exclusive AT&T telephone equipment distributor in Mexico.  From January 1986 to
May 1987 Mr. Garcia was Sales Support Manager for Macrotel de Mexico SA de CV, 
a subsidiary of Macrotel, Inc., a Florida telephone key systems company with 
exports to Mexico and Latin America.  From January 1983 until April 1986 Mr. 
Garcia held the position of design engineer for the R&D department of GTE, the 
leading U.S. telecommunications company involved at that time in PBX and KSU 
manufacturing in Mexico.  Mr. Garcia holds an undergraduate degree in 
Electronic and Communications Engineering (1984) from La Salle University in 
Mexico City, a diploma in Marketing form La Salle University (1986) and is 
currently obtaining a diploma in Business Administration from Berkley 
University in Mexico City.

RICARDO OREA has been a member of the Board of Directors of the Company since 
May 1996.  Mr. Orea is a co-founder of Vextro and Telereunion and has been Vice
President of Sales and Marketing since 1988 for Vextro, and a Director of 
Telereunion since August 1995.  Prior to joining Vextro, Mr. Orea was 

                                      43
<PAGE>

Electronic Control Systems Plant Manager for Asea Brown Boveri (ABB), a Swedish
electrical control and switchgear equipment manufacturer from 1985 to 1988.  
From April 1982 to June 1985, Mr. Orea worked for GTE in the Purchasing and 
Logistics Department as System Integrator and Supplier Development Manager.  
From 1979 to 1982, he was Technical Service Manager for MISA, a Mexican 
computer mainframes and telecommunications maintenance service company which 
served major financial accounts and universities.  Mr. Orea received an 
undergraduate degree in Electronic and Communications Engineering (1984) form 
La Salle University in Mexico City and has a diploma in Business Administration
from Berkley University in Mexico City (1994).

ROY A. VARGHESE is a co-founder of the Company and has served on the Board of 
Directors of the Company from its inception to the present.  He has been Vice 
President, Business Development of Immune Associates, Inc., a pharmaceutical 
industry consulting firm, from June 1994 to the present.  He served as Vice 
President of Business Development of the Company from its inception to May 
1994.  From October 1987 to November 1991, Mr. Varghese served as Director of 
Technical Services and Marketing Consultant for VISystems, Inc., a systems 
software company of which he was a co-founder.  Mr. Varghese received a Master 
of International Journalism degree from Baylor University in 1982.

DARREL O. KIRKLAND has been a member of the Board of Directors of the Company 
since March 1996.  Mr. Kirkland is a principal consultant with Kirkland & 
Associates, a management consulting firm specializing in telecommunications.  A
registered Professional Engineer, Mr. Kirkland has many years experience in 
long distance, microwave, wireless, fiber and local transmission services.  He 
has held general management and marketing positions with MCI Air Signal, CPI 
Microwave and Discovery Communications. Current and recent clients include MCI,
Skytel, IXC Communications, Prime Cable and Winstar Wireless.  Mr. Kirkland 
holds degrees from the University of Texas (BBA) and the University of Houston 
(MS, Industrial Engineering).

S. P. KRISHNA MURTHY is a co-founder of the Company and served as its Chairman 
from March 1994 until February 1996 and Chairman of DTS/ZWUT from March 1993
until February 1996.  From July 1990 until he co-founded the Company's 
predecessor, Mr. Murthy served as Vice President of International Operations 
for Axes Technologies, Inc., a Texas computer company with exports to Europe 
and procurement from the Far East.  From January 1986 to June 1990, Mr. Murthy 
was Vice President of International Marketing for ACS International, Inc., a 
Texas Electronics company with exports to Europe, South America and Asia.  Mr. 
Murthy holds an undergraduate degree in Electrical Engineering (1961) from the 
University of Madras and a Master's degree in International Management (1977) 
from the University of Texas at Dallas.


                                      44

<PAGE>

W. DAL BERRY has served as President, Chief Executive Officer and Director of 
the Company from its inception in 1992 until June 1995.  From 1988 until 1992, 
Mr. Berry was Chairman and Chief Executive Officer of Publishing Technology, 
Inc., a software developer.  During this same time period, Mr. Berry owned 
Berry & Associates, a management consulting firm and served on the boards of 
several private companies, including Networth, Inc. and Microdynamics, Inc., of
Dallas, Texas, Unified Communication of Atlanta, Georgia, and CVC Corporation 
of Abilene, Texas.  From 1982 until 1988, Mr. Berry was President and Chief 
Executive Officer of VMX, Inc., a publicly traded company in the voice 
messaging industry.  From 1980 until 1982, Mr. Berry was Vice President of the 
Xerox Office Products Division.  From 1963 until 1980, Mr. Berry served in 
various positions with Burroughs Corporation, including President and Chief 
Executive Officer of a wholly owned subsidiary, Graphics Sciences, Inc.  Mr. 
Berry received his degree in Accounting and Finance from the University of 
North Alabama in 1963.

KENNETH GREGSON served as a Director of the Company from November 1995 to April
1996.  Mr. Gregson retired from Tandycrafts in 1993, having served as its 
President and Chief Executive Officer from 1983 to his retirement and its 
Chairman of the Board from 1990 to his retirement.  

LESZEK WRONSKI served as a Director of the Company from March 1995 to April 
1996.  Mr. Wronski is a Vice President for Price Waterhouse Business 
Information Technologies located in Warsaw, Poland.  Additionally, he teaches 
at the Institute of Telecommunications, Warsaw University of Technology.  From 
1990 until 1993, Mr. Wronski served as an Executive Officer of Polish 
Telephones Foundation, a telecommunication consulting organization to Polish 
and foreign telecommunication companies in Poland.  He received his M.Sc. in 
Telecommunications from Warsaw University of Technology in 1987.  

MAMAL KHOROUZAN has been President of  DTS/ZWUT from September 1996 to the 
present.  Mr. Khorouzan was Vice President of Manufacturing of DTS/ZWUT from 
May 1992 to August 1996.  From January 1987 to January 1992, Mr. Khorouzan was 
general manager and executive vice president of Cal Power, a custom power 
systems company in California.  Mr. Khorouzan received a B.S. in Engineering 
from the University of Tucson in 1961 and an M.B.A. from the State University 
of California in 1971.  Mr. Khorouzan is based in Warsaw, Poland. 

WILLIAM VETTER, JR. served as Chief Financial Officer of DTS/ZWUT from its 
inception to August 1996.  Mr. Vetter was employed by Deloitte and Touche 
(previously Touche Ross & Co.) from 1980 to 1991.  At Deloitte and Touche, Mr. 
Vetter had both national and international assignments and spent over 5 years 
in Europe, South America and in the International Headquarters.  Mr. Vetter's 
public accounting experience includes major manufacturing, banking and 
wholesale operations.  He was responsible for professional review of 


                                      45
<PAGE>

international accounting issues and conducted due diligence procedures for 
acquisitions and mergers.  Mr. Vetter is a member of the American Institute of 
Certified Public Accountants.  Mr. Vetter is based in Warsaw, Poland.

     To the best of the Company's knowledge, there are no material proceedings 
to which any director, officer or affiliate of the Company, any owner of record
or beneficially of more than five percent of any class of voting securities of 
the Company or any associate of any such director, officer, affiliate of the 
Company or security holder is a party adverse to the Company or any of its 
subsidiaries or has a material interest adverse to the Company or any of its 
subsidiaries.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Exchange Act requires the Company's executive 
officers and directors and persons who own more than 10% of a registered class 
of the Company's equity securities to file reports of ownership and changes in 
ownership with the Securities and Exchange Commission and the NASDAQ.
Executive officers, directors and greater than 10% stockholders are required by
certain regulations to furnish the Company with copies of all Section 16(a) 
forms they file.

     Based solely on its review of the copies of Forms 3, 4 and 5 furnished to 
the Company, pursuant to the Exchange Act during its most recent fiscal year,
it is the Company's belief that any such forms required to be filed pursuant to
Section 16(a) of the Exchange Act were timely filed, as necessary by the 
officers, directors and security holders required to file the same during the 
fiscal year ended December 31, 1995 except that no Form 3 was filed by Leszek 
Wronski, a former director, and Forms 3, although subsequently filed, were not
filed on a timely basis by Ken Gregson, a former director, or Christopher 
Efird, a director of the Company.

CERTAIN INFORMATION RELATING TO THE BOARD OF DIRECTORS AND COMMITTEES OF THE 
BOARD

     The Board of Directors of the Company held six formal meetings during 
1995.  The Board of Director's Compensation Committee and Audit Committee each 
held one formal meeting during the year.  Each of the Directors who are 
nominated in this Proxy Statement and who served during 1995 as a Director or 
as a member of the Compensation Committee or the Audit Committee attended at 
least 75% of the Board and Committee Meetings during 1995 during the period in 
which they served as Director except that Roy Varghese did not attend two of 
the six Board Meetings. 

     The Audit Committee reviews internal auditing procedures and the adequacy 
of internal controls.  The Audit Committee meets periodically with management 
and the Company's independent public accountants.  The Compensation Committee 
establishes compensation and incentives for the Company's executive officers 


                                      46
<PAGE> 

and administers the Company's incentive compensation and benefit plans.  The 
Board of Directors does not have a standing nominating committee or any other 
committee performing a similar function.  The function customarily attributable
to a nominating committee is performed by the Board of Directors as a whole.


                                      47
<PAGE>
ITEM 10.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

     The following table sets forth the aggregate cash compensation paid for 
services rendered to the Company during the last two fiscal years by the 
Company's Chief Executive Officer who served as such during the 1995 fiscal 
year.  None of the Company's executive officers who served as such at the end 
of the last fiscal year earned in excess of $100,000 during the fiscal year 
indicated.

<TABLE>
<CAPTION>




                                                                         Long-Term Compensation
                                                                  -------------------------------------
                              Annual Compensation(1)                        Awards             Payouts
                    --------------------------------------------  --------------------------  ---------
                                                                                  Securities
                                                      Other         Restricted    Underlying
    Name and                                          Annual          Stock        Options/      LTIP       All Other
Principal Position  Year    Salary($)  Bonus($)   Compensation($)  Awards($)(2)    SARs (#)   Payouts(#)   Compensation
------------------  ----    ---------  --------   ---------------  ------------   ----------  ----------   ------------
<S>                 <C>       <C>        <C>             <C>             <C>        <C>            <C>           <C>
S.P. Krishna        1995      96,000        -            -               -          50,000         -             -
Murthy, CEO         1994      76,000     40,000          -               -             -           -             -
(June 1995-         1993      60,000        -            -               -          16,204         -             -
Feb. 1996)

W. Dal Berry        1995      33,000        -            -               -             -           -             -
CEO (until          1994      68,000        -            -               -             -           -             -
June 1995)          1993      52,000        -            -               -          16,204         -             -



</TABLE>

(1) Certain of the Company's executive officers receive prerequisites and other
personal benefits in addition to salary and bonuses. The aggregate amount of 
such prerequisites and other personal benefits, however, does not exceed the 
lesser of $50,000 or 10 percent of the total of the annual salary and bonus 
reported for any of the named executive officers.

(2)  The number and value of aggregate restricted stock holdings for Mr. Murthy
and Mr. Berry at the end of the last fiscal year, based on the closing bid 
price of the Common Stock on NASDAQ on December 31, 1995, were 49,859 and 
132,440 shares, respectively with a value of $137,112 and $364,210, 
respectively (without giving effect to the consideration paid by the named 
executive officer).

     The following table sets forth certain information with respect to options
granted during the last fiscal year to the Company's Chief Executive Officer 
named in the above Summary Compensation Table.

OPTION/SAR GRANTS IN LAST FISCAL YEAR (1995)

<TABLE>
<CAPTION>




                          Number of Securities        Percent of total          Exercise
                               Underlying          Options/SARS Granted to       or Base
       Name              Options/SARS Granted(#)   Employees in Fiscal Year    Price($/Sh)   Expiration Date
----------------------   -----------------------   ------------------------    -----------   ---------------
<S>                              <C>                        <C>                    <C>           <C> 
S.P. Krishna Murthy              50,000                     86.21%                 2.25          1/1/2002




</TABLE>


                                      48
<PAGE>

AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END 
OPTION/SAR VALUES

     The following table sets forth certain information with respect to options
exercised during fiscal 1995 by the Company's Chief Executive Officer named in 
the Summary Compensation Table, and with respect to unexercised options held by
such persons at the end of fiscal 1995.

<TABLE>
<CAPTION>





                                                      Number of Securities Underlying       Value of Unexercised in the
                                                         Unexercised Options/SARS              Money Options/SARs at  
                                                               at FY-End(#)                         FY-End($)(1)
                 Shares Acquired        Value         -------------------------------      ------------------------------
   Name           on Exercise(#)     Realized($)      Exercisable       Unexercisable      Exercisable      Unexercisable 
--------------   ---------------    ------------      -----------       -------------      -----------      -------------
<S>                     <C>               <C>            <C>                  <C>             <C>                  <C>
S.P. Krishna            -                 -              66,204               -               56,598               -
Murthy

W. Dal Berry            -                 -              16,204               -               31,598               -



</TABLE>


----------------------
  (1) The calculations of the value of unexercised options are based on the
      difference between the closing bid price on NASDAQ of the Common Stock on
      December 31, 1995, and the exercise price of each option, multiplied by
      the number of shares covered by the option.


EMPLOYMENT AGREEMENTS

     The Company has entered into an employment agreement with Mr. Gary Panno, 
effective as of April 1, 1996, which agreement provides that Mr. Panno will 
serve as President and Chief Executive Officer or other executive position.  
The agreement terminates March 31, 1997, unless earlier terminated by the 
Company for cause.  The agreement provides that Mr. Panno will be entitled to 
receive annual compensation of $60,000 and options to purchase 80,000 shares of 
Common Stock exercisable at $5.125 per share.

     Telereunion, Inc. has entered into employment agreements with Messrs. 
Landa, Garcia and Orea, effective as of May 14, 1996, which agreements provide 
that Mr. Landa will serve as President and CEO and Messrs. Garcia and Orea will
each serve as Vice Presidents of Telereunion, Inc.  Each agreement terminates 
May 14, 1999, unless earlier terminated by Telereunion, Inc. for cause.  
Messrs. Landa, Garcia and Orea will be entitled to receive annual compensation 
of $80,000 each.


                                      49
<PAGE>
CONSULTING AGREEMENTS

     The Company has entered into a consulting agreement with Benchmark Equity 
Group, Inc. effective May 23, 1996.  Pursuant to the agreement, Benchmark 
Equity Group will provide the Company business and strategic planning services.
The term of the agreement is one year and is automatically renewed for a second
year unless terminated by 60 days' written notice.  The agreement provides that
Benchmark Equity Group will be entitled to receive compensation of $7,000 per
month plus expenses.

     The Company has entered into a consulting agreement with Telecom 
Consulting Services, Inc. effective June 12, 1996 pursuant to which Telecom 
Consulting Services was to provide the Company telecommunication consulting.
The agreement was indefinite in term and has been terminated by the Company.
Telecom Consulting Services received $125 per hour expended on behalf of the 
Company plus expenses.

     The Company has entered into a financial public relations consulting 
agreement with Langley Financial Group, Inc. effective June 24, 1996.  Pursuant
to the agreement, Langley Financial Group and Richard H. Langley, Jr. will act 
as the Company's public relations counsel.  The agreement terminates June 24, 
1997.  Pursuant to the agreement, as amended in September 1996, Richard H. 
Langley, Jr. is entitled to receive $2,500 per month, 80,000 shares of common 
stock and options to purchase 100,000 shares of Common Stock exercisable at 
$5.00 per share.

COMPENSATION OF DIRECTORS

CASH COMPENSATION.  No cash compensation was paid by the Company to its 
directors prior December 31, 1994.  Directors are reimbursed for their ordinary
and necessary expenses incurred in attending meetings of the Board of Directors
or a committee thereof.  In addition, beginning in 1995, the Company has agreed
to pay Directors who are not also employees of the Company $500 for each 
meeting of the Board of Directors they attend.  Directors of the Company are 
eligible to participate in the Company's stock option plans.

OUTSIDE DIRECTORS STOCK OPTION PLAN

     The Outside Directors Stock Option Plan (the "Directors Plan") was adopted
by the Board of Directors and approved by the stockholders in June 1994.  The 
Directors Plan provides for the issuance of nonqualified stock options to
purchase up to 31,163 shares of Common Stock.  The Directors Plan is 
administered by the Compensation Committee of the Board of Directors.

     The Directors plan provides for the issuance of nonqualified stock options
to purchase shares of Common Stock to outside directors of the Company and its
subsidiaries.  Outside directors include only those directors of the Company or


                                      50
<PAGE> 

its subsidiaries who are not regular salaried employees of the Company or a 
subsidiary at the time the option is granted.  In the event the optionee ceases
to be an outside director (other than upon optionee's death or a change of 
control), the optionee may exercise his or her option at any time within 90 
days and only to the extent the optionee was entitled to exercise the option at
the date of termination but no option shall be exercisable after the expiration
of ten years from the date of grant.

     Under the Directors Plan, the exercise price of each option will not be 
less than 100% of the fair market value of the Common Stock at the time of 
granting the option.  Options granted under this plan shall not be exercisable 
after the expiration of ten years from the date of grant or such sooner date 
determined by the Compensation Committee.

     As of August 31, 1996, there were 11,163 shares available for issuance 
under the Director Plan and outstanding options granted under the Directors 
Plan to purchase 20,000 shares of the Company's Common Stock held by 2 
directors and exercisable at exercise prices ranging from $1.75 to $4.25 per 
share.

1993 STOCK OPTION PLAN

     The 1993 Stock Option Plan (the "1993 Plan") was adopted by the Board of 
Directors in January 1993 and thereafter approved by the stockholders.  The 
1993 Plan provides for the issuance of qualified or "incentive" stock options 
as well as nonqualified stock options to purchase 218,145 shares of Common 
Stock.  The 1993 Plan is administered by the Compensation Committee of the 
Board of Directors.

     Employees, directors and consultants of the Company and its subsidiaries 
may participate in the 1993 Plan.  Options granted under the 1993 Plan may be 
exercised by the optionee within such time period as determined by the Board 
and only to the extent the optionee was entitled to exercise the option at the 
date of termination but no option shall be exercisable after the expiration of 
ten years from the date of grant.

     Under the 1993 Plan, the exercise price of each incentive stock option 
will not be less than 100% of the fair market value of the Common Stock at the 
time of granting the option.  The exercise price of each nonqualified stock
option shall not be less than 85% of the fair market value of the stock on the 
date the option is granted.  Options granted under the 1993 Plan shall not be 
exercisable after the expiration of ten years from the date of grant or such 
sooner date as determined by the Compensation Committee.

     As of August 31, 1996, there were 587 shares available for issuance under 
the 1993 Plan and outstanding options granted under the 1993 Plan to purchase 
177,031 shares of the Company's Common Stock to 12 persons, including 1 present
director, at exercise prices ranging from $.80 to $6.42 per share.


                                      51
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information, as of August 31, 1996,
with respect to the beneficial ownership of Common Stock by each director, each
executive officer included in the Summary Compensation Table, the directors and
executive officers as a group and each shareholder known to management to own 
beneficially more than 5% of the Common Stock.  Unless otherwise noted, the 
persons listed below have sole voting and investment power with respect to such
shares.

<TABLE>
<CAPTION>

                                                     Percentage
Name and                    Number of Shares        Beneficially
Address                    Beneficially Owned          Owned   
------------               ------------------       ------------
<S>                              <C>                   <C>
Gary Panno                        54,758(1)             1.6%
4635 Southwest Freeway
Suite 800
Houston, TX  77027

Christopher H. Efird              75,625(2)             2.1%
700 Gemini
Houston, TX  77058

Manuel Landa                     385,000(3)(4)         10.8%
c/o Telereunion, Inc.
Moras No. 430
Col. Del Valle
Del Benito Juarez
03100 Mexico, D.F.

Oscar Garcia                     385,000(4)(5)         10.8% 
c/o Telereunion, Inc.
Moras No. 430
Col. Del Valle
Del Benito Juarez
03100 Mexico, D.F.

Darrel Kirkland                   10,000(6)              *
4635 Southwest Freeway
Suite 800
Houston, TX  77027

Ricardo Orea                     385,000(4)(7)         10.8%
c/o Telereunion, Inc.
Moras No. 430
Col. Del Valle
Del Benito Juarez
03100 Mexico, D.F.


                                      52
<PAGE>

Roy A. Varghese                   66,063(8)             1.9%
4635 Southwest Freeway
Suite 800
Houston, TX  77027

S.P. Krishna Murthy              266,063(9)             7.1%
4635 Southwest Freeway
Suite 800
Houston, TX  77027

W. Dal Berry                     158,644(8)(10)         4.5%
4635 Southwest Freeway
Suite 800
Houston, TX  77027

Benchmark Equity Group, Inc.     459,375(11)           13.0%
16815 Royal Crest Drive
Houston, TX  77058

All directors and 
executive officers as a
group (9 persons)              1,633,946(12)           44.8%

</TABLE>

------------------------------------
*    Less than 1%

(1)  A portion of such shares and options have been deposited into escrow.  
     See "Escrow Agreement."

(2)  Excludes shares of Common Stock issuable upon exercise of a Series A
     Common Stock Warrant representing the right to purchase 37,500 shares of
     Common Stock at $2.19 per share.  The Series A Common Stock Warrant will
     vest and become exercisable, if at all, upon the Company meeting certain
     fiscal year earnings per share targets, computed in accordance with the
     terms of the Series A Common Stock Warrant as follows: (i) the Warrant
     will vest and become fully exercisable as to 40% of the shares of Common
     Stock upon the Company's fiscal year earnings equal to at least $.315 per
     share; (ii) the Warrant will vest and become fully exercisable as to an
     additional 40% of the shares of Common Stock upon the Company's fiscal
     year earnings equal to at least $.458 per share; and (iii) the Warrant
     will vest and become fully exercisable as to an additional 20% of the
     shares of Common Stock upon the Company's fiscal year earnings equal to at
     least $.75 per share.  Notwithstanding the foregoing, the Warrant will
     vest and become fully exercisable as to any shares not vested if, for any
     ninety (90) consecutive trading days, the closing price for a share of
     Common Stock equals or exceeds $12.00.  The Series A Common Stock Warrant
     lapses on May 16, 2003.  Also, excluded are the shares of Common Stock
     issuable upon exercise or a Series B Common Stock Warrant representing the


                                      53
<PAGE>
     right to purchase 11,875 shares of Common Stock at $2.19 per share.  The
     Series B Common Stock Warrant will vest and become exercisable, if at all,
     upon (i) the Company achieving an increase in net shareholders equity of
     the Company of at least $5,000,000, computed in accordance with the terms
     of the Series B Common Stock Warrant; or (ii) if for any ninety (90)
     consecutive trading days, the closing price for a share of Common Stock
     equals or exceeds $12.00.  The Series B Common Stock Warrant will expire
     on and no longer be exercisable if the condition for vesting is not 
     satisfied within 18 months following the acquisition of Telereunion and, 
     in any event, will expire on May 16, 2003.  Mr. Efird is associated with
     Benchmark Equity Group, Inc. but disclaims beneficial ownership of any 
     such shares.  Includes options to purchase 10,000 shares of Common Stock 
     at $1.75 per share, all of which options are presently exercisable.

(3)  Excludes shares of Common Stock issuable upon exercise of a Series A
     Common Stock Warrant representing the right to purchase 241,208 shares of
     Common Stock at $2.19 per share. Also, excluded are shares of Common Stock
     issuable upon exercise of a Series A Common Stock Warrant representing the
     right of Willowtree Developments, Ltd., a British Virgin Island entity,
     ("Willowtree") to purchase 447,958 shares of Common Stock at $2.19 per
     share.  Mr. Landa is the beneficial owner of Willowtree.  The Series A
     Common Stock Warrant lapses on May 16, 2003.  For the discussion of
     vesting provisions for the Series A Common Stock Warrant, please see
     footnote 1 above.  Reference is also made to the Schedule 13D filed with
     the Securities and Exchange Commission by Mr. Landa on or about June 4,
     1996.

(4)  Includes options to purchase 25,000 shares of Common Stock at $1.35 per
     share, all of which options are presently exercisable.

(5)  Excludes shares of Common Stock issuable upon exercise of a Series A
     Common Stock Warrant representing the right to purchase 241,208 shares of
     Common Stock at $2.19 per share. Also, excluded are shares of Common Stock
     issuable upon exercise of a Series A Common Stock Warrant representing the
     right of Trafford Park Holdings, Ltd., a British Virgin Island entity,
     ("Trafford Park") to purchase 447,959 shares of Common Stock at $2.19 per
     share.  Mr. Garcia is the beneficial owner of Trafford Park.  The Series A
     Common Stock Warrant lapses on May 16, 2003.  For the discussion of
     vesting provisions for the Series A Common Stock Warrant, please see
     footnote 1 above.  Reference is also made to the Schedule 13D filed with
     the Securities and Exchange Commission by Mr. Garcia on or about June 4,
     1996.

                                      54
<PAGE>

(6)  Includes options to purchase 10,000 shares of Common Stock at $4.25 per
     share, all of which options are presently exercisable.

(7)  Excludes shares of Common Stock issuable upon exercise of a Series A
     Common Stock Warrant representing the right to purchase 241,208 shares of
     Common Stock at $2.19 per share. Also, excluded are shares of Common Stock
     issuable upon exercise of a Series A Common Stock Warrant representing the
     right of Bollington Developments, Ltd., a British Virgin Island entity,
     ("Bollington") to purchase 447,959 shares of Common Stock at $2.19 per
     share.  Mr. Orea is the beneficial owner of Bollington.  The Series A
     Common Stock Warrant lapses on May 16, 2003.  For the discussion of
     vesting provisions for the Series A Common Stock Warrant, please see
     footnote 1 above.  Reference is also made to the Schedule 13D filed with
     the Securities and Exchange Commission by Mr. Orea on or about June 4,
     1996.

(8)  Includes options to purchase 16,204 shares of Common Stock at $.80 per
     share, all of which options are presently exercisable. A portion of such
     shares and options have been deposited into escrow.  See "Escrow
     Agreement."

(9)  Includes options to purchase 50,000 shares of Common Stock at $2.25 per
     share, options to purchase 16,204 shares of Common Stock at $.80 per share
     and Warrants to purchase 150,000 shares of Common Stock at $2.9375 per
     share, all of which options and warrants are presently exercisable.
     Excludes 5,240 shares of Common Stock held by Mr. Murthy's adult child of
     which shares Mr. Murthy disclaims beneficial ownership. A portion of such
     shares and options have been deposited into escrow.  See "Escrow 
     Agreement."

(10) Includes warrants to purchase 10,000 shares of Common Stock at $8.00 per
     share, all of which warrants are presently exercisable.

(11) Excludes shares of Common Stock issuable upon exercise of a Series A
     Common Stock Warrant representing the right to purchase 262,500 shares of
     Common Stock at $2.19 per share. Also, excluded are shares of Common Stock
     issuable upon exercise of a Series B Common Stock Warrant representing the
     right to purchase 83,125 shares of Common Stock at $2.19 per share.  The
     Series B Common Stock Warrant will expire on and no longer be exercisable
     after May 16, 2003.  For the discussion of vesting provisions for the
     Series A Common Stock Warrant and the Series B Common Stock Warrant,
     please see footnote 1 above.  Reference is also made to the Schedule 13D
     filed with the Securities and Exchange Commission by Mr. Frank DeLape,
     president of Benchmark Equity Group, Inc. on or about June 4, 1996.

(12) Includes options to purchase 111,204 shares of Common Stock, all of which
     options are presently exercisable.


                                      55
<PAGE>

ESCROW AGREEMENT

    Pursuant to the Texas Securities Act of 1957, the Texas State Securities 
Commissioner has the discretion to require that an issuer offering and selling 
securities to the residents of Texas in a public offering deposit certain 
outstanding securities in escrow.  In that regard, certain former and present 
officers and directors of the Company are parties to a Stock Escrow Agreement 
(the "Escrow Agreement") dated August 8, 1994.  The Escrow Agreement was 
required by the Texas State Securities Commissioner as a condition to the 
registration of securities in Texas in connection with the Company's initial 
public offering.  The Escrow Agreement provides that a total of 415,503 shares 
of Common Stock and 55,779 shares of Common Stock issuable upon the exercise of 
options be held in escrow for a period of not less than two years and not more 
than ten years.  The terms of the Escrow Agreement provide further that shares 
held in escrow may be released provided that the Company attain certain levels 
of earnings per share during any two or five consecutive fiscal year periods.  
In addition, the Escrow Agreement permits the unconditional release of twenty 
(20%) percent of the escrowed shares upon the sixth anniversary of the Escrow 
Agreement and twenty (20%) percent every year thereafter until the tenth 
anniversary of the Escrow Agreement.  As of the date hereof, no shares have 
been released pursuant to the Escrow Agreement.  The shareholders retain the 
right to vote the securities and to transfer the securities among themselves 
and to related individuals who must become parties to the agreement.







                                      56
<PAGE>

Item 13. Exhibits and Reports on Form 8-K.

    (a)  Exhibits.  See index to Exhibits on page 62.  Each of the following
    exhibits described on the index to exhibits is a management contract for
    compensatory plan or arrangement: 10.1, 10.2, 10.5, 10.6.

    (b)  Reports on Form 8-K.

    On December 12, 1995 the Company filed a report on Form 8-K reporting that 
    by unanimous consent of the Board of Directors executed effective as of 
    November 17, 1995, in accordance with the terms of the Bylaws of the 
    Company, the Directors amended the Bylaws to provide that the Directors 
    shall determine the size of the Board. Subsequent to this amendment, the 
    Directors increased the size of the Board to six members.  The Board 
    elected Mr. Kenneth Gregson as a Director to fill the seat vacated by the 
    resignation of W. Dal Berry in June of 1995.  In addition, Mr. Christopher 
    Efird was elected as a Director to fill the seat created by the increase in
    the size of the Board.  Messrs. Gregson and Efird will serve as Directors 
    until the next annual meeting of the shareholders of the Company and their 
    successors are duly elected and qualified.

    On December 8, 1995, the Company acquired an additional 10% equity interest
    in its subsidiary, Digital Telecommunication Systems/ZWUT, increasing the 
    Company's ownership from 80% to 90%.  The Company purchased the additional 
    equity interest from ZWUT-SA, a Polish telecommunications equipment 
    manufacturing subsidiary of Siemens, A.G., for approximately $67,000 in 
    cash.


                                      60

<PAGE>

                                   SIGNATURES

     In accordance with Section 13 of the Exchange Act, the registrant caused
     this report to be signed on its behalf by the undersigned, thereunto duly
     authorized.




     (Registrant)    Polish Telephones and Microwave Corporation 
                     --------------------------------------------

 

     By (Signature and Title) /S/ E. Scott Crist
                              -----------------------------------
                              Scott Crist, President and Chief
                              Executive Officer

     Date   September 26, 1996
           --------------------


     By (Signature and Title) /s/ Mark Vance
                              -----------------------------------
                              Mark Vance, Executive Vice
                              President and Chief Financial
                              Officer

     Date   September 26, 1996
           --------------------



                                      61