WORLD ACCESS INC /NEW/, 10-Q/A, 2000-09-11

WORLD ACCESS INC /NEW/
10-Q/A, 2000-09-11
COMMUNICATIONS EQUIPMENT, NEC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM 10-Q/A
AMENDMENT NO. 2
(MARK ONE)

<TABLE>
<C> <S>
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE THREE MONTHS ENDED MARCH 31, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _______________.
</TABLE>

COMMISSION FILE NUMBER 0-29782

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

<TABLE>
<S> <C>
DELAWARE 58-2398004
(State of Incorporation) (I.R.S. Employer Identification No.)

945 E. PACES FERRY ROAD, SUITE 2200 30326
ATLANTA, GEORGIA (Zip Code)
(Address of principal executive offices)
</TABLE>

(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 May 15, 2000 was 60,101,658.

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<PAGE> 2

PART I

FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

WORLD ACCESS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and equivalents...................................... $ 145,347 $ 147,432
Short-term investments.................................... 43,922 --
Restricted cash........................................... 30,847 32,243
Accounts receivable....................................... 260,053 164,768
Other current assets...................................... 29,835 24,547
Net assets held for sale.................................. 238,405 244,388
---------- ----------
Total Current Assets.............................. 748,409 613,378
Property and equipment...................................... 154,250 136,033
Goodwill.................................................... 1,081,172 830,234
Other assets................................................ 64,854 50,159
---------- ----------
Total Assets...................................... $2,048,685 $1,629,804
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt........................................... $ 74,722 $ 83,837
Accounts payable.......................................... 228,721 182,107
Other accrued liabilities................................. 101,730 57,590
---------- ----------
Total Current Liabilities......................... 405,173 323,534
Long-term debt.............................................. 413,989 408,338
Other liabilities........................................... 652 633
---------- ----------
Total Liabilities................................. 819,814 732,505
---------- ----------
Stockholders' Equity
Preferred stock........................................... 6 4
Common stock.............................................. 597 523
Capital in excess of par value............................ 1,422,619 1,062,939
Accumulated other comprehensive loss...................... (4,368) (341)
Accumulated deficit....................................... (189,983) (165,826)
---------- ----------
Total Stockholders' Equity........................ 1,228,871 897,299
---------- ----------
Total Liabilities and Stockholders' Equity........ $2,048,685 $1,629,804
========== ==========
</TABLE>

See notes to consolidated financial statements.

1
<PAGE> 3

WORLD ACCESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- -------
(UNAUDITED)
<S> <C> <C>
Carrier services............................................ $239,256 $85,098
Retail services............................................. 16,285 --
-------- -------
Total Revenue.......................................... 255,541 85,098
Cost of services (exclusive of depreciation and amortization
shown separately below)................................... 223,855 80,154
Selling, general and administrative......................... 23,776 3,769
Depreciation and network amortization....................... 5,551 1,259
Goodwill amortization....................................... 12,208 978
-------- -------
Total Operating Expenses............................... 265,390 86,160
-------- -------
Operating Loss......................................... (9,849) (1,062)
Interest and other income................................... 2,619 183
Interest expense............................................ 14,545 2,339
Foreign exchange gain....................................... 532 --
-------- -------
Loss From Continuing Operations Before Income Taxes.... (21,243) (3,218)
Income taxes benefit........................................ 3,460 762
-------- -------
Loss From Continuing Operations........................ (17,783) (2,456)
Net income (loss) from discontinued operations.............. (6,374) 4,609
-------- -------
Net Income (Loss)...................................... (24,157) 2,153
Preferred stock dividends................................... 632 --
-------- -------
Net Income (Loss) Available to Common Stockholders..... $(24,789) $ 2,153
======== =======
Income (Loss) Per Common Share:
Basic:
Continuing Operations............................. $ (0.33) $ (0.07)
Discontinued Operations........................... (0.12) 0.13
-------- -------
Net Income (Loss)................................. $ (0.45) $ 0.06
======== =======
Diluted:
Continuing Operations............................. $ (0.33) $ (0.07)
Discontinued Operations........................... (0.12) 0.13
-------- -------
Net Income (Loss)................................. $ (0.45) $ 0.06
======== =======
Weighted Average Shares Outstanding:
Basic.................................................. 55,189 36,089
======== =======
Diluted................................................ 55,189 36,089
======== =======
</TABLE>

See notes to consolidated financial statements.

2
<PAGE> 4

WORLD ACCESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
ACCUMULATED
CAPITAL IN OTHER
PREFERRED COMMON EXCESS OF COMPREHENSIVE ACCUMULATED
STOCK STOCK PAR VALUE LOSS DEFICIT TOTAL
--------- ------ ---------- ------------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 2000..... $4 $523 $1,062,939 $ (341) $(165,826) $ 897,299
Net loss..................... (24,157) (24,157)
Foreign currency translation
adjustment................. (4,027) (4,027)
----------
Total comprehensive loss..... (28,184)
Issuance of common shares in
private offerings.......... 39 82,172 82,211
Issuance of preferred shares,
common shares and options
for acquisition of
businesses................. 2 6 251,330 251,338
Dividends on preferred
stock...................... (632) (632)
Conversion of Series B
preferred stock............ 14 (14) --
Conversion of debt into
common shares.............. 8 13,642 13,650
Release of escrowed common
shares..................... 1,000 1,000
Issuance of common shares for
option and warrant
exercises.................. 7 10,007 10,014
Tax benefit from option and
warrant exercises.......... 2,049 2,049
Other issuances of common
shares..................... 126 126
-- ---- ---------- -------- --------- ----------
Balance at March 31, 2000...... $6 $597 $1,422,619 $ (4,368) $(189,983) $1,228,871
== ==== ========== ======== ========= ==========
</TABLE>

See notes to consolidated financial statements.

3
<PAGE> 5

WORLD ACCESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
(UNAUDITED)
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss)......................................... $(24,157) $ 2,153
Adjustments to reconcile net income (loss) to net cash
used by operating activities:
Depreciation and amortization.......................... 22,351 7,537
Income tax benefit from stock warrants and options..... 2,049 13
Provision for inventory reserves....................... 128 365
Provision for bad debts................................ 2,354 1,022
Stock contributed to employee benefit plan............. 126 77
Changes in operating assets and liabilities, net of
effects from businesses acquired:
Accounts receivable.................................. (64,734) (6,022)
Inventories.......................................... (12,154) (10,918)
Accounts payable..................................... 23,773 6,296
Other assets and liabilities......................... 27,274 (9,482)
-------- --------
Net Cash Used By Operating Activities............. (22,990) (8,959)
-------- --------
Cash Flows From Investing Activities:
Acquisition of businesses, net of cash acquired........... 29,659 (2,486)
Proceeds on sales of assets held for sale................. 5,135 --
Purchase of short-term investments........................ (43,922) --
Expenditures for property and equipment................... (8,997) (1,895)
Capitalization of software development costs.............. (489) (1,204)
Loans to WorldxChange..................................... (25,000) --
-------- --------
Net Cash Used By Investing Activities............. (43,614) (5,585)
-------- --------
Cash Flows From Financing Activities:
Net proceeds from sales of common stock................... 82,211 --
Short-term borrowings (repayments)........................ (21,777) 1,200
Principal payments under capital lease obligations........ (5,050) (779)
Payment of preferred stock dividends...................... (879) --
Proceeds from exercise of stock warrants and options...... 10,014 105
Debt issuance costs....................................... -- (46)
-------- --------
Net Cash From Financing Activities................ 64,519 480
-------- --------
Decrease in Cash and Equivalents.................. (2,085) (14,064)
Cash and Equivalents at Beginning of Period............... 147,432 55,176
-------- --------
Cash and Equivalents at End of Period............. $145,347 $ 41,112
======== ========
Supplemental Schedule of Noncash Financing and Investing
Activities:
Issuance of common stock for businesses acquired.......... $ 13,047 $ 2,454
Issuance of preferred stock for business acquired......... 217,560 --
Issuance of stock options and warrants for businesses
acquired............................................... 21,731 --
Conversion of debt into common stock...................... 13,650 --
Conversion of note receivable to investment in LDI........ 4,674 --
</TABLE>

See notes to consolidated financial statements.

4
<PAGE> 6

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A: BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the
accounts of World Access, Inc. and its majority owned and wholly owned
subsidiaries (the "Company") from their effective dates of acquisition. These
financial statements have been prepared in accordance with the instructions to
Form 10-Q and do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the results of the
interim periods covered have been included.

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

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

The fair values of cash equivalents, short-term investments, accounts
receivable, accounts payable and accrued expenses approximate the carrying
values due to their short-term nature. The fair values of long-term debt are
estimated based on current market rates and instruments with the same risk and
maturities and approximate the carrying value.

The results of operations for the three months ended March 31, 2000 are not
necessarily indicative of the results expected for the full year. Certain
reclassifications have been made to the prior period's financial information to
conform with the presentations used in 2000.

Accounts receivable are presented net of an allowance for doubtful accounts
of $24.0 million and $18.5 million as of March 31, 2000 and December 31, 1999,
respectively.

Cost of carrier services is exclusive of depreciation and amortization
related to the services network which is included in "Depreciation and network
amortization" presented separately on the consolidated statements of operations.

NOTE B: ACQUISITIONS

LDI ACQUISITION

In February 2000, the Company acquired substantially all of the assets and
assumed certain liabilities of Long Distance International Inc. ("LDI"),
including its wholly-owned subsidiary NETnet International S.A. ("NETnet").
NETnet(TM) provides an array of retail telecommunications services concentrating
on the needs of business customers in Austria, France, Germany, Italy, Norway,
Spain, Sweden, Switzerland, and the United Kingdom.

In connection with the LDI acquisition, the Company issued 185,000 shares
of Convertible Preferred Stock, Series D ("Series D Preferred Stock") to LDI's
stockholders and the holders of LDI's senior notes.

5
<PAGE> 7
WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

The acquisition of LDI has been accounted for under the purchase method of
accounting. Accordingly, the results of LDI's operations have been included in
the accompanying consolidated financial statements from February 11, 2000. The
excess of purchase price over the fair value of net assets acquired has been
recorded as goodwill and is being amortized over a 20 year period. The following
summarizes the allocation of the purchase price based on information currently
available to management (in thousands):

<TABLE>
<S> <C>
Purchase price:
Preferred stock issued.................................... $217,560
Debt forgiven............................................. 4,674
Stock options issued...................................... 21,731
Fees and expenses......................................... 2,000
--------
Total purchase price.............................. 245,965
Allocation to fair value of net assets:
Cash...................................................... (42,476)
Other current assets...................................... (15,447)
Property and equipment.................................... (17,127)
Other assets.............................................. (1,420)
Current liabilities....................................... 78,374
Other liabilities......................................... 478
--------
Goodwill.......................................... $248,347
========
</TABLE>

PRO FORMA RESULTS OF OPERATIONS

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

On a pro forma, unaudited basis, as if the acquisitions of Comm/Net,
FaciliCom and LDI had occurred as of January 1, 1999, total revenue, operating
loss from continuing operations, loss from continuing operations and loss from
continuing operations per diluted common share for the three months ended March
31, 2000 and 1999 would have been approximately $264.2 million and $215.3
million; $23.1 million and $31.5 million; $31.1 million and $42.7 million; and
$0.56 and $0.85, respectively. These unaudited pro forma results have been
prepared for comparative purposes only and are not necessarily indicative of the
results of operations which would actually have occurred had the acquisitions
been in effect on the date indicated.

6
<PAGE> 8
WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE C: DISCONTINUED OPERATIONS

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

- Telco Systems Division (acquired November 1998), a provider of next
generation transport and access solutions for service providers
throughout the world. Its products include intelligent integrated access
devices, multiplexers and digital microwave radios.

- NACT Switching Division (acquired February 1998), a provider of advanced
switching platforms with integrated proprietary applications software as
well as billing and telemanagement systems.

- Wireless Local Loop ("WLL") Division, a research and development group
designing a next generation, fixed wireless local loop system.

- Cellular Infrastructure Supply ("CIS") Division (acquired March 1997), a
value-added supplier of new and refurbished cellular base stations and
related equipment.

In April 2000, the Company sold its Telco Systems and WLL divisions in two
separate transactions that generated aggregate gross cash proceeds of
approximately $275.0 million. In addition, in connection with the sale of Telco
Systems, the Company received 960,000 restricted shares of BATM Advanced
Communications Limited ("BATM") stock. The shares of BATM stock, which had an
initial value of approximately $70.0 million, trade on the London Stock
Exchange. Under the terms of the sales agreement, the Company may not sell,
transfer or otherwise monetize these shares for a period of one year without the
consent of BATM.

During the first four months of 2000, the Company monetized its investment
in CIS accounts receivable and inventories in the normal course of business. The
remaining assets of CIS, which were not material, were sold in a private
transaction completed in May 2000.

The assets and liabilities of the discontinued operations are reflected as
"Net assets held for sale" in the Consolidated Balance Sheets and consisted of
the following (in thousands):

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
Accounts receivable......................................... $ 35,518 $ 58,080
Inventories................................................. 38,742 26,716
Other current assets........................................ 34,907 40,369
-------- --------
Total current assets.............................. 109,167 125,165
Property and equipment...................................... 13,679 13,198
Goodwill and other intangibles.............................. 167,259 167,295
Other assets................................................ 12,689 17,891
-------- --------
Total assets...................................... 302,794 323,549
Accounts payable............................................ 16,911 22,771
Other current liabilities................................... 32,334 40,840
Long-term debt.............................................. 147 169
Other liabilities........................................... 14,997 15,381
-------- --------
Net assets held for sale.......................... $238,405 $244,388
======== ========
</TABLE>

7
<PAGE> 9
WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In the normal course of business, the Company enters into certain
sales-type lease arrangements with equipment customers. These leases are
generally sold to third-party financing institutions. A portion of these
arrangements contains certain recourse provisions under which the Company
remains liable. The Company's maximum exposure under the recourse provisions,
net of related reserves, was approximately $19.0 million at March 31, 2000. A
portion of this contingent obligation is collateralized by security interests in
the related equipment. The fair value of the recourse obligation at March 31,
2000 was not determinable as no market exists for these obligations.

NOTE D: RESTRUCTURING CHARGE

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

FaciliCom is a multi-national long distance service carrier focused on
providing international telecommunications services to other carriers worldwide.
FaciliCom provides these services over its carrier-grade international network,
which consists of 17 gateway switches as well as a satellite earth station.
Given the duplication of network assets between FaciliCom and the Company,
including switching and transmission equipment, the Company made the decision in
late 1999 to shut down and dispose of its six gateway switches located in
Chicago, Los Angeles, Newark, Dallas, San Francisco and London. The Company
intends to dispose of these six switches and related network assets through sale
in the secondary switching and transmission equipment market during 2000. The
restructuring charge also provided for the write-off of leasehold improvements
at the six switch sites and lease commitments remaining on certain facilities
and equipment taken out of service.

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

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

<TABLE>
<CAPTION>
RESTRUCTURING 1999 2000 RESERVE BALANCE
CHARGE ACTIVITY ACTIVITY AT 3/31/00
------------- -------- -------- ---------------
<S> <C> <C> <C> <C>
Write-down of leasehold improvements............... $ 1,506 $ 1,506 $ -- $ --
Write-down of network equipment.................... 25,372 25,372 -- --
Write-down of redundant software and general
equipment........................................ 1,256 1,256 -- --
Accrual for lease and circuit cost commitments..... 8,078 1,216 1,441 5,421
Accrual for termination benefits................... 1,588 270 387 931
------- ------- ------ ------
$37,800 $29,620 $1,828 $6,352
======= ======= ====== ======
</TABLE>

The restructuring accrual is recorded in "Other accrued liabilities" on the
Company's Consolidated Balance Sheets. The restructuring program is expected to
be completed in 2000.

8
<PAGE> 10
WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE E: DEBT

SUMMARY

Debt consisted of the following (in thousands):

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
13.25% Senior Notes due 2008................................ $285,533 $285,078
4.5% Convertible Subordinated Notes due 2002................ 115,000 115,000
Bank line of credit......................................... -- 25,000
IRU and other capital lease obligations..................... 53,237 45,380
Nortel line of credit....................................... 24,941 21,717
Term loan................................................... 10,000 --
-------- --------
Total debt........................................ 488,711 492,175
Amount due within one year.................................. 74,722 83,837
-------- --------
Long-term debt.................................... $413,989 $408,338
======== ========
</TABLE>

In connection with the LDI acquisition, the Company assumed a $10.0 million
term loan with a stockholder of LDI pursuant to a term loan agreement. The loan
bears interest at 12.25% per annum and matures on July 20, 2000. The loan is
secured by all the capital stock of the non-U.S. subsidiaries of LDI, including
NETnet. The holder of the term loan has an option to exchange the debt,
including accrued interest, at anytime prior to its maturity date for shares of
the Company's common stock valued at $15.00 per share.

In April 2000, the Company issued an aggregate of 936,081 shares of Company
common stock as payment in full for certain capital lease obligations assumed in
connection with the acquisitions of LDI and Resurgens Communications Group
(December 1998). These capital lease obligations had an aggregate debt balance
due of approximately $22.0 million, including accrued interest.

SUMMARIZED FINANCIAL INFORMATION OF WA TELCOM PRODUCTS CO., INC.

On October 28, 1998, World Access, Inc. reorganized its operations into a
holding company structure and changed its name to WA Telcom Products Co., Inc.
("WA Telcom"). As a result of the reorganization, WA Telcom became a
wholly-owned subsidiary of WAXS INC., which changed its name to World Access,
Inc. and is the company filing this Report. Pursuant to the reorganization, the
Company exchanged each outstanding share of common stock of WA Telcom for one
share of common stock of the Company, converted each option and warrant to
purchase shares of common stock of WA Telcom into options and warrants to
purchase a like number of shares of common stock of the Company, and fully and
unconditionally guaranteed the payment of the $115.0 million aggregate principal
amount 4.5% Convertible Subordinated Notes dated October 1, 1997 (due 2002)
previously issued by WA Telcom.

Set forth below is summarized financial information of WA Telcom presented
for the information of its debtholders. Separate financial statements of WA
Telcom are not presented because management has determined that they would not
be material to investors. The summarized financial information presented below
includes the results of operations for the following businesses from their
respective dates of acquisitions: Discontinued operations: Cellular
Infrastructure Supply, Inc. -- January 1997; Galaxy Personal Communications
Services, Inc. -- July 1997 to December 1999; Advanced TechCom, Inc. -- January
1998; NACT Telecommunications, Inc. -- February 1998; Continuing operations:
Cherry Communications Incorporated

9
<PAGE> 11
WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and Cherry Communications U.K. Limited -- December 1998; Comm/Net -- May 1999;
FaciliCom -- December 1999 and LDI -- February 2000 (in thousands):

BALANCE SHEET INFORMATION

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
Current assets.............................................. $140,902 $108,264
Non-current assets.......................................... 624,108 448,311
Total assets................................................ 765,010 556,575
Current liabilities......................................... 160,866 112,020
Non-current liabilities..................................... 116,908 131,009
Stockholders' equity........................................ 487,236 313,546
Total liabilities and stockholders' equity.................. 765,010 556,575
</TABLE>

OPERATING STATEMENT INFORMATION

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- -------
<S> <C> <C>
Total revenue from continuing operations.................... $ 50,447 $85,098
Gross profit from continuing operations..................... 2,650 4,944
Net loss from continuing operations......................... (13,010) (560)
Net income (loss) from discontinued operations.............. (987) 3,193
Net income (loss)........................................... (13,997) 2,633
</TABLE>

NOTE F: STOCKHOLDERS' EQUITY

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

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- ------------
<S> <C> <C>
Common Stock (150,000,000 shares authorized)................ 59,787,758 52,333,832
========== ==========
Preferred Stock (10,000,000 shares authorized)
Series A.................................................. 50,000 50,000
Series B.................................................. -- 23,174
Series C.................................................. 350,260 350,260
Series D.................................................. 185,000 --
---------- ----------
585,260 423,434
========== ==========
</TABLE>

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

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

As of March 31, 2000, a total of approximately 33.5 million shares of
common stock are reserved for issuance upon conversion of the Series A, C and D
Preferred Stock, including 20,000 shares of Series A Preferred Stock subject to
a $20.0 million purchase option agreement scheduled to expire on June 30, 2000.

10
<PAGE> 12
WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE G: INCOME TAXES

The Company's provision for income taxes attributable to continuing
operations for the three months ended March 31, 2000 was a benefit of $3.5
million, or approximately 16.3% of loss from continuing operations before income
taxes. The provision for income taxes differs from the amount computed by
applying the statutory federal and state income tax rates due to non-deductible
expenses, consisting primarily of goodwill amortization.

NOTE H: LITIGATION

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

These class action suits were consolidated into a single action for all
pretrial proceedings in the United States District Court for the Northern
District of Georgia. The plaintiffs filed an amended consolidated complaint for
this action on or about May 28, 1999. The Company filed a motion to dismiss the
amended consolidated complaint on June 28, 1999. The court denied this motion to
dismiss in an order dated March 28, 2000. The Company filed an answer on May 5,
2000.

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

NOTE I: REPORTABLE SEGMENT DATA

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

Revenue by geographic region was as follows (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
2000(A) 1999(A)
-------- -------
<S> <C> <C>
United States............................................... $156,660 $85,098
Europe...................................................... 98,881 --
Other foreign countries..................................... -- --
-------- -------
Consolidated total........................................ $255,541 $85,098
======== =======
</TABLE>

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

(a) Revenue is attributed to countries based on the location of customers.

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

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
United States............................................... $ 86,041 $ 88,695
Europe...................................................... 68,209 47,338
Other foreign countries..................................... -- --
-------- --------
Consolidated total........................................ $154,250 $136,033
======== ========
</TABLE>

11
<PAGE> 13
WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE J: SUBSEQUENT EVENTS

SALE OF TELCO SYSTEMS

In April 2000, the Company sold its Telco Systems division to BATM Advanced
Communications Limited, an Israel-based technology company, for $260.8 million
of cash and 960,000 restricted shares of BATM common stock. The shares of BATM
common stock, which had an initial value of approximately $70.0 million, trade
on the London Stock Exchange. Under the terms of the definitive agreement, the
Company may not sell, transfer or otherwise monetize these shares for a period
of one year without the consent of BATM.

STAR MERGER

In February 2000, the Company executed a definitive agreement with Star
Telecommunications, Inc. ("Star"), a publicly held multinational
telecommunications service provider, pursuant to which Star will be merged with
and into the Company. Under the terms of the agreement, each share of Star
common stock will be converted into .3905 shares of the Company's common stock
(approximately 23 million shares). The Company has the option of paying up to
40% of the merger consideration in cash. The Company expects the transaction to
close in the third quarter of 2000.

The Star merger is subject to, among other things, certain regulatory
approvals, the approval of the stockholders of the Company and Star, and the
divestiture by Star of certain business segments for specified minimum net cash
proceeds. Any net proceeds in excess of the specified minimum proceeds would
serve to directly increase the merger consideration. The merger is intended to
qualify as a tax-free reorganization, and will be accounted for as a purchase
transaction. The Company has agreed to provide bridge financing to Star in an
amount up to $35.0 million, none of which has been funded as of the date of this
Report. Star will be entitled to elect one director to the Company's board of
directors.

WORLDXCHANGE MERGER

In February 2000, the Company executed a definitive merger agreement with
Communication TeleSystems International, d/b/a WorldxChange Communications
("WorldxChange"), a privately held multinational telecommunications service
provider. WorldxChange generated pro-forma revenues in 1999 of approximately
$600.0 million, through its primary operations in North America, Germany, the
United Kingdom, France, the Netherlands, Belgium, Australia and New Zealand.
Pursuant to the terms of the agreement, stockholders of WorldxChange will
receive approximately 31 million shares of the Company's common stock, subject
to adjustment under certain circumstances. In addition, the Company will assume
approximately $225.0 million in WorldxChange debt. The Company expects the
transaction to close in the third quarter of 2000.

The WorldxChange merger is subject to, among other things, certain
regulatory approvals and the approval of the stockholders of the Company and
WorldxChange. The merger is intended to qualify as a tax-free reorganization,
and will be accounted for as a purchase transaction. The Company has agreed to
provide bridge financing to WorldxChange in an amount up to $30.0 million, all
of which has been funded as of the date of this Report. WorldxChange will be
entitled to elect one director to the Company's board of directors.

12
<PAGE> 14

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD LOOKING STATEMENTS

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

Factors that could cause the Company's actual results to differ from the
results discussed in the forward-looking statements include, but are not limited
to (i) the ability to successfully integrate new acquisitions; (ii) the ability
to acquire and develop an international telecommunications network; (iii) the
ability to manage effectively the Company's rapid growth; (iv) changes in
customer rates per minute; (v) termination of certain service agreements or
inability to enter into additional service agreements; (vi) changes in or
developments under domestic or foreign laws, regulations, licensing requirements
or telecommunications standards; (vii) changes in the availability of
transmission facilities; (viii) loss of the service of key officers; (ix) loss
of a customer which provides significant revenue; (x) highly competitive market
conditions in the industry; and (xi) concentration of credit risk. Any forward
looking statement speaks only as of the date of this Report, and the Company
undertakes no obligation to update any forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

OVERVIEW

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

In December 1998, the Company acquired Resurgens, a facilities based
provider of carrier international long distance services. In connection
therewith, a wholly owned subsidiary of MCI WorldCom, Inc. ("WorldCom"), a major
customer and vendor of Resurgens, became a significant stockholder of the
Company. WorldCom currently owns approximately 6.9% of the voting common stock
of the Company. In December 1998, John D. Phillips was appointed the Company's
new President and Chief Executive Officer. Mr. Phillips was formerly the
President and Chief Executive Officer of Resurgens.

In early 1999, management adopted a strategy designed to build on the
Company's base carrier services business and position the Company to become a
leading provider of bundled voice, data and Internet services to retail and
carrier customers throughout Europe. Management believes that the European
telecommunications market has become extremely fragmented in recent years due to
the significant deregulation initiatives undertaken and the significant growth
projected for this market. Management also believes that this market is ripe for
consolidation of carriers, not unlike that which occurred in the United States
during the late 1980's and 1990's. At the time, management also believed that
being able to provide certain of the Company's customers both services and
equipment represented a competitive advantage.

13
<PAGE> 15

During 1999 and the first quarter of 2000, the Company completed three
significant acquisitions and executed definitive agreements to acquire two other
companies in an effort to pursue its strategy. As a result of these transactions
and related initiatives, the Company has evolved from a $501.1 million provider
of U.S. originated carrier to carrier traffic in 1999 to a projected
multi-billion dollar provider of U.S. and European originated retail and carrier
traffic in 2000 (on a pro forma basis). These acquisitions include:

Comm/Net
(May 1999) Privately-held facilities based provider of
carrier to carrier international long
distance primarily to Mexico. It is
expected to serve as a foundation for
facilities and bandwidth into other Latin
American countries.

FaciliCom International
(December 1999) Privately-held facilities based provider of
European and U.S. originated international
long distance, voice, data and Internet
services. FaciliCom has invested in excess
of $200.0 million during the past few years
to establish an extensive, high quality
switching and transport network in 13
European countries.

NETnet International
(February 2000) Acquired all the assets of Long Distance
International, Inc. ("LDI") including
NETnet International S.A. ("NETnet"), its
wholly owned subsidiary. NETnet provides an
array of telecommunication services to over
20,000 retail customers in nine European
countries.

Star Telecommunications
(Pending) Publicly held international
telecommunications service provider with 24
international gateway switches in the U.S.
and Europe, ownership on 17 transoceanic
cable systems and interconnections between
23 German cities.

WorldxChange Communications
(Pending) Privately held international
telecommunication service provider
operating in 13 countries, including the
U.S., U.K., Germany and Australia. Operates
45 switches and undersea and land-based
fiber optic cables in providing
communications services to more than
750,000 customers.

The Company expects to complete its acquisitions of Star and WorldxChange
in the third quarter of 2000. The combination of World Access, FaciliCom, Star
and WorldxChange will create one of the largest independent telecommunications
service companies focused on the European market. The combined network, retail
customer base, sales organization and traffic is expected to significantly
accelerate the implementation of the Company's strategy as outlined above.
Management expect to aggressively pursue additional acquisitions in the next few
years to further pursue growth opportunities projected for Europe and selected
other deregulating markets throughout the world.

The Company has used its common stock and new series of its preferred stock
as the primary consideration paid for the companies acquired in 1999 and 2000.
This form of consideration will also be the primary form of consideration in the
pending mergers with Star and WorldxChange.

In December 1999, the Company adopted a plan to divest its Equipment Group
in order to focus all its resources on its international long distance
businesses (see "Discontinued Operations"). As a result of this plan, the
Company's Equipment Group has been accounted for as discontinued operations and,
accordingly, the results of the Equipment Group's operations have been excluded
from continuing operations in the Consolidated Statements of Operations for all
periods presented.

In April 2000, the Company sold its Telco Systems division to BATM Advanced
Communications Limited, an Israel-based technology company for $260.8 million of
cash and 960,000 restricted shares of BATM common stock. The shares of BATM
common stock, which had an initial value of approximately $70.0 million, trade
on the London Stock Exchange. Under the terms of the definitive agreement, the

14
<PAGE> 16

Company may not sell, transfer or otherwise monetize these shares for a period
of one year without the consent of BATM. The Company will record a significant
gain from this transaction in the second quarter of 2000.

During 1999 and 2000, the Company has significantly increased its cash
balances through several private placements of common stock for a total of
$158.1 million, a private placement of Series A Preferred Stock for $50.0
million and proceeds from the sale or liquidation of certain Equipment Group
assets. Management believes that with existing cash balances, proceeds from the
recent sale of Telco Systems and available borrowings under the Company's $100.0
million revolving line of credit, the Company will have sufficient capital to
support the working capital and other cash requirements associated with the
integration of recent and pending acquisitions.

QUARTERLY OPERATING RESULTS

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

Carrier service revenue, costs and related expenses have fluctuated
significantly in the past and are likely to continue to fluctuate significantly
in the future as a result of numerous factors. The Company's revenue in any
given period can vary due to factors such as call volume fluctuations,
particularly in regions with relatively high per-minute rates; the addition or
loss of major customers, whether through competition, merger, consolidation or
otherwise; the loss of economically beneficial routing options for the
termination of the Company's traffic; financial difficulties of major customers;
pricing pressure resulting from increased competition; and technical
difficulties with or failures of portions of the Company's network that impact
the Company's ability to provide service or to bill its customers. The Company's
operating expenses in any given period can vary due to factors such as
fluctuations in rates charged by carriers to terminate traffic; increases in bad
debt expense and reserves; the timing of capital expenditures, and other costs
associated with acquiring or obtaining other rights to switching and other
transmission facilities; and costs associated with changes in staffing levels of
sales, marketing, technical support and administrative personnel. In addition,
the Company's operating results can vary due to factors such as changes in
routing due to variations in the quality of vendor transmission capability; loss
of favorable routing options; the amount of, and the accounting policy for,
return traffic under operating agreements; actions by domestic or foreign
regulatory entities; the level, timing and pace of the Company's expansion in
international and commercial markets; and general domestic and international
economic and political conditions. Further, a substantial portion of
transmission capacity used by the Company is obtained on a variable, per minute
and short-term basis, subjecting the Company to the possibility of unanticipated
price increases and service cancellations. Since the Company does not generally
have long-term arrangements for the purchase or resale of long distance
services, and since the rates fluctuate significantly over short periods of
time, the Company's future quarterly operating results may vary significantly.

15
<PAGE> 17

RESULTS OF CONTINUING OPERATIONS

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

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
2000 1999
------ ------
<S> <C> <C>
Carrier services............................................ 93.6% 100.0%
Retail services............................................. 6.4 --
----- -----
Total revenue.......................................... 100.0 100.0
Cost of services (exclusive of depreciation and amortization
shown separately below)................................... 87.6 94.2
Selling, general and administrative......................... 9.3 4.4
Depreciation and network amortization....................... 2.2 1.5
Goodwill amortization....................................... 4.8 1.1
----- -----
Total operating expenses............................... 103.9 101.2
----- -----
Operating loss......................................... (3.9) (1.2)
Interest and other income................................... 1.0 0.2
Interest expense............................................ 5.7 2.8
Foreign exchange gain....................................... 0.2 --
----- -----
Loss from continuing operations income taxes........... (8.4) (3.8)
Income taxes benefit........................................ 1.4 0.9
----- -----
Loss from continuing operations........................ (7.0)% (2.9)%
===== =====
</TABLE>

FIRST QUARTER 2000 CONTINUING OPERATIONS COMPARED TO FIRST QUARTER 1999
CONTINUING OPERATIONS

Revenue. Total revenue increased $170.4 million, or 200.3%, to $255.5
million in the first quarter of 2000 from $85.1 million in the first quarter of
1999. The increase was due to both the acquisitions of Comm/Net in May 1999,
FaciliCom in December 1999 and LDI in February 2000 (the "Acquisitions") and
organic growth. On a pro forma basis, giving effect to the Acquisitions as if
completed on January 1, 1999, first quarter 2000 revenue increased by
approximately $49.0 million, or 23.0%, as compared to the first quarter of 1999.

As a result of the FaciliCom and LDI acquisitions, the Company began
providing telecommunications services to retail European customers in the first
quarter of 2000, primarily to small and medium sized businesses. The Company's
long-term strategy is focused on growing European retail revenues, primarily
through acquisitions. On a pro forma basis, giving effect to the LDI acquisition
as if completed on January 1, 2000, retail revenue was $264.2 million, or 9.5%
of total revenue.

During the first quarter of 2000, approximately 40.0% of the Company's
total revenue was from traffic originated in Europe. The strengthening of the
U.S. dollar versus the Euro and other major European currencies negatively
impacted the Company's European revenue by approximately $5.0 million, or 5.0%.

Pursuant to a Carrier Service Agreement with WorldCom, the Company recorded
approximately $53.0 million of revenue and related cost of services (exclusive
of depreciation and amortization) of $35.0 million during the first quarter of
2000. This represented approximately 21.0% and 15.6% of the Company's total
revenue and cost of services (exclusive of depreciation and amortization) from
continuing operations, respectively. The Company expects the percentage of its
total revenue contributed by WorldCom to decrease during the second half of 2000
in connection with its acquisitions of Star and WorldxChange.

Cost of Services (Exclusive of Depreciation and Amortization). Cost of
services (exclusive of depreciation and amortization), referred to herein as
"cost of services", increased $143.7 million, or 179.2%, to $223.9 million in
the first quarter of 2000 from $80.2 million in the first quarter of 1999. This
increase is primarily due to the acquisitions of Comm/Net, FaciliCom and LDI
which were completed subsequent to March 31, 1999 as noted above. As a
percentage of revenues, cost of services decreased to 87.6% of revenues for the
quarter ended March 31, 2000 as compared to 94.2% for the quarter ended March
31, 1999.

16
<PAGE> 18

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

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $20.0 million, or 530.8%, to $23.8 million in
the first quarter of 2000 from $3.8 million in the first quarter of 1999,
primarily due to the Acquisitions. As a percentage of total revenue, these
expenses increased to 9.3% in the first quarter of 2000 as compared to 4.4% in
the first quarter of 1999. The percentage increase relates primarily to the
costs of operating FaciliCom's businesses in 13 European countries and the
inclusion of retail services, which typically have general and administrative
expenses greater than 20.0% percent of retail revenue.

Depreciation and Network Amortization. Depreciation and network
amortization increased $4.3 million, or 340.9%, to $5.6 million in the first
quarter of 2000 from $1.3 million in the first quarter of 1999, primarily due to
the depreciation and amortization of FaciliCom's European network. FaciliCom has
invested over $200.0 million in this network over the past several years.

Goodwill Amortization. Goodwill amortization increased $11.2 million to
$12.2 million in the first quarter of 2000 from $1.0 million in the first
quarter of 1999. The increase relates to additional goodwill recorded in
connection with the Acquisitions.

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

Operating Loss. Operating loss increased $8.7 million to $9.8 million in
the first quarter of 2000 from $1.1 million in the first quarter of 1999 as a
direct result of increased goodwill amortization. Operating loss margin
increased to 3.9% of total revenue in the first quarter of 2000 as compared to
1.2% in the first quarter of 1999.

Earning Before Interest, Taxes, Depreciation and Amortization
("EBITDA"). EBITDA increased $6.7 million, or 573.2%, to $7.9 million in the
first quarter of 2000 from $1.2 million in the first quarter of 1999.

Interest and Other Income. Interest and other income increased $2.4
million to $2.6 million in the first quarter of 2000 from $183,000 in the first
quarter of 1999 due to the increase in invested cash balances of the Company and
higher market rates of return.

Interest Expense. Interest expense increased $12.2 million to $14.5
million in the first quarter of 2000 from $2.3 million in the first quarter of
1999. The increase was primarily due to interest expense associated with the
$300.0 million of 13.25% Senior Notes issued in December 1999 in exchange for
FaciliCom's Senior Notes and other debt assumed by the Company in connection
with the Acquisitions.

Foreign Exchange Gain. The Company reported a $532,000 foreign exchange
gain in the first quarter of 2000. All of this gain was unrealized and related
to the conversion of special drawing rights, or SDRs, into monetary units other
than U.S. dollars (see "Quantitative and Qualitative Disclosures about Market
Risks").

RESTRUCTURING CHARGE

certain of the Company's United States gateway switching centers and related
technical support functions into existing FaciliCom operations; (ii)
consolidating certain of the Company's United Kingdom operations into existing
FaciliCom operations; (iii) consolidating certain of the Company's
administrative functions into FaciliCom's operations; and (iv) eliminating other
redundant operations and assets as a result of combining the two entities. No
costs were included in the restructuring charge that were expected to derive
future economic benefit to the Company.

FaciliCom is a multi-national long distance service carrier focused on
providing international telecommunications services to other carriers worldwide.
FaciliCom provides these services over its carrier-grade international network,
which consists of 17 gateway switches as well as a satellite earth station.
Given the duplication of network assets between FaciliCom and the Company,
including switching and transmission equipment, the Company made the decision in
late 1999 to shut down and dispose of its six gateway switches located in
Chicago, Los Angeles, Newark, Dallas, San Francisco and London. As of March 31,
2000, all of these switches have been shut down except the London switch, which
is being utilized on a limited basis. The Company intends to dispose of these
six switches and related network assets through sale in the secondary switching
and transmission equipment market during 2000. The restructuring charge also
provided for the write-off of leasehold improvements at the six switch sites and
lease commitments remaining on certain facilities and equipment taken out of
service.

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

The restructuring accrual is recorded in "Other accrued liabilities" on the
Company's Consolidated Balance Sheets. The restructuring program is expected to
be completed in 2000.

18
<PAGE> 20

DISCONTINUED OPERATIONS

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

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
2000 1999
--------- ---------
<S> <C> <C>
Sales....................................................... $18,011 $66,589
Cost of sales............................................... 14,598 41,929
Research and development.................................... 4,052 4,353
Selling, general and administrative......................... 7,504 9,107
Goodwill amortization....................................... 1,635 2,274
Other (income) expense, net................................. (506) 50
------- -------
Income (loss) before income taxes......................... (9,272) 8,876
Income taxes (benefit)...................................... (2,898) 4,267
------- -------
Net income (loss)......................................... $(6,374) $ 4,609
======= =======
</TABLE>

First quarter 1999 results include sales and income before income taxes of
$3.5 million and $1.1 million, respectively, for the Galaxy Engineering Services
Division, which was sold by the Company in December 1999. Discontinued
operations consisted of the following businesses as of December 31, 1999:

- NACT Switching Division (acquired February 1998), a provider of advanced
switching platforms with integrated proprietary applications software as
well as billing and telemanagement systems.

- Wireless Local Loop ("WLL") Division, a research and development group
designing a next generation, fixed wireless local loop system.

- Cellular Infrastructure Supply ("CIS") Division (acquired March 1997), a
value-added supplier of new and refurbished cellular base stations and
related equipment.

19
<PAGE> 21

The assets and liabilities of the discontinued operations are reflected as
"Net assets held for sale" in the Consolidated Balance Sheets and consisted of
the following (in thousands):

In April 2000, the Company sold its Telco Systems Division to BATM Advanced
Communications Limited, an Israel-based technology company for $260.8 million of
cash and 960,000 restricted shares of BATM common stock. The shares of BATM
common stock, which had an initial value of approximately $70.0 million, trade
on the London Stock Exchange. Under the terms of the definitive agreement, the
Company may not sell, transfer or otherwise monetize these shares for a period
of one year without the consent of BATM. The Company will record a significant
gain from this transaction in the second quarter of 2000.

In April 2000, the Company sold its WLL Division to Nera ASA, a
Norwegian-based technology company for approximately $13.0 million of cash.

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

As of the date of this report, the Company's only remaining discontinued
operation was the NACT Switching Division. The Company has not yet been offered
a sales price for this business that management feels appropriately measures its
inherent value. In the first quarter of 2000, NACT had sales and EBITDA of $7.0
million and $872,000, respectively. Management expects NACT to continue to
generate positive operating results and introduce significant new products and
technology during 2000. A. Lindsay Wallace, former President of the Company's
Equipment Group, has recently been appointed the new President and Chief
Executive Officer of NACT.

LIQUIDITY AND CAPITAL RESOURCES

Overview. Cash management is a key element of the Company's operating
philosophy and strategic plans. Acquisitions to date have been structured to
minimize the cash element of the purchase price and ensure that appropriate
levels of cash are available to support the increased network capacity,
marketing programs and working capital normally associated with the growth
initiatives of acquired businesses. As of March 31, 2000, the Company had $189.3
million of unrestricted cash and investments and $100.0 million in borrowings
available under its bank credit line to support its current working capital
requirements and strategic growth initiatives.

Operating Activities. Cash used by operating activities was $23.0 million
and $9.0 million for the first quarter of 2000 and 1999, respectively.

20
<PAGE> 22

Accounts receivable increased $95.3 million to $260.1 million at March 31,
2000 from $164.8 million at December 31, 1999. The increase in accounts
receivable was primarily due to the LDI acquisition completed in February 2000
and the $82.7 million increase in the Company's total revenues for the first
quarter of 2000 as compared to the fourth quarter of 1999. In addition,
WorldCom, the Company's largest customer, began paying for its carrier services
under standard credit terms during the first quarter of 2000. WorldCom had
traditionally prepaid for services provided by the Company under a Carrier
Service Agreement entered into in mid-1998.

Average days sales outstanding at March 31, 2000 were approximately 92 days
as compared to 59 days at December 31, 1999. The increase related primarily to
the change in WorldCom payment terms and a $46.6 million increase in accounts
payable during the first quarter of 2000. In the Company's carrier service
business, the Company will frequently buy selected termination capacity, routes
and services from certain carriers and sell these same carriers different
termination capacity, routes and services. When the timing impact of these
offsetting receivables and payables is excluded, management believes its normal
average days sales outstanding currently approximates 60 days.

Investing Activities. Cash used by investing activities was $43.6 million
in the first quarter of 2000 and $5.6 million for the first quarter of 1999.

The net cash impact of business acquisitions and related transactions
completed in the first quarter of 2000 was the generation of $29.7 million of
cash, consisting of the following (in thousands):

<TABLE>
<S> <C>
Cash balance of acquired companies.......................... $42,644
Cash portion of purchase price.............................. (3,500)
Fees and expenses paid...................................... (9,485)
-------
$29,659
=======
</TABLE>

In February 2000, the Company acquired substantially all of the assets and
assumed certain liabilities of LDI, including its wholly-owned subsidiary NETnet
International S.A. In connection with the LDI acquisition, the Company issued
185,000 shares of Series D Preferred Stock to LDI's stockholders and the holders
of LDI's senior notes. The Series D Preferred Stock, which has a $185.0 million
liquidation preference, was valued at $217.6 million based on its estimated
market value during the period including the three trading days prior and the
three trading days subsequent to the date economic terms of the LDI acquisition
were announced.

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

The $9.5 million of fees and expenses paid in the first quarter of 2000
related primarily to the FaciliCom acquisition completed in December 1999.

In the first quarter of 2000, the Company invested its excess cash reserves
in short-term investments consisting of U.S. government securities, certificates
of deposit, high-grade commercial paper and bank acceptances. As of March 31,
2000, the Company had short-term investments of $43.9 million.

During the first quarter of 2000, the Company invested $9.0 million in
property and equipment. Of this amount, $7.8 million related to continuing
operations and was primarily spent on upgrading the Company's European
telecommunication network.

In February 2000, the Company executed a definitive agreement with Star,
pursuant to which Star will be merged with and into the Company. Under the terms
of the agreement, each share of Star common stock will be converted into .3905
shares of the Company's common stock (approximately 23 million shares). The
Company has the option of paying up to 40% of the merger consideration in cash.
The Company expects the transaction to close in the third quarter of 2000.

21
<PAGE> 23

In February 2000, the Company executed a definitive merger agreement with
WorldxChange. Pursuant to the terms of the agreement, stockholders of
WorldxChange will receive approximately 31 million shares of the Company's
common stock, subject to adjustment under certain circumstances. In addition,
the Company will assume approximately $225.0 million in WorldxChange debt. The
Company expects the transaction to close in the third quarter of 2000.

The WorldxChange merger is subject to, among other things, certain
regulatory approvals and the approval of the stockholders of the Company and
WorldxChange. The merger is intended to qualify as a tax-free reorganization,
and will be accounted for as a purchase transaction. The Company has agreed to
provide bridge financing to WorldxChange in an amount up to $30.0 million, $25.0
million of which was funded in the first quarter of 2000 and the remainder in
April 2000. The loans to WorldxChange are included in "Other Assets" in the
Consolidated Balance Sheets.

Financing Activities. Cash provided from financing activities was $64.5
million and $480,000 for the first quarter of 2000 and 1999, respectively.

In February 2000, the Company sold an aggregate of 3,822,552 shares of
restricted common stock for approximately $83.1 million, or $21.75 per share, in
two private transactions with a group of institutional and sophisticated
investors. The share price was based on the average closing price of the
Company's common stock during the five days prior to the offering dates.

In December 1998, the Company entered into a $75.0 million revolving line
of credit facility (the "Facility"), with a banking syndicate group led by Bank
of America, Fleet National Bank and Bank Austria Creditanstalt. The Facility
consists of a 364-day revolving line of credit which may be extended under
certain conditions and provides the Company the option to convert existing
borrowings to a three year term loan. In December 1999, the Company amended the
Facility to increase the line of credit to $100.0 million and extend the credit
for another 364-day term. Borrowings under the line are secured by a first lien
on substantially all the assets of the Company.

The Facility, which expires in December 2001, contains standard lending
covenants including financial ratios, restrictions on dividends and limitations
on additional debt and the disposition of Company assets. Interest is paid at
the rate of prime plus 1 1/4% or LIBOR plus 2 1/4%, at the option of the
Company. The Facility restricts distributions from the Company's consolidated
subsidiaries. Accordingly, the assets and cash flows of such subsidiaries,
including WA Telcom, the primary obligor on the Company's 4.5% Convertible
Notes, may not be used to pay any dividends to World Access, Inc.

As of December 31, 1999, borrowings of $25.0 million were outstanding under
the Facility, which represented the amount drawn on the Facility in December
1999 to repay $25.0 million owed by FaciliCom at the time of its acquisition
under its revolving line of credit. In January 2000, the Company repaid the
$25.0 million outstanding under the Facility. As of March 31, 2000, there were
no borrowings and $1.2 million of letters of credit outstanding under the
Facility.

During the first quarter of 2000, the Company received approximately $10.0
million in cash from the exercises of stock options and warrants by the
Company's employees and directors.

Commitments and Contingencies. Pursuant to the terms of the Indenture
governing the Company's $300.0 million of 13.25% Senior Notes due 2008, the
Company has an obligation to utilize the net cash proceeds (as defined in the
Indenture) from the sale of certain of the Company's equipment businesses (see
"Discontinued Operations") to make a one-time tender offer for all or a portion
of the 13.25% Senior Notes outstanding. Based on transactions completed as of
the date of this Report, the Company is currently obligated

22
<PAGE> 24

to tender for approximately $160.0 million of the 13.25% Senior Notes by January
2, 2001. Upon the sale of NACT and the monetization of the 960,000 BATM shares
held by the Company, the obligatory tender amount will increase accordingly.

The actual price of this tender is defined as the face value of the 13.25%
Senior Notes, plus accrued and unpaid interest, less the current market value of
$15.0 million, or five points, of Company common stock paid to the noteholders
as exchange consideration in December 1999. Since by definition the tender price
will be below face value and these notes carry what management believes to be an
attractive interest rate, the Company is not currently able to forecast how much
of the 13.25% Senior Notes will actually be tendered to the Company. Management
has not yet made any determination as to when the $160.0 million tender offer
will be made, but will likely delay this offer until such time as the Company's
common stock trades at a level management believes to be more appropriate than
current trading ranges.

Income Taxes. The Company's provision for income taxes attributable to
continuing operations for the first quarter of 2000 was a benefit of $3.5
million, or approximately 16.3% of loss from continuing operations before income
taxes. The provision for income taxes differs from the amount computed by
applying the statutory federal and state income tax rates due to non-deductible
expenses, consisting primarily of goodwill amortization.

As a result of the exercises of non-qualified stock options and warrants by
the Company's employees and directors, the Company realized federal income tax
benefits during the first quarter of 2000 of approximately $2.0 million.
Although these tax benefits do not have any effect on the Company's provision
for income tax expense, they represent a significant cash benefit to the
Company. This tax benefit is accounted for as a decrease in current income taxes
payable and an increase in capital in excess of par value.

Summary. The sale of $50.0 million of Series A Preferred Stock in April
1999, the sale of $158.1 million of common stock in private placement
transactions in the fourth quarter of 1999 and first quarter of 2000 and
approximately $275.0 million of gross cash proceeds received from the sales of
the Telco Systems and WLL divisions in April 2000 have significantly enhanced
the financial strength of the Company and improved its liquidity. The Company
believes that existing cash balances, available borrowings under the Company's
$100.0 million bank line of credit and additional cash expected to be generated
from the sale of Equipment Group assets will provide the Company with sufficient
capital resources to support its current working capital requirements and
business plans for at least the next 12 months.

YEAR 2000 ISSUE

In late 1999, the Company completed remediation and testing of its computer
systems. As a result of those planning and implementation efforts, the Company
experienced no significant disruptions in its information technology and
non-information technology systems to date and believe those systems
successfully responded to the Year 2000 date change. The Company is not aware of
any material problems resulting from Year 2000 issues and will continue to
monitor its mission critical computer systems and the appropriate systems of its
suppliers and vendors throughout 2000 to ensure that any latent Year 2000
matters which may arise are addressed promptly. To date, the Company is not
aware of any Year 2000 disruptions in the computer systems of its significant
vendors or service providers.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, which establishes
accounting and reporting standards for

23
<PAGE> 25

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

On December 3, 1999, the Securities and Exchange Commission staff issued
SAB No. 101, Revenue Recognition in Financial Statements. The SAB spells out
four basic criteria that must be met before companies can record revenue. These
are: (a) persuasive evidence that an arrangement exists; (b) delivery has
occurred or services have been rendered; (c) the seller's price to the buyer is
fixed or determinable; and (d) collectibility is reasonably assured. Many of the
examples in the SAB address situations that give rise to the potential for
recording revenue prematurely. They include transactions subject to
uncertainties regarding customer acceptance, including rights to refunds and
extended payment terms, and require continuing involvement by the seller.

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Although the Company's reporting currency is the U.S. dollar, an increasing
percentage of the Company's revenue will be generated from international
operations. Accordingly, changes in currency exchange rates may have a
significant effect on the Company's future results of operations. For example,
the accounting rate under certain European operating agreements is often defined
in monetary units other than U.S. dollars, such as "special drawing rights" or
"SDRs." To the extent that the U.S. dollar declines relative to units such as
SDRs, the dollar equivalent accounting rate would increase. In addition, as the
Company expands into foreign markets, its exposure to foreign currency rate
fluctuations is expected to increase.

24
<PAGE> 26

Although the Company does not currently engage in exchange rate hedging
strategies, management may choose to limit the Company's exposure by purchasing
forward exchange contracts or other similar hedging strategies. Specific hedging
contracts, if any, will be subject to approval by specified officers acting
within the Company's board of directors' overall policies and limits. Management
intends to limit the Company's hedging activities to the extent of its foreign
currency exposure. There can be no assurance that any currency hedging strategy
will be successful in avoiding currency exchange-related losses.

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

The majority of the Company's debt, which consists of $300.0 million of
13.25% Senior Notes and $115.0 million of 4.5% Convertible Notes, bears interest
at a fixed rate. Although the actual service requirements of this debt are
fixed, changes in interest rates generally could put the Company in a position
of paying interest that differs from then existing rates. The Company's
revolving line of credit agreements with a banking syndicate group and Nortel
Networks, Inc. provide for borrowings which bear interest at variable rates
based on either the prime rate or the London Interbank Offered Rates. The
Company had approximately $24.9 million outstanding pursuant to these revolving
line of credit agreements at March 31, 2000. Management believes that the
effect, if any, of reasonably possible near-term changes in interest rates on
the Company's financial position, results of operations and cash flows should
not be material.

25
<PAGE> 27

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

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

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

1. In January 2000, the Company issued 439,892 shares of common stock to
MCI WorldCom, Inc. as payment for $7.0 million in FaciliCom trade accounts
payable.

2. In February 2000, the Company issued 1,448,373 shares of common stock
upon conversion of 23,174 shares of Series B Preferred Stock held by the former
owners of Comm/Net.

3. In February 2000, the Company issued 3,362,782 shares of common stock
for an aggregate of $73.1 million in a private placement transaction to the
following institutional and sophisticated investors outside of the United
States:

<TABLE>
<S> <C>
Nairobi Holding Limited..................................... 459,770
Kleinwort Benson (Guernsey) Limited......................... 20,000
Kleinwort Benson Citibank Depot............................. 42,200
Kleinwort Benson (Jersey) Limited........................... 167,685
HSBC PLC A/C Clients........................................ 1,103,449
Crescent Holding GmbH....................................... 125,000
Mercury Offshore Sterling Trust -- Global Equity Fund....... 11,000
Royal Bank of Scotland as trustees for Mercury Global Titan
Fund...................................................... 5,300
Mercy Offshore Sterling Trust -- North American Fund........ 23,000
Mercury Select Trust -- US Dollar Global Balanced Fund...... 24,000
Mercury Select Trust -- Global Equity Fund.................. 24,000
Mercury Select Trust -- European Balanced Fund.............. 3,300
Mercury Select Trust -- North American Fund................. 590,000
Royal Bank of Scotland as trustees for Mercury American
Fund...................................................... 120,400
</TABLE>

26
<PAGE> 28
<TABLE>
<S> <C>
St. James's Place International Unit Trust.................. 183,908
Wimple Limited.............................................. 229,885
Instituto Nazionale Delle Assicurazioni S.p.A............... 229,885
---------
3,362,782
=========
</TABLE>

The issuances of these securities were made pursuant to Regulation S under
the Securities Act of 1933 because the offers and sales occurred outside of the
United States. Brown Brothers Harriman & Co. acted as an advisor to the Company
on this transaction.

4. In February 2000, the Company issued 459,770 shares of common stock for
$10.0 million to Esru Investments LLC in a private placement transaction. Brown
Brothers Harriman & Co. acted as an advisor to the Company on this transaction.

5. In February 2000, the Company issued 614,268 shares of common stock,
valued at approximately $12.1 million, to NewTel Inc. in connection with the
acquisition of the assets of NewTel Inc.

6. In February 2000, the Company issued 74,074 shares of common stock to El
Camino Resources, Ltd. as payment for $1,650,000 in capital lease obligations
owed by LDI.

7. In March 2000, the Company issued 10,327 shares of common stock to Long
Aldridge & Norman LLP in payment of $222,627 in legal fees.

No underwriters were involved in the issuances of theses securities. Other
than the February 2000 private placement transaction involving sales made
pursuant to Regulation S described above, the issuances of these securities were
deemed to be exempt from registration under the Securities Act in reliance on
Section 4(2) of the Securities Act as transactions by an issuer not involving
any public offering. The recipients of securities in theses transactions
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution of the
securities, and appropriate legends were affixed to the stock certificates and
warrants issued in theses transactions. All recipients represented that they had
adequate access to information regarding the Company.

In February 2000, the Company acquired substantially all of the assets and
assumed certain liabilities of LDI, including its wholly-owned subsidiary,
NETnet International S.A. In connection with the LDI acquisition, the Company
issued 185,000 shares of Series D Preferred Stock to LDI's stockholders and the
holders of LDI's senior notes. The Series D Preferred Stock ranks, as to
dividends, on par with the World Access common stock. With respect to
liquidation preference, the Series D Preferred Stock ranks senior to the World
Access common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

None

27
<PAGE> 29

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
<C> <C> <S>
2.1* -- Agreement and Plan of Merger, dated February 11, 2000 among
the Company, STI Merger Co., a Delaware corporation and
wholly-owned subsidiary of the Company, and STAR
Telecommunications, Inc., a Delaware corporation. The
following is a list of omitted schedules and other
attachments which the Company agrees to furnish
supplementally to the Commission upon request:
</TABLE>

<TABLE>
<S> <C> <C>
SCHEDULES TO MERGER AGREEMENT:
3.1(a) -- Organization
3.1(b) -- Capital Structure
3.1(c) -- No Conflict
3.1(d) -- Reports and Financial Statements
3.1(g) -- Required World Access Stockholder Vote
3.1(j) -- Litigation; Compliance with Laws
3.1(k) -- Absence of Certain Changes or Events
3.1(o) -- Tax Matters
3.1(p) -- Certain Contracts
3.2(a) -- Organization; Standing and Power; Subsidiaries
3.2(b) -- Capital Structure
3.2(c) -- Authority; No Conflicts
3.2(h) -- Litigation
3.2(i) -- Absence of Certain Changes or Events
3.2(j) -- Employee Benefits Matters
3.2(k) -- Intellectual Property
3.2(n) -- Taxes
3.2(o) -- Certain Contracts
4.2(f) -- Sales
4.2(h) -- Compensation
4.2(l) -- Litigation
</TABLE>

<TABLE>
<C> <C> <S>
2.2* -- Agreement and Plan of Merger, dated February 11, 2000 among
the Company, CTI Merger Co., a Delaware corporation and
wholly-owned subsidiary of the Company, and Communication
TeleSystems International d/b/a WORLDxCHANGE Communications,
a California corporation. The following is a list of omitted
exhibits, schedules and other attachments which the Company
agrees to furnish supplementally to the Commission upon
request:
</TABLE>

<TABLE>
<S> <C> <C>
EXHIBITS TO MERGER AGREEMENT:
A -- Form of Escrow Agreement
B -- Form of Opinion of O'Melveny & Myers LLP
C -- Form of Opinion of Long Aldridge & Norman LLP
SCHEDULES TO MERGER AGREEMENT:
3.1(b) -- Organization and Authorization
3.2 -- Authorized and Outstanding Stock
3.4 -- Financial Statements
3.5 -- Undisclosed Liabilities
3.6 -- Legal Issues
</TABLE>

28
<PAGE> 30
<TABLE>
<S> <C> <C>
3.7 -- Property
3.10(a) -- Intellectual Property
3.10(b) -- Computer Software and Databases
3.10(c) -- Year 2000 Compliance
3.11 -- Litigation
3.12(a) -- Benefit Plans
3.12(d) -- Benefit Plans
3.12(h) -- Benefit Plans
3.13 -- Collective Bargaining
3.15 -- Investments
3.16 -- Tax Matters
3.18 -- Contracts and Commitments
3.19 -- No Conflict
3.20 -- Agreements in Full Force and Effect
3.21 -- Required Consents and Approvals
3.22 -- Certain Changes and Events
4.1 -- Organization
4.3 -- No Conflict
4.5 -- Capital Structure
4.6 -- Reports and Financial Statements
4.10 -- Required World Access Stockholder Vote
4.13 -- Litigation; Compliance with Laws
4.14 -- Absence of Certain Changes or Events
4.15 -- Tax Matters
5.1(b) -- Dividends; Changes in Share Capital
5.1(c) -- Issuance of Securities
5.1(e) -- Acquisitions
5.1(f) -- Sales
5.1(g) -- Investments; Indebtedness
5.1(h) -- Compensation
5.1(j) -- Material Agreements
</TABLE>

<TABLE>
<C> <C> <S>
3.1 -- Certificate of Incorporation of the Company and Amendments
to Certificate of Incorporation (incorporated by reference
herein to Exhibit 3.1 to the Company's Form S-4, filed with
the Commission on October 6, 1998, Registration No.
333-65386; Amendment to Certificate of Incorporation
incorporated by reference herein to Exhibit 3.2 to Form 8-K
of the Company's predecessor, World Access, Inc., filed with
the Commission on October 28, 1998).
3.2 -- Amendment to Certificate of Incorporation (incorporated by
reference to Exhibit 3.2 to the Company's Form 10-K for the
year ended December 31, 1998, filed with the Commission on
April 9, 1999).
3.3 -- Certificate of Designation of 4.25% Cumulative Senior
Perpetual Convertible Preferred Stock. Series A
(incorporated by reference herein to Exhibit 4 to the
Company's Form 8-K, filed with the Commission on May 3,
1999).
3.4 -- Certificate of Designation of 4.25% Cumulative Junior
Convertible Preferred Stock. Series B (incorporated by
reference herein to Exhibit 4.1 to the Company's Form 8-K,
filed with the Commission on July 14, 1999).
</TABLE>

29
<PAGE> 31
<TABLE>
<C> <C> <S>
3.5 -- Certificate of Designation of Convertible Preferred Stock,
Series C (incorporated by reference to Exhibit 1.7(b) to
Appendix A to the Company's Proxy Statement dated November
5, 1999 relating to the Special Meeting of Stockholder held
on December 7, 1999).
3.6 -- Certificate of Designation of Convertible Preferred Stock,
Series D (incorporated by reference to Exhibit 4 to the
Company's Form 8-K, filed with the Commission on February
28, 2000).
3.7 -- Bylaws of the Company (incorporated by reference herein to
Exhibit 3.2 to the Company's Form S-4, filed with the
Commission on October 6, 1998, Registration No. 333-65389).
4.1 -- Certificate of Designation of 4.25% Cumulative Senior
Perpetual Convertible Preferred Stock, Series A
(incorporated by reference herein to Exhibit B to the
Company's Form 8-K, filed with the Commission on May 3,
1999).
4.2 -- Certificate of Designation of 4.25% Cumulative Junior
Convertible Preferred Stock. Series B (incorporated by
reference herein to Exhibit 4.1 to the Company's Form 8-K,
filed with the Commission on July 14, 1999).
4.3 -- Certificate of Designation of Convertible Preferred Stock,
Series C (incorporated by reference to Exhibit 1.7(b) to
Appendix A to the Company's Proxy Statement dated November
5, 1999 relating to the Special Meeting of Stockholders held
on December 7, 1999).
4.4 -- Certificate of Designation of Convertible Preferred Stock,
Series D (incorporated by reference to Exhibit 4 to the
Company's Form 8-K, filed with the Commission on February
28, 2000).
27.1* -- Financial Data Schedule (for SEC use only).
</TABLE>

---------------
* Previously filed

(b) Reports on Form 8-K

On February 9, 2000, the Company filed a Report on Form 8-K announcing that
the Company had entered into a definitive agreement with BATM Advanced
Communications Limited pursuant to which the Company would sell its Telco
Systems, Inc. subsidiary.

On February 22, 2000, the Company filed a Report on Form 8-K/A to amend its
Report on Form 8-K filed on December 22, 1999 related to the Company's merger
with FaciliCom International, Inc.

On February 28, 2000, the Company filed a Report on Form 8-K announcing
that World Access Telecommunications Group, Inc., an indirect, wholly-owned
subsidiary of the Company, had acquired substantially all of the assets and
assumed substantially all of the liabilities of Long Distance International,
Inc.

On March 1, 2000, the Company filed a Report on Form 8-K announcing that
the Company had entered into a definitive agreement to merge with STAR
Telecommunications, Inc.

On March 1, 2000, the Company filed a Report on Form 8-K announcing that
the Company had entered into a definitive agreement to merge with Communication
TeleSystems International d/b/a WORLDxCHANGE Communications.

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/ BRYAN D. YOKLEY
------------------------------------
Bryan D. Yokley
Executive Vice President and Chief
Financial Officer

Dated: September 8, 2000

30
<PAGE> 32

[World Access, Inc., LOGO]