WORLD ACCESS INC, S-3, 1996-06-28

WORLD ACCESS INC
S-3, 1996-06-28
MISCELLANEOUS REPAIR SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 28, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WORLD ACCESS, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 65-0044209
(State or other jurisdiction of incorporation or (IRS Employer Identification Number)
organization)
</TABLE>

4501 VINELAND ROAD, ORLANDO, FLORIDA 32811
(407) 843-7031
(Address and telephone number of Registrant's principal executive offices)

MARK A. GERGEL
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
WORLD ACCESS, INC.
4501 VINELAND ROAD
ORLANDO, FLORIDA 32811
(407) 843-7031
(Name, address and telephone number of agent for service)
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COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO THE AGENT FOR
SERVICE, SHOULD BE SENT TO:

<TABLE>
<S> <C>
STEVEN E. FOX, ESQ. DAVID M. CARTER, ESQ.
ROGERS & HARDIN HUNTON & WILLIAMS
2700 INTERNATIONAL TOWER, PEACHTREE CENTER RIVERFRONT PLAZA, EAST TOWER
229 PEACHTREE STREET, N.E. 951 EAST STREET
ATLANTA, GEORGIA 30303 RICHMOND, VIRGINIA 23219
(404) 522-4700 (804) 788-8200
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
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If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /

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CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED SHARE(1) PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value...... 4,600,000 $10.56 $48,576,000 $16,751
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</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended,
on the basis of the average of the high and low sales prices of the
Company's common stock quoted on the Nasdaq National Market on June 25,
1996.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JUNE 28, 1996

4,000,000 SHARES

WORLD ACCESS, INC.

COMMON STOCK
---------------------
Of the 4,000,000 shares of Common Stock offered hereby (the "Offering"),
3,000,000 shares are being sold by World Access, Inc. (the "Company") and
1,000,000 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). See "Selling Stockholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling Stockholders.

The Common Stock is quoted on the Nasdaq National Market under the symbol
"WAXS." On June , 1996, the closing sale price for the Common Stock, as
reported on the Nasdaq National Market, was $ per share. See "Price
Range of Common Stock."

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SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2)(3) STOCKHOLDERS
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<S> <C> <C> <C> <C>
Per Share......................... $ $ $ $
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Total(3).......................... $ $ $ $
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</TABLE>

(1) See "Underwriting" for a description of the indemnification arrangements
with the Underwriters.
(2) Before deducting expenses payable by the Company estimated to be
$ .
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 600,000 shares of Common Stock solely to cover over-allotments, if any.
If such option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."

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The Common Stock is offered severally by the Underwriters named herein,
subject to prior sale, when, as and if received and accepted by them, subject to
their right to reject orders, in whole or in part, and to certain other
conditions. It is expected that delivery of the certificates representing the
Common Stock will be made on or about , 1996.

THE ROBINSON-HUMPHREY COMPANY, INC.

WHEAT FIRST BUTCHER SINGER

INTERSTATE/JOHNSON LANE
CORPORATION
, 1996
<PAGE> 3

[ARTWORK TO COME]

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. SEE "UNDERWRITING."

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, and notes thereto, appearing
elsewhere in this Prospectus or incorporated by reference herein. Unless the
context otherwise requires, references made to the "Company" shall mean World
Access, Inc. and its consolidated subsidiaries. Unless otherwise indicated, all
information in this Prospectus assumes no exercise of the Underwriters'
over-allotment option.

THE COMPANY

The Company develops, manufactures and markets wireline and wireless
switching, transmission and access products primarily for the United States,
Caribbean Basin and Latin American telecommunications markets. The Company's
products allow telecommunications service providers to build and upgrade their
central office and outside plant networks in order to provide a wide array of
voice, data and video services to their business and residential customers. The
Company offers digital switches, intelligent multiplexers, protection switching
equipment, digital loop carriers, microwave and millimeterwave radio equipment
and other wireless communications products. The products offered by the Company
include those manufactured by the Company as well as those manufactured by
original equipment manufacturers ("OEMs"). To support and complement its product
sales, the Company also provides its customers with a broad range of design,
manufacturing, testing, installation, repair and other value-added services.

The Company markets and sells its products and services to over 200
telecommunications service providers. The Company's customers include Regional
Bell Operating Companies ("RBOCs") such as Ameritech, BellSouth and SBC
Communications; local exchange carriers such as GTE, Alltel and Puerto Rico
Telephone; inter-exchange carriers such as Sprint-United and Cable & Wireless;
cable television companies such as TCI, Cablevision and Cox Cable; and other
telecommunications service providers such as Bosch Telecom, PCS Primeco and
Lockheed-Martin.

The global telecommunications industry has undergone significant
transformation and growth in recent years due to domestic deregulation,
technological innovation and growth in international markets. In addition,
business and residential demand for voice, data and video telecommunications
services has increased the need for additional systems capacity and network
bandwidth to accommodate the provision of such services by telecommunications
providers. The Company believes that these market forces will intensify in the
foreseeable future and that an increased number of telecommunications service
providers, availability of new services and strong international demand for the
deployment of basic telephone service will provide the Company with extensive
opportunities to sell its wireline and wireless switching, transmission and
access products in the United States and in international markets.

The Company realized significant improvements in its sales and operating
results during 1995 and the three months ended March 31, 1996, primarily as a
result of its three acquisitions and sales of access products under a
distribution agreement entered into in September 1995. The Company's total sales
increased by 97.2% in 1995 and 168.2% in the first quarter of 1996 when compared
to 1994 and the first quarter of 1995, respectively. As the Company's sales mix
shifted from a majority of service revenues in 1994 to a majority of product
sales in 1995 and the first quarter of 1996, the Company's gross profit margin
increased from 12.9% in 1994 to 21.1% in 1995 and 22.4% in the first quarter of
1996. As a percentage of total sales, the Company's operating income (loss)
before special charges increased from (8.5%) in 1994 to 8.3% in 1995 and 9.8% in
the first quarter of 1996.

The Company's objective is to continue to broaden its offering of wireline
and wireless switching, transmission and access products and expand its
geographic market coverage to become a preferred provider of telecommunications
products and related services. In order to achieve this objective, the Company
plans to continue its strategy of (i) acquiring switching, transmission and
access products companies; (ii) pursuing opportunities to license and
manufacture telecommunications products; (iii) leveraging its existing customer
relationships and distribution base; (iv) focusing on emerging international
markets; and (v) capitalizing on the Company's manufacturing, test and service
capabilities.

3
<PAGE> 5

THE OFFERING

Common Stock offered by the Company..... 3,000,000 shares

Common Stock offered by the Selling
Stockholders............................ 1,000,000 shares

Common Stock to be outstanding after the
Offering................................ 16,287,420 shares(1)

Use of proceeds by the
Company............................... Repayment of outstanding
indebtedness, acquisitions of
businesses and technology licenses
and general corporate purposes. See
"Use of Proceeds."

Nasdaq National Market
symbol................................ "WAXS"

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(1) Excludes 2,877,966 shares of Common Stock reserved for issuance upon the
exercise of outstanding stock options and warrants at a weighted average
exercise price of $4.18 per share.

4
<PAGE> 6

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
MARCH 31, 1996
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ACTUAL AS ADJUSTED(6)
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<S> <C> <C>
BALANCE SHEET DATA:
Cash and equivalents.................................................. $ 2,083
Working capital....................................................... 11,731
Total assets.......................................................... 29,361
Short-term debt....................................................... 2,407 2,007
Long-term debt........................................................ 3,600 --
Stockholders' equity.................................................. 17,730
</TABLE>

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(1) Includes the results of operations of two acquired businesses, AIT, Inc.
("AIT") and Westec Communications, Inc. ("Westec"), from May 17, 1995 and
October 2, 1995, their respective effective dates of acquisition. See "The
Company."
(2) Gives effect to the acquisitions (collectively, the "Acquisitions") of AIT,
Westec and Comtech Sunrise, Inc. ("Comtech") as if each Acquisition had
occurred on January 1, 1995. This pro forma financial information has been
derived from the Unaudited Pro Forma Consolidated Financial Information
incorporated herein by reference.
(3) Includes the results of operations of Comtech from January 1, 1996, its
effective date of acquisition. See "The Company."
(4) The Company has recorded no income tax expense during the periods presented
due to net losses realized and the availability of federal income tax net
operating loss carryforwards.
(5) Net income (loss) per share and weighted average shares outstanding are
presented on a fully-diluted basis. The calculations exclude 895,744 and
1,107,509 shares of Common Stock for the year ended December 31, 1995 and
the three months ended March 31, 1996, respectively, that are held in
escrow in connection with the Company's August 1991 initial public offering
and the acquisitions of Westec and Comtech. These shares have been excluded
because the conditions for release of such shares from escrow have not yet
been satisfied. See Notes A, C and I to the Consolidated Financial
Statements.
(6) Adjusted to give effect to the sale of the 3,000,000 shares of Common Stock
offered by the Company hereby at an assumed public offering price of
$ per share and the application of the net proceeds therefrom. See
"Use of Proceeds."

5
<PAGE> 7

RISK FACTORS

Prospective investors should carefully consider the following risk factors,
in addition to the other information contained in this Prospectus, in evaluating
an investment in the Common Stock offered hereby. This Prospectus contains
certain forward-looking statements with respect to the Company's operations,
industry, financial condition and liquidity. These statements reflect the
Company's assessment of a number of risks and uncertainties. The Company's
actual results could differ materially from the results anticipated in these
forward-looking statements as a result of certain factors set forth below and
elsewhere in this Prospectus.

ACQUISITION RISKS

A key element of the Company's growth to date and its strategy for the
future is expansion through the acquisition of companies that complement or
expand its existing business. As a result, the Company continually evaluates
potential acquisition opportunities, some of which may be material in size or
scope. Acquisitions involve a number of special risks, including the time
associated with identifying and evaluating future acquisitions, the diversion of
management's attention to the integration of the operations and personnel of the
acquired companies, the incorporation of acquired products and services into the
Company's offerings, possible adverse short-term effects on the Company's
operating results, the realization of acquired intangible assets and the loss of
key employees of the acquired companies. The Company may issue equity securities
and other forms of consideration in connection with future acquisitions, which
could cause dilution to investors purchasing Common Stock in the Offering.

The Company does not currently have any commitments or agreements with
respect to any acquisitions. There can be no assurance that suitable acquisition
candidates will be found at prices acceptable to the Company, the Company will
have adequate resources to consummate any acquisition, acquisitions can be
consummated successfully, or acquired businesses can be operated profitably or
integrated successfully into the Company's operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -- Strategy."

MANAGEMENT OF GROWTH

The Company is currently experiencing a period of rapid growth resulting
from the expansion of its operations and recent acquisitions, both of which have
placed significant demands on the Company's resources. The Company's success in
managing its growth will require it to continue to improve its operational,
financial and management information systems, and to motivate and effectively
manage its employees. If the Company's management is unable to manage such
growth effectively, the quality of the Company's products and services, its
ability to retain key personnel and its business, financial condition and
results of operations could be materially adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

COMPETITION

The segments of the telecommunications industry in which the Company
operates are intensely competitive. The Company's ability to compete is
dependent upon several factors, including price, quality, product features and
timeliness of delivery. Many of the Company's competitors have significantly
more extensive engineering, manufacturing, marketing, financial and technical
resources than the Company. In addition, the Company currently competes with
several of its major suppliers, including Northern Telecom, with respect to the
sale of certain of its products, which may adversely affect its ability to
continue to obtain such products from these suppliers in the future.

6
<PAGE> 8

In light of these provisions, it is possible that one or more of the RBOCs, some
of which are major customers of the Company, may decide to manufacture
telecommunications equipment or to form alliances with other manufacturers. Any
of these developments could result in increased competition for the Company
which may have a material adverse effect on the Company's business, financial
condition or results of operations. See "Business -- Competition."

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company's quarterly operating results have varied significantly in the
past and are expected to do so in the future. As the Company increases its
telecommunications product offerings, its future quarterly operating results may
vary significantly depending on factors such as the timing and shipment of
significant orders, new product introductions by the Company and its
competitors, market acceptance of new and enhanced versions of the Company's
products, changes in pricing policies by the Company and its competitors, the
availability of new technologies, the mix of distribution channels through which
the Company's products are sold, the inability to obtain sufficient supplies of
sole or limited source components for the Company's products, gains or losses of
significant customers, the timing of customers' upgrade and expansion programs,
changes in the level of operating expenses, seasonality, the timing of
acquisitions and general economic conditions. In response to competitive
pressures or new product introductions, the Company may take certain pricing or
marketing actions that could materially and adversely affect the Company's
quarterly operating results. The Company's expense levels are based, in part, on
the Company's expectations as to future sales. If future sales levels are below
expectations, then the Company may be unable to adjust spending sufficiently in
a timely manner to compensate for the unexpected sales shortfall. Accordingly,
the Company believes that period-to-period comparisons of its operating results
should not be relied upon as an indication of future performance. In addition,
the operating results of any quarterly period are not indicative of results to
be expected for a full fiscal year. In future quarters, the Company's operating
results may be below the expectations of public market analysts and investors.
In such event, the price of the Common Stock would likely be materially
adversely affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Quarterly Operating Results."

DEPENDENCE ON SUPPLIERS

The Company purchases substantially all of its components and other parts
from suppliers on a purchase order basis and does not maintain long-term supply
arrangements. Most of the components used in the Company's products and related
services are currently obtained from multiple sources. However, several
components, primarily custom hybrid integrated circuits, are available from a
single source. In addition, the Company's AIT operations depend on a consistent
supply of new or used switching products, add-on frames and related circuit
boards. Accordingly, there can be no assurance that the Company will be able to
continue to obtain sufficient quantities of products or key components as
required or that such products or key components, if obtained, will be available
to the Company on commercially favorable terms. Failure to obtain products and
key components could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Suppliers."

CUSTOMER CONCENTRATION

A small number of customers historically have accounted for a significant
percentage of the Company's total sales. In the three months ended March 31,
1996, two customers accounted for 25.9% and 10.8% of the Company's total sales,
respectively, and the Company's top 10 customers accounted for 64.1% of total
sales. For the year ended December 31, 1995, on a pro forma basis to give effect
to the Acquisitions as if each had occurred on January 1, 1995, two customers
accounted for 18.2% and 12.0% of the Company's total sales, respectively, and
the Company's top 10 customers accounted for 59.7% of total sales. The Company's
customers typically are not obligated contractually to purchase any quantity of
products or services in any particular period. The loss of, or a material
reduction in orders by, one or more key customers could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Business -- Customers."

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NEW MANAGEMENT TEAM AND DEPENDENCE ON KEY PERSONNEL

The Company's management team consists of four executive officers, three of
whom have been employed by the Company for less than two years. Although these
individuals have significant experience in the telecommunications industry,
there can be no assurance that they will function successfully as a management
team to implement the Company's strategy. Moreover, the Company is highly
dependent on the services of several key executive officers and technical
employees, the loss of any of whom could have a material adverse impact on the
Company's business, financial condition and results of operations. In addition,
the Company may need to hire additional skilled personnel to support the
continued growth of its business. The market for skilled personnel, especially
those with the technical abilities required by the Company, is currently very
competitive, and the Company must compete with much larger companies with
significantly greater resources to attract and retain such personnel. There can
be no assurance that the Company will be able to retain its existing personnel
or attract other qualified employees. See "Management."

ACCUMULATED DEFICIT; LIMITED HISTORY OF PROFITABILITY

At March 31, 1996, the Company had an accumulated deficit of $11.3 million.
The Company recorded net losses for each of the years in the three year period
ended December 31, 1994. Although the Company was profitable in the year ended
December 31, 1995 and for the three months ended March 31, 1996, there can be no
assurance that it will be profitable in the future. See "-- Potential
Fluctuations in Quarterly Operating Results" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

INTERNATIONAL SALES, REGULATORY STANDARDS AND CURRENCY EXCHANGE

International sales represented approximately 5.0% of the Company's total
sales in the year ended December 31, 1995. The Company intends to increase its
international sales efforts, primarily in Latin America and the Caribbean Basin,
which may require significant management attention and financial resources.
There can be no assurance that the Company can increase its international sales.
International sales are subject to inherent risks, including unexpected changes
in regulatory requirements, tariffs or other barriers, difficulties in staffing
and managing foreign operations, longer payment cycles, unstable political
environments, greater difficulty in accounts receivable collection and
potentially adverse tax consequences. Moreover, gains and losses on the
conversion to U.S. dollars of receivables and payables arising from
international operations may contribute to fluctuations in the Company's results
of operations, and fluctuations in exchange rates could affect demand for the
Company's products and services. See "Business -- Sales and Marketing."

RAPID TECHNOLOGICAL CHANGE

The telecommunications equipment market is characterized by rapidly
changing technologies and frequent new product introductions. The rapid
development of new technologies increases the risk that current or new
competitors could develop products that would reduce the competitiveness of the
Company's products. As the Company continues to implement elements of its
strategy to become a preferred provider of telecommunications equipment and
related services, its success will depend to a substantial degree upon its
ability to respond to changes in technology and customer requirements. This will
require the timely selection, development and marketing of new products and
enhancements to existing products on a cost-effective basis. The development of
new switching, transmission and access products is a complex and uncertain
process, requiring high levels of innovation and capital. This process requires
competence in the general areas of telephony, data networking, network
management, fiber optic and wireless telephony. Further, the telecommunications
industry is characterized by the need to design products which meet industry
standards for safety, emissions and network interconnection. With new and
emerging technologies and service offerings from network service providers, such
standards are often changing. As a result, there is a potential for product
development delay due to the need for compliance with new or modified standards.
The introduction of new and enhanced products also requires that the Company
manage transitions from older products in order to minimize disruptions in
customer orders, avoid excess inventory of old products and ensure that adequate
supplies of new products can be delivered to meet customer orders. There can be
no assurance that the Company will be successful in developing and introducing
new or enhanced products or managing the

8
<PAGE> 10

transition by customers to new or enhanced products or that any such products
will be sufficiently responsive to technological changes or will gain market
acceptance. The Company's business, financial condition and results of
operations would be materially adversely affected if the Company were to be
unsuccessful, or to incur significant delays, in developing and introducing such
new products or enhancements. In addition, there can be no assurance that
products or technologies developed by others will not render the Company's
products or technologies noncompetitive or obsolete. See
"Business -- Competition."

POSSIBLE VOLATILITY OF STOCK PRICE

The Company believes factors such as announcements of new products or
technological innovations by the Company or third parties, as well as variations
in the Company's results of operations, the gain or loss of significant
customers, the timing of acquisitions of businesses or technology licenses,
legislative or regulatory changes, general trends in the industry, market
conditions, analysts' estimates and other events or factors may cause the market
price of the Common Stock to fluctuate significantly. In addition, the stock
market has experienced extreme price and volume fluctuations that have
particularly affected the market price for many technology companies and that
have often been unrelated to the operating performance of these companies. These
broad market fluctuations may adversely affect the market price of the Common
Stock. See "Price Range of Common Stock."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock in the public
market after the Offering could adversely affect the market price of the Common
Stock. Upon completion of the Offering, the Company will have outstanding
16,287,420 shares of Common Stock (16,887,420 shares if the Underwriters'
over-allotment option is exercised in full). All of these shares are freely
tradeable without restriction or further registration under the Securities Act
of 1933, as amended (the "Securities Act"), except for (i) shares acquired in
the Offering by "affiliates" of the Company (defined in Rule 144 under the
Securities Act as a person who directly or indirectly through the use of one or
more intermediaries controls, is controlled by, or is under common control with,
the Company); (ii) shares subject to certain lock-up arrangements with the
Underwriters as described below; (iii) 597,246 shares issued in connection with
the Comtech Acquisition, 211,765 of which are held in escrow and 385,481 of
which are subject to a lock-up arrangement with the Company until December 16,
1996; and (iv) shares of "restricted securities" which may be sold
only pursuant to a registration statement under the Securities Act or an
applicable exemption from registration thereunder or pursuant to Rule 144
promulgated under the Securities Act. In addition, certain of the Company's
existing stockholders have "piggyback" registration rights in connection with
future offerings of Common Stock. The resale of substantial amounts of Common
Stock, or the perception that such resales may occur, could adversely affect
prevailing market prices for the Common Stock. The Company has agreed not to
issue, and all directors and executive officers of the Company and the Selling
Stockholders have agreed not to resell, or otherwise dispose of, any shares of
Common Stock (except for any shares offered hereby) or securities convertible
into or exchangeable for Common Stock for 180 days after the date of this
Prospectus without the prior written consent of The Robinson-Humphrey Company,
Inc. on behalf of the Underwriters. See "Shares Eligible for Future Sale" and
"Underwriting."

CERTAIN ANTITAKEOVER EFFECTS

As a Delaware corporation, the Company is subject to Section 203 of the
Delaware General Corporation Law which, with certain exceptions, imposes certain
restrictions on mergers and other business combinations between the Company and
any holder of 15% or more of the Common Stock. These restrictions may make the
acquisition of control of the Company without the approval of the Company's
Board of Directors more difficult. See "Description of Capital Stock -- Delaware
Business Combination Statute."

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THE COMPANY

The Company develops, manufactures and markets wireline and wireless
switching, transmission and access products primarily for the United States,
Caribbean Basin and Latin American telecommunications markets. The Company's
products allow telecommunications service providers to build and upgrade their
central office and outside plant networks in order to provide a wide array of
voice, data and video services to their business and residential customers. The
Company offers digital switches, intelligent multiplexers, protection switching
equipment, digital loop carriers, microwave and millimeterwave radio equipment
and other wireless communications products. The products offered by the Company
include those manufactured by the Company as well as those manufactured by OEMs.
To support and complement its product sales, the Company also provides its
customers with a broad range of design, manufacturing, testing, installation,
repair and other value-added services.

The Company markets and sells its products and services to over 200
telecommunications service providers. The Company's customers include Regional
Bell Operating Companies such as Ameritech, BellSouth and SBC Communications;
local exchange carriers such as GTE, Alltel and Puerto Rico Telephone;
inter-exchange carriers such as Sprint-United and Cable & Wireless; cable
television companies such as TCI, Cablevision and Cox Cable; and other
telecommunications service providers such as Bosch Telecom, PCS Primeco and
Lockheed-Martin.

During 1995 and early 1996, the Company acquired three businesses to
broaden its line of switching, transmission and access products, enhance its
product development capabilities and strengthen its technical base. Each of the
acquired businesses has, in turn, benefited from the Company's broad range of
complementary support services, existing customer base and ability to provide
working capital. The Company believes that these acquisitions have provided it
with a core group of telecommunications products and the necessary
infrastructure to support the development and marketing of new products. The
following is a summary of each of the acquired businesses.

AIT, Inc. As of May 1995, the Company acquired AIT, a Lakeland,
Florida-based provider of digital switching systems to the telecommunications
marketplace. At the time of the acquisition, AIT sold new and used Northern
Telecom switching systems and related products primarily to domestic equipment
brokers. Since the acquisition, the Company has expanded AIT's product line to
include local, local tandem, toll, cellular and international gateway switches
and has changed its marketing strategy to focus on direct sales to
telecommunications service providers in the United States, the Caribbean Basin
and Latin America.

Westec Communications, Inc. As of October 1995, the Company acquired
Westec, a Scottsdale, Arizona-based provider of wireless telecommunications
products from 900 MHZ spread spectrum systems to 31 GHZ millimeter wave systems
for voice, data and video applications. Westec traditionally has sold its
products and related repair services to cable television companies and private
network users. The Company expects that, with its resources and manufacturing
capabilities and Westec's 16 years of experience in providing wireless products
and services, the Company will be able to continue to develop and upgrade its
offering of wireless telecommunications products. Since the acquisition, the
Company has begun marketing Westec's products in the international marketplace
and to the Company's existing customer base and has begun marketing the
Company's switching, access and transmission products to cable television
companies.

Comtech Sunrise, Inc. As of January 1996, the Company acquired Comtech, a
Livermore, California-based provider of multiplexers, digital loop carriers and
other intelligent transmission and access products. The Company believes that
Comtech's products complement the Company's other products by providing
equipment that connects the end user's telephone, data and video services to the
Company's central office digital switches and wireless transmission products.
The Company also believes that it can capitalize on Comtech's research and
product development expertise to further enhance and expand the Company's
product offerings. Since the acquisition, the Company has made plans to
integrate Comtech's manufacturing operations with the manufacturing operations
located in the Company's Orlando facility.

10
<PAGE> 12

In June 1996, the Company changed its name from Restor Industries, Inc. to
World Access, Inc. The Company's principal executive offices are located at 4501
Vineland Road, Orlando, Florida 32811. Its telephone number is (407) 843-7031.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,000,000 shares of
Common Stock offered hereby, after deducting the underwriting discount and other
Offering expenses payable by the Company, are expected to be approximately
$ million (approximately $ million if the Underwriters' over-allotment
option is exercised in full), based upon an assumed public offering price of
$ per share.

The Company intends to use $4 million of the net proceeds from the Offering
to repay borrowings under a term loan made under a credit facility with the
Company's primary lender (the "Credit Facility"). The borrowings under the term
loan, bear interest at a rate per annum equal to LIBOR plus 2.5% (approximately
8% as of June 1, 1996) and are due and payable in graduated quarterly
installments from July 1996 to March 2001. In consideration of the repayment of
the amounts borrowed under the term loan with a portion of the net proceeds from
the Offering, the Company's primary lender has committed to increase the amount
available to the Company under the Credit Facility's revolving line of credit
from $6 million to $10 million. As of the date of this Prospectus, the Company
had no debt outstanding under the line of credit.

The Company intends to use the remaining $ million of net proceeds from
the Offering for the acquisition of businesses and technology licenses and other
strategic initiatives related to the growth and development of the Company's
telecommunications products business and for general corporate purposes. See
"Business -- Strategy." General corporate purposes include new product
development, the expansion of domestic and international sales and marketing
efforts and working capital. Although the Company is continually considering and
evaluating acquisition opportunities, the Company currently has no binding
agreement or commitment with respect to any specific acquisition. Pending the
use thereof, the Company intends to invest the remaining net proceeds from the
Offering in short-term, investment grade, interest bearing securities.

The Company will not receive any of the proceeds from the sale of shares of
Common Stock by the Selling Stockholders. See "Selling Stockholders" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

PRICE RANGE OF COMMON STOCK

The Common Stock has been quoted on the Nasdaq National Market under the
symbol "WAXS" since June 25, 1996. From March 2, 1995 through June 24, 1996, the
Common Stock was quoted on the Nasdaq SmallCap Market. From September 16, 1994
to March 1, 1995, quotations of the Common Stock were available on the OTC
Bulletin Board. Prior to September 16, 1994, the Common Stock was quoted on the
Nasdaq National Market. The following table sets forth the closing high and low
sales prices of the Common Stock for the periods January 1, 1994 through
September 15, 1994 and March 2, 1995 through June 26, 1996, as reported by
Nasdaq, and the closing high and low bid prices for the Common Stock for the
period September 16, 1994 through March 1, 1995. The bid prices are believed to
be representative interdealer

11
<PAGE> 13

quotations, without retail markup, markdown or commissions, and may not
represent prices at which actual transactions occurred.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1994
First Quarter............................................................ $ 2 1/8 $1 1/2
Second Quarter........................................................... 2 3/4 1 1/8
Third Quarter............................................................ 2 3/8 1
Fourth Quarter........................................................... 2 5/8 1
YEAR ENDED DECEMBER 31, 1995
First Quarter............................................................ $ 2 9/16 $1 3/4
Second Quarter........................................................... 3 7/8 2 1/16
Third Quarter............................................................ 4 7/8 3 3/16
Fourth Quarter........................................................... 8 1/2 4 7/8
YEAR ENDING DECEMBER 31, 1996
First Quarter............................................................ $10 $7 1/2
Second Quarter (through June 26, 1996)................................... 11 1/2 8
</TABLE>

On June , 1996, the closing sale price of the Common Stock as reported on
the Nasdaq National Market was $ per share. As of June 26, 1996, there
were 223 holders of record of the Common Stock. This number does not include
beneficial owners of the Common Stock whose shares are held in the names of
various dealers, clearing agencies, banks, brokers and other fiduciaries.

DIVIDEND POLICY

The Company has not paid or declared any cash dividends on its Common Stock
and currently intends to retain all future earnings to fund operations and the
continued development of its business. In addition, the Company's Credit
Facility contains restrictions limiting the ability of the Company to pay cash
dividends. Any future determination to declare and pay cash dividends will be at
the discretion of the Board of Directors and will be dependent on the Company's
financial condition, results of operations, contractual restrictions, capital
requirements, business prospects and such other factors as the Board of
Directors deems relevant.

12
<PAGE> 14

CAPITALIZATION

The following table sets forth the short-term debt and capitalization of
the Company as of March 31, 1996, and as adjusted (based upon an assumed public
offering price of $ per share) to give effect to the sale of the
3,000,000 shares of Common Stock offered by the Company hereby and the
application of the estimated net proceeds therefrom. This table should be read
in conjunction with "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Consolidated Financial Statements and notes thereto, appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt(1)...................................................... $ 2,407 $ 2,007
======== =========
Long-term debt.......................................................... $ 3,600 $ --
Stockholders' equity:
Common stock, $.01 par value; 20,000,000 shares authorized; 13,221,295
shares issued and outstanding; 16,221,295 shares issued and
outstanding, as adjusted(2)........................................ 132
Capital in excess of par value........................................ 29,883
Note receivable from affiliate........................................ (982)
Accumulated deficit................................................... (11,303)
-------- -----------
Total stockholders' equity.................................... 17,730
-------- -----------
Total capitalization.......................................... $ 21,330 $
======== =========
</TABLE>

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

(1) Short-term debt at March 31, 1996 includes $2.0 million outstanding under
the Company's revolving line of credit (which was subsequently repaid out
of the Company's operating cash flow), $400,000 in current portion of
long-term debt and $7,000 in other debt. As of the date of this Prospectus,
the Company has no borrowings outstanding under its line of credit.
(2) Excludes 2,877,966 shares of Common Stock reserved for issuance upon the
exercise of outstanding stock options and warrants.

13
<PAGE> 15

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data for the years ended
December 31, 1993, 1994 and 1995 is derived from the Company's consolidated
financial statements, which have been audited by Price Waterhouse LLP, the
Company's independent certified public accountants. The following selected
consolidated financial data for the three months ended March 31, 1995 and 1996
is derived from the Company's unaudited consolidated financial statements. In
the opinion of management, the unaudited consolidated financial statements have
been prepared on the same basis as the audited consolidated financial statements
and include all adjustments (consisting of only normal recurring accruals)
necessary for a fair presentation of the financial position and results of
operations for such periods. Results for the three months ended March 31, 1996
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.

The information below is qualified by reference to, and should be read in
conjunction with, the Consolidated Financial Statements, and notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which are included elsewhere in this Prospectus, and the Unaudited
Pro Forma Consolidated Financial Information incorporated herein by reference.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS
--------------------------------------- ENDED MARCH 31,
PRO FORMA ----------------
1993 1994 1995(1) 1995(2) 1995 1996(3)
------- ------- ------- --------- ------ -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales of products........................ $ 3,320 $ 2,776 $17,384 $23,440 $1,556 $ 8,354
Service revenues......................... 12,441 12,507 12,754 14,660 3,064 4,039
------- ------- ------- --------- ------ -------
Total sales............................ 15,761 15,283 30,138 38,100 4,620 12,393
------- ------- ------- --------- ------ -------
Cost of products sold.................... 2,514 2,195 12,657 16,908 1,074 6,215
Cost of services......................... 10,642 11,112 11,118 12,037 2,711 3,403
------- ------- ------- --------- ------ -------
Total cost of sales.................... 13,156 13,307 23,775 28,945 3,785 9,618
------- ------- ------- --------- ------ -------
Gross profit........................... 2,605 1,976 6,363 9,155 835 2,775
Engineering and development.............. 503 581 577 715 142 176
Selling, general and administrative...... 2,949 2,658 3,125 4,857 557 1,277
Amortization of goodwill................. 96 30 157 413 5 111
------- ------- ------- --------- ------ -------
Operating income (loss) before special
charges............................. (943) (1,293) 2,504 3,170 131 1,211
Special charges.......................... 725 -- 980 980 -- --
------- ------- ------- --------- ------ -------
Operating income (loss)................ (1,668) (1,293) 1,524 2,190 131 1,211
Interest expense......................... 422 523 494 633 126 103
Other expense............................ 60 80 -- -- -- --
Interest and other income................ (30) (13) (142) (198) (6) (102)
------- ------- ------- --------- ------ -------
Net income (loss)(4)................... $(2,120) $(1,883) $ 1,172 $ 1,755 $ 11 $ 1,210
======= ======= ======= ======== ====== =======
Net income (loss) per share(5)......... $ (.56) $ (.41) $ .12 $ .17 $ -- $ .09
======= ======= ======= ======== ====== =======
Weighted average shares
outstanding(5)...................... 3,765 4,631 9,083 10,401 6,277 13,549
======= ======= ======= ======== ====== =======
</TABLE>

14
<PAGE> 16

<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
------------------------- ----------------
1993 1994 1995 1995 1996
------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and equivalents.............................. $ 625 $ 753 $ 1,887 $ 341 $ 2,083
Working capital................................... 1,783 2,267 10,222 2,120 11,731
Total assets...................................... 8,752 8,943 28,515 9,143 29,361
Short-term debt................................... 83 212 5,385 223 2,407
Long-term debt.................................... 5,388 4,328 3,750 4,114 3,600
Stockholders' equity.............................. 342 1,160 14,334 1,259 17,730
</TABLE>

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

(1) Includes the results of operations of AIT and Westec from May 17, 1995 and
October 2, 1995, their respective effective dates of acquisition. See "The
Company."
(2) Gives effect to the Acquisitions as if each Acquisition had occurred on
January 1, 1995. This pro forma financial information has been derived from
the Unaudited Pro Forma Consolidated Financial Information incorporated
herein by reference.
(3) Includes the results of operations of Comtech from January 1, 1996, its
effective date of acquisition. See "The Company."
(4) The Company has recorded no income tax expense during the periods presented
due to net losses realized and the availability of federal income tax net
operating loss carryforwards. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
(5) Net income (loss) per share and weighted average shares outstanding are
presented on a fully-diluted basis. The calculations exclude 895,744 and
1,107,509 shares of Common Stock for the year ended December 31, 1995 and
the three months ended March 31, 1996, respectively, that are held in
escrows established in connection with the Company's August 1991 initial
public offering and the acquisitions of Westec and Comtech. These shares
have been excluded because the conditions for release of such shares from
escrow have not yet been satisfied. See Notes A, C, and I to the
Consolidated Financial Statements.

15
<PAGE> 17

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in connection with the Company's
consolidated financial statements, and notes thereto, included elsewhere in this
Prospectus.

OVERVIEW

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

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

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

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

The Company realized significant improvements in its sales and operating
results during 1995 and the three months ended March 31, 1996, primarily as a
result of the Acquisitions and the sales of DSC Communications Corporation
("DSC") access products under a distribution agreement entered into in September
1995. The Company's total sales increased by 97.2% in 1995 and 168.2% in the
first quarter of 1996 when compared to 1994 and the first quarter of 1995,
respectively. As the Company's sales mix shifted from a majority of service
revenues in 1994 (81.8% of total sales) to a majority of product sales in 1995
and the first quarter of 1996 (57.7% and 67.4% of total sales, respectively).
The Company's gross profit margin increased from 12.9% in 1994 to 21.1% in 1995
and 22.4% in the first quarter of 1996. As a percentage of total sales, the
Company's operating income (loss) before special charges increased from (8.5%)
in 1994 to 8.3% in 1995 and 9.8% in the first quarter of 1996. Management will
continue to seek further improvements in gross profit margin over time as the
Company's product offerings include more internally developed and acquired
products containing proprietary technology.

Since January 1, 1995, the Company has significantly strengthened its
balance sheet through improved operating results, the addition of approximately
$10 million in new capital and a new five-year $10 million credit facility. The
Company has used this capital for acquisitions and to support the working
capital

16
<PAGE> 18

requirements associated with the Company's growth. The Company's working capital
and stockholders' equity have increased from $2.3 million and $1.2 million,
respectively, at December 31, 1994 to $11.7 million and $17.7 million,
respectively, at March 31, 1996.

RESULTS OF OPERATIONS

The following discussion and analysis of the Company's consolidated results
of operations for the years ended December 31, 1993, 1994 and 1995 and the three
months ended March 31, 1995 and 1996 is based upon, and should be read in
conjunction with, the financial information set forth under "Selected
Consolidated Financial Data" and the Consolidated Financial Statements,
including the notes thereto, included elsewhere in this Prospectus.

The following table sets forth for the periods indicated the percentage of
total sales represented by each line item in the Company's consolidated
statements of operations:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------- --------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Sales of products............................ 21.1% 18.2% 57.7% 33.7% 67.4%
Service revenues............................. 78.9 81.8 42.3 66.3 32.6
----- ----- ----- ----- -----
Total sales................................ 100.0 100.0 100.0 100.0 100.0
Cost of products sold........................ 16.0 14.4 42.0 23.2 50.1
Cost of services............................. 67.5 72.7 36.9 58.7 27.5
----- ----- ----- ----- -----
Total cost of sales........................ 83.5 87.1 78.9 81.9 77.6
----- ----- ----- ----- -----
Gross profit............................... 16.5 12.9 21.1 18.1 22.4
Engineering and development.................. 3.2 3.8 1.9 3.1 1.4
Selling, general and administrative.......... 18.7 17.4 10.4 12.1 10.3
Amortization of goodwill..................... 0.6 0.2 0.5 0.1 0.9
----- ----- ----- ----- -----
Operating income (loss) before special
charges................................. (6.0) (8.5) 8.3 2.8 9.8
Special charges.............................. 4.6 -- 3.3 -- --
----- ----- ----- ----- -----
Operating income (loss).................... (10.6) (8.5) 5.0 2.8 9.8
Interest expense............................. 2.7 3.4 1.6 2.7 0.8
Other expense................................ 0.4 0.5 -- -- --
Interest and other income.................... (0.2) (0.1) (0.5) (0.1) (0.8)
----- ----- ----- ----- -----
Net income (loss).......................... (13.5)% (12.3)% 3.9% 0.2% 9.8%
===== ===== ===== ===== =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995

Sales. Total sales increased $7,773,000, or 168.2%, to $12,393,000 in the
first quarter of 1996 from $4,620,000 in the first quarter of 1995. The
percentage of product sales to total sales increased to 67.4% in the first
quarter of 1996 from 33.7% in the first quarter of 1995.

Product sales increased $6,798,000, or 436.9%, to $8,354,000 in the first
quarter of 1996 from $1,556,000 in the first quarter of 1995. The increase
resulted primarily from $4.1 million in switching, transmission and access
products sold by AIT, Westec and Comtech, all of which were acquired by the
Company subsequent to the first quarter of 1995, and the sale of $3.5 million of
DSC access products in the first quarter of 1996 pursuant to the distribution
agreement with DSC entered into during the third quarter of 1995.

Service revenues increased $975,000, or 31.8%, to $4,039,000 in the first
quarter of 1996 from $3,064,000 in the first quarter of 1995. The increase
related to approximately $400,000 of Westec repair revenues following its
acquisition and increased circuit board repair and electronic manufacturing
revenues.

17
<PAGE> 19

Gross Profit. Gross profit increased $1,940,000, or 232.3%, to $2,775,000
in the first quarter of 1996 from $835,000 in the first quarter of 1995. Gross
profit margin increased to 22.4% in the first quarter of 1996 from 18.1% in the
first quarter of 1995. The improved performance resulted from the 168.2%
increase in total sales and the change in sales mix to products, which generally
carry a higher gross profit margin than service revenues.

Gross profit margin on products sold decreased to 25.6% in the first
quarter of 1996 from 31.0% in the first quarter of 1995 as a result of the sale
of DSC access products. Excluding the sale of these distributed DSC products,
gross profit margin for products sold was 37.4%.

Gross profit margin on service revenues increased to 15.7% in the first
quarter of 1996 from 11.5% in the first quarter of 1995. This improvement
related primarily to the economies of scale associated with the 31.8% increase
in service revenues and reduced depreciation expense of approximately $100,000
resulting from the special charge taken in the second quarter of 1995 to write
down the net book value of certain fixed assets of the Company's repair
operations.

Engineering and Development. Engineering and development expenses
increased $34,000, or 23.9%, to $176,000 in the first quarter of 1996 from
$142,000 in the first quarter of 1995. The increase in gross expenses was
attributable to the research and product development activities acquired in
connection with the acquisition of Comtech. As a result of the 168.2% increase
in total sales, engineering and development expenses decreased to 1.4% of total
sales in the first quarter of 1996 from 3.1% in the first quarter of 1995.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $720,000, or 129.3%, to $1,277,000 in the
first quarter of 1996 from $557,000 in the first quarter of 1995. The increase
primarily related to expenses associated with the operations of the recently
acquired businesses, additional salary and related costs for the Company's
Chairman (who took no salary during 1995) and its new President, and the
Company's establishment of a dedicated international sales and marketing group
in the first quarter of 1996. As a percentage of total sales, selling, general
and administrative expenses decreased to 10.3% in the first quarter of 1996 from
12.1% in the first quarter of 1995.

Amortization of Goodwill. Amortization of goodwill increased $106,000 to
$111,000 in the first quarter of 1996 from $5,000 in the first quarter of 1995,
as a result of the Acquisitions.

Operating Income. Operating income increased $1,080,000, or 824.4%, to
$1,211,000 in the first quarter of 1996 from $131,000 in the first quarter of
1995. Operating income margin increased to 9.8% in the first quarter of 1996
from 2.8% in the first quarter of 1995.

Interest Expense. Interest expense decreased $23,000, or 18.3%, to
$103,000 in the first quarter of 1996 from $126,000 in the first quarter of
1995. The decrease resulted from a reduction in the interest rate on the
Company's bank debt due to the lender's reinstatement of a LIBOR-based interest
rate option in July 1995.

Interest and Other Income. Interest and other income increased $96,000 to
$103,000 in the first quarter of 1996 from $7,000 in the first quarter of 1995
due to interest earned on notes receivable from stockholders, the note
receivable from the former owner of AIT and the Company's invested cash
balances. As of March 31, 1996, the notes receivable from stockholders were paid
in full.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Sales. The Company's total sales increased $14,855,000, or 97.2%, to
$30,138,000 in 1995 from $15,283,000 in 1994. The mix of sales shifted
significantly during this period to 57.7% in product sales in 1995 from 81.8%
service revenues in 1994.

Product sales increased $14,608,000, or 526.2%, to $17,384,000 in 1995 from
$2,776,000 in 1994. The increased sales related primarily to $6.2 million of
switching systems, add-on frames and related circuit boards sold by AIT since
its acquisition in May 1995 and $5.8 million of access products sold under the
DSC distribution agreement.

18
<PAGE> 20

Service revenues increased $248,000, or 2.0%, to $12,755,000 in 1995 from
$12,507,000 in 1994. The increase related to repair revenues earned by Westec in
the fourth quarter of 1995.

Gross Profit. Gross profit increased $4,387,000, or 222.0%, to $6,363,000
in 1995 from $1,976,000 in 1994, as a result of increases in total sales and
product sales as a percentage of total sales. Gross profit margin increased to
21.1% in 1995 from 12.9% in 1994.

Gross profit margin for products sold increased to 27.2% in 1995 from 20.9%
in 1994. Excluding the sale of DSC distributed products, gross profit margin for
products sold in 1995 was 33.4%. The improved gross profit margin resulted from
the Company's increased product sales and, more specifically, on switching
products offered by the Company as a result of the acquisition of AIT. Switching
systems and add-on frames sold by AIT, which represented a new product offering
for the Company, carry significantly higher gross profit margins than the
modified circuit boards and pay telephone parts that comprised most of the
product sales in 1994.

Gross profit margin on service revenues increased to 12.8% in 1995 from
11.1% in 1994. The improvement in gross profit margin in 1995 related to an
approximately $1.0 million increase in refurbishment revenues offset by a
similar reduction in manufacturing service revenues. The Company's gross profit
margin for service revenues is subject to wide fluctuations depending on the
sales mix (i.e., circuit board repair and pay telephone refurbishment have
targeted gross profit margins significantly higher than those of electronic
manufacturing services).

Engineering and Development Expenses. Engineering and development expenses
decreased $4,000 to $577,000 in 1995 from $581,000 in 1994. As a result of the
97.2% increase in total sales in 1995, engineering and development expenses as a
percentage of total sales decreased to 1.9% in 1995 from 3.8% in 1994.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $467,000, or 17.6%, to $3,125,000 in 1995 from
$2,658,000 in 1994. The increased expenses were primarily a result of the AIT
and Westec operations. As a percentage of total sales, selling, general and
administrative expenses decreased to 10.4% in 1995 from 17.4% in 1994.

Amortization of Goodwill. Amortization of goodwill increased $127,000 to
$157,000 in 1995 from $30,000 in 1994 as a result of goodwill acquired in
connection with the AIT and Westec Acquisitions.

Special Charges. In the second quarter of 1995, the Company recorded a
one-time charge of $980,000, or $.11 per share, primarily for the write-down of
test equipment and related tooling used in certain repair operations. As a
result of a decline in analog circuit board repair revenues, the shift in
strategic focus to product sales, new digital repair services and programs
offered by the Company, the acquisition of AIT and other market considerations,
management elected to significantly write-down the net book value of certain
test equipment, tooling, dies and diagnostic programs used to repair analog
telecommunications equipment. See Note D to Consolidated Financial Statements.

Operating Income (Loss). Operating income increased $2,817,000 to
$1,524,000 in 1995 from a loss of $1,293,000 in 1994. As a percentage of total
sales, operating income (loss) increased to 5.0% in 1995 from (8.5)% in 1994.

Interest Expense. Interest expense decreased $29,000, or 5.5%, to $494,000
in 1995 from $523,000 in 1994. The decrease resulted from an approximately
$800,000 reduction in average debt outstanding during the second half of 1995
and an approximately two point reduction in the interest rate being paid on bank
debt due to the reinstatement of a LIBOR-based interest rate option by the
Company's primary lender in mid-1995.

Other Expenses. In December 1994, $110,000 of 8 1/2% debentures were
converted into shares of Common Stock at a reduced price of $1.25 per share. In
connection with the incremental shares issued, the Company recorded $80,000 of
debt conversion expense and a corresponding credit to stockholders' equity.

Interest and Other Income. Interest and other income increased $130,000 to
$143,000 in 1995 from $13,000 in 1994. The increased income was generated from
interest earned on notes receivable from stockholders, a note receivable from
the former owner of AIT and the Company's invested cash balances.

19
<PAGE> 21

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

Sales. The Company's total sales decreased $478,000, or 3.0%, to
$15,283,000 in 1994 from $15,761,000 in 1993. The Company's sales mix during
1994 remained relatively constant as compared to 1993 at approximately 80%
service revenues and 20% product sales.

Product sales decreased $544,000, or 16.4%, to $2,776,000 in 1994 from
$3,320,000 in 1993. Although service revenues were approximately $12,500,000 in
both 1994 and 1993, the Company experienced a 40% reduction in its circuit board
repair revenues during 1994, which was offset by increased pay telephone
refurbishment and electronic manufacturing revenues.

Circuit board repair revenues and the sales of surplus circuit boards
declined during 1994 due to warehouse consolidations, spare inventory reduction
and handling agent programs implemented by several large telecommunications
customers. The Company's inability to develop new repair services and technology
during 1991 through mid-1993 and other market considerations also impacted
revenues.

Gross Profit. Gross profit decreased $629,000, or 24.1%, to $1,976,000 in
1994 from $2,605,000 in 1993. Gross profit margin decreased to 12.9% in 1994
from 16.5% in 1993. The decrease was a result of the reduced product sales and
the change in service revenues mix from higher margin circuit board repair
revenues to lower margin pay telephone refurbishment and electronic
manufacturing revenues. Gross profit margins for circuit board repair increased
by approximately 5.0% in 1994 despite the significant reduction in repair
revenues. This performance was attributable to the plant consolidation programs
completed in December 1993. See "-- Special Charges."

Engineering and Development Expenses. Engineering and development expenses
increased $78,000, or 15.5%, to $581,000 in 1994 from $503,000 in 1993. The
increase related to the Company's development of new repair services for digital
telecommunications equipment and additional engineering necessary to support
increased electronic manufacturing service revenues. As a percentage of total
sales, engineering and development expenses increased to 3.8% in 1994 from 3.2%
in 1993.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $291,000, or 9.9%, to $2,658,000 in 1994 from
$2,949,000 in 1993. This decrease was primarily a result of restructuring
actions taken in previous years to streamline operations and reduce costs. As a
percentage of total sales, selling, general and administrative expenses
decreased to 17.4% in 1994 from 18.7% in 1993.

Amortization of Goodwill. Amortization of goodwill decreased $66,000 to
$30,000 in 1994 from $96,000 in 1993 as a result of certain intangible assets
becoming fully amortized in early 1994.

Special Charges. In the third quarter of 1993, the Company recorded a
one-time charge of $725,000, or $.19 per share, for the costs of consolidating
its Florence, Kentucky and Ocoee, Florida circuit board repair operations into
existing facilities in Orlando, Florida and South Bend, Indiana. These plant
closings and consolidations, which were completed in December 1993, were
initiated to reduce the overhead costs of the Company's circuit board repair
operations and improve operational efficiencies. See Note D to Consolidated
Financial Statements.

Operating Income (Loss). Operating loss decreased $375,000 to a loss of
$1,293,000 in 1994 from a loss of $1,668,000 in 1993. As a percentage of total
sales, operating losses decreased to (8.5%) in 1994 from (10.6%) in 1993.

Interest Expense. Interest expense increased $101,000, or 23.9%, to
$523,000 in 1994 from $422,000 in 1993. The increase was a result of an increase
in the Company's borrowing rate resulting from a March 1994 bank agreement that
discontinued a LIBOR-based rate option and a significant increase in the prime
lending rate during 1994.

LIQUIDITY AND CAPITAL RESOURCES

Overview. The Company has traditionally financed its operations and growth
through private placements of equity, the exercise of stock warrants and options
and bank loans from its primary lender. With the

20
<PAGE> 22

significant increase in total sales and net income in 1995 and the first quarter
of 1996, cash flows from operations are also becoming a primary cash resource
for the Company.

Cash management is a key element of the Company's operating philosophy and
future strategic plans. Acquisitions to date have been carefully structured to
minimize the cash element of the purchase price and ensure that appropriate
levels of cash are available to support the increased product development,
marketing programs and working capital normally associated with the growth
initiatives of acquired businesses. The 1996 Salary Incentive Program discussed
below is another example of the Company's efforts to effectively manage its cash
position as cash payments related to certain salary costs are not made until
sufficient pre-tax profits and accompanying cash flow are generated by the
Company.

Operating Activities. Cash used by operating activities of $1,164,000 and
$6,189,000 for the first quarter of 1996 and the year ended December 31, 1995,
respectively, resulted from the Company's need to finance increased accounts
receivable and inventories required to support its rapid growth in sales.

Accounts receivable increased $433,000, or 4.5%, to $10,082,000 at March
31, 1996 from December 31, 1995, primarily due to the Comtech Acquisition.
Accounts receivable increased $7,095,000, or 277.9%, to $9,649,000 at December
31, 1995 from December 31, 1994, primarily as a result of the Company's 235.7%
increase in sales in the fourth quarter of 1995 compared to the fourth quarter
of 1994. Average days sales outstanding at March 31, 1996 were 50 days as
compared to 49 and 53 days at December 31, 1995 and 1994, respectively.

Inventories at March 31, 1996 increased $2,283,000, or 50.2%, over December
31, 1995 levels to $6,833,000. This increase was due primarily to a planned $1.0
million build-up of AIT inventories to support the increased demand for its
switching products and $918,000 of distributed product inventories on hand as of
March 31, 1996, which were subsequently sold in April 1996. The remaining
increase related primarily to inventories from the acquisition of Comtech.
Inventories at December 31, 1995 increased $2,306,000, or 102.8%, over December
31, 1994 levels primarily a result of the AIT Acquisition. AIT's inventories as
of December 31, 1995 amounted to approximately $2.1 million.

Investing Activities. During 1993 and 1994, the Company's investing
activities consisted entirely of $824,000 in capital expenditures for facility
improvements, manufacturing equipment and repair service development projects.
In 1995 and the first quarter of 1996, the Company invested $446,000 in capital
expenditures, primarily for computer network and related communications
equipment designed to upgrade the Company's management information systems and
to integrate new acquisitions.

In March 1995, the Company entered into a four year agreement to lease
approximately $1 million of new surface mount manufacturing and automated
testing equipment. See "Business -- Manufacturing." As part of the lease
agreement, the Company paid approximately $220,000 as a first payment and
$24,000 for a security deposit. Other Assets on the March 31, 1996 balance sheet
includes approximately $253,000 in prepaid rent relating to this lease. See Note
F to Consolidated Financial Statements.

From May 1995 to January 1996, the Company completed the Acquisitions,
which were designed to bring new wireline and wireless switching, transmission
and access products and technology into the Company. See "The Company." All of
the Acquisitions were relatively similar in structure in that the former
owner(s) received initial consideration consisting of a combination of Common
Stock and cash, as well as contingent consideration tied to the future
profitability of the ongoing business. See Note C to Consolidated Financial
Statements. The majority of the contingent consideration may be paid, at the
option of the Company, in the form of Common Stock valued at its then-current
market price. At the time it becomes highly probable that contingent
consideration will be earned, it will be measured and capitalized as additional
goodwill and stockholders' equity.

To date, the Company has paid approximately $1.3 million in cash
consideration in connection with the Acquisitions, including $582,000 in
contingent consideration paid to the previous owner of AIT in February 1996 as a
result of AIT's gross profit performance during 1995. The impact of these
payments on the Company's cash position has been partially offset by the
addition of $805,000 in cash owned by Comtech on the effective date of its
acquisition.

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<PAGE> 23

In July 1995, the Company loaned the sole shareholder of AIT $1.3 million
in cash in connection with a secured promissory note executed as an integral
part of the acquisition of AIT. An additional $1,030,000 may be loaned to the
shareholder as specific fully reserved accounts receivable, notes receivable and
inventories on AIT's May 17, 1995 balance sheet are collected or realized by the
Company. Through March 31, 1996, the Company had loaned an aggregate of
$1,565,000 to the shareholder, of which $983,000 remained outstanding at that
date. See Note C to Consolidated Financial Statements.

In connection with the terms of the acquisition of Comtech, former Comtech
stockholders were paid approximately $100,000 in cash in June 1996. The cash
purchase price, along with an estimated $100,000 in legal, audit and other costs
associated with the acquisition of Comtech, are included in Other Accrued
Liabilities on the Company's March 31, 1996 balance sheet.

Financing Activities. Since February 1993, the Company has raised
approximately $6.2 million from four placements of Common Stock to private
investors. See Note I to Consolidated Financial Statements. Net proceeds from
these private placements were used for operational purposes and to complete the
acquisition of AIT in 1995.

Additional sources of cash flow have included bank debt and related payment
concessions. In July 1995, the Company received a new $2 million line of credit
from its primary lender through November 1997. In March 1996, the Company's bank
agreement was amended to increase the revolving line of credit from $2 million
to $6 million, reduce the interest rate by one point and extend the bank's
commitment until March 2001. The original $4 million term loan, scheduled to
mature in November 1997, was replaced with a new $4 million term loan requiring
graduated quarterly payments through March 2001. As of March 31, 1996, $2
million was outstanding on the Company's line of credit.

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

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

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

22
<PAGE> 24

Under the 1996 program, employees could participate to a maximum level of
50% of their 1996 salaries. The Company's Chairman, President and Chief
Financial Officer each elected to forego 50% of their salary under this program.
This program also provides that if certain levels of pre-tax income before
special charges is achieved for 1996 in excess of that reported for 1995, a
partial or full repayment of salaries will be made in February 1997.
Compensation expense for this program will be recorded in 1996 as it becomes
highly probable a repayment will be earned. In connection with the Company's
pre-tax income performance in the first quarter of 1996, a $150,000 expense was
recorded for the pro-rata portion of the potential repayment of 1996 salaries
under this program. The related liability is included in Accrued Payroll and
Benefits on the Company's March 31, 1996 balance sheet.

Summary. The above financing transactions, the Acquisitions and the
improved operating performance of the Company in 1995 and the first quarter of
1996 have significantly enhanced the Company's liquidity and its capital
resources. At March 31, 1996, the Company's primary source of liquidity included
cash and equivalents of $2,083,000.

The Company intends to use $4 million of the net proceeds of the Offering
to repay the term loan. In consideration of the repayment of the amounts
borrowed under the term loan, the bank has committed to increase the Company's
revolving line of credit from $6 million to $10 million. As of the date of this
Prospectus, the Company had no debt outstanding under the line of credit.

Management believes that the net proceeds of the Offering, together with
cash generated from operations and available borrowings under the Company's
revolving line of credit 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.

QUARTERLY OPERATING RESULTS

The following table presents unaudited quarterly operating results for each
of the Company's last eight quarters. This information has been prepared by the
Company on a basis consistent with the Company's audited consolidated financial
statements and includes all adjustments, consisting only of normal recurring
accruals, that the Company considers necessary for a fair presentation in
accordance with generally accepted accounting principles. Such quarterly results
are not necessarily indicative of future operating results. This information
should be read in conjunction with the Company's consolidated financial
statements, and notes thereto, included elsewhere in this Prospectus.

The following results include the results of operations for businesses
acquired from their respective dates of acquisition as follows: (a) AIT
effective as of May 17, 1995; (b) Westec effective as of October 2, 1995; and
(c) Comtech effective as of January 1, 1996. Net income (loss) per share is
presented on a fully diluted basis.

Sales of switching, transmission and access products are subject to the
timing of customer upgrade and new installation programs and, as a result, may
contribute to significant fluctuations in the Company's future

23
<PAGE> 25

quarterly sales. The Company's operating income performance is also subject to
significant quarterly fluctuations based on the mix of product sales and service
revenues.

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1994 1994 1994 1995 1995 1995 1995 1996
-------- ------------- ------------ --------- -------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of products(1).......... $ 499 $ 725 $1,136 $ 1,556 $1,914 $ 3,392 $ 10,522 $ 8,354
Service revenues.............. 3,422 3,349 3,064 3,064 2,844 3,268 3,578 4,039
-------- ------ ------ --------- -------- ------ ------------ ---------
Total sales................. 3,921 4,074 4,200 4,620 4,758 6,660 14,100 12,393
-------- ------ ------ --------- -------- ------ ------------ ---------
Cost of products sold......... 353 525 980 1,074 1,239 1,925 8,419 6,215
Cost of services.............. 2,938 2,914 2,986 2,711 2,519 2,892 2,996 3,403
-------- ------ ------ --------- -------- ------ ------------ ---------
Total cost of sales......... 3,291 3,439 3,966 3,785 3,758 4,817 11,415 9,618
-------- ------ ------ --------- -------- ------ ------------ ---------
Gross profit................ 630 635 234 835 1,000 1,843 2,685 2,775
Engineering and development... 161 156 130 142 144 165 126 176
Selling, general and
administrative.............. 613 661 759 557 611 938 1,019 1,277
Amortization of goodwill...... 6 6 12 5 18 44 90 111
-------- ------ ------ --------- -------- ------ ------------ ---------
Operating income (loss)
before special charges.... (150) (188) (667) 131 227 696 1,450 1,211
Special charges............... -- -- -- -- 980 -- -- --
-------- ------ ------ --------- -------- ------ ------------ ---------
Operating income (loss)..... (150) (188) (667) 131 (753) 696 1,450 1,211
Interest expense.............. 138 142 141 126 120 110 138 103
Other expenses................ -- -- 80 -- -- -- -- --
Interest and other income..... (5) (2) (2) (6) (5) (41) (90) (102)
-------- ------ ------ --------- -------- ------ ------------ ---------
Net income (loss)........... $ (283) $ (328) $ (886) $ 11 $ (868) $ 627 $ 1,402 $ 1,210
======= =========== ========== ======== ======= =========== ========== ========
Net income (loss) per common
share..................... $ (.06) $ (.04) $ (.22) $ -- $ (.13) $ .10 $ .15 $ .09
======= =========== ========== ======== ======= =========== ========== ========
</TABLE>

The following table sets forth the above unaudited quarterly financial
information as a percentage of total sales:

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1994 1994 1994 1995 1995 1995 1995 1996
-------- ------------- ------------ --------- -------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of products(1).......... 12.7% 17.8% 27.0% 33.7% 40.2% 50.9% 74.6% 67.4%
Service revenues.............. 87.3 82.2 73.0 66.3 59.8 49.1 25.4 32.6
-------- ----- ----- --------- -------- ----- ----- ---------
Total sales................. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
-------- ----- ----- --------- -------- ----- ----- ---------
Cost of products sold......... 9.0 12.9 23.3 23.2 26.1 28.9 59.7 50.1
Cost of services.............. 74.9 71.5 71.1 58.7 52.9 43.4 21.3 27.5
-------- ----- ----- --------- -------- ----- ----- ---------
Total cost of sales......... 83.9 84.4 94.4 81.9 79.0 72.3 81.0 77.6
-------- ----- ----- --------- -------- ----- ----- ---------
Gross profit(2)............. 16.1 15.6 5.6 18.1 21.0 27.7 19.0 22.4
Engineering and development... 4.1 3.8 3.1 3.1 3.0 2.5 0.9 1.4
Selling, general and
administrative.............. 15.6 16.2 18.1 12.1 12.8 14.1 7.2 10.3
Amortization of goodwill...... 0.2 0.2 0.3 0.1 0.4 0.7 0.6 0.9
-------- ----- ----- --------- -------- ----- ----- ---------
Operating income (loss)
before special charges.... (3.8) (4.6) (15.9) 2.8 4.8 10.4 10.3 9.8
Special charges............... -- -- -- -- 20.6 -- -- --
-------- ----- ----- --------- -------- ----- ----- ---------
Operating income (loss)..... (3.8) (4.6) (15.9) 2.8 (15.8) 10.4 10.3 9.8
Interest expense.............. 3.5 3.5 3.3 2.7 2.5 1.6 1.0 0.8
Other expenses................ -- -- 1.9 -- -- -- -- --
Interest and other income..... (0.1) -- -- (0.1) (0.1) (0.6) (0.6) (0.8)
-------- ----- ----- --------- -------- ----- ----- ---------
Net income (loss)........... (7.2)% (8.1)% (21.1)% 0.2% (18.2)% 9.4% 9.9% 9.8%
======= =========== ========== ======== ======= =========== ========== ========
</TABLE>

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

(1) The significant increase in product sales beginning in mid-1995 is a result
of the Acquisitions and approximately $9.3 million of distributed DSC
access products sold during the six months ended March 31, 1996. Any
significant future sales of DSC products will more than likely occur only
if the Company is successful in marketing these products in Latin America.
(2) Excluding the sales of distributed DSC products, gross profit margins for
the quarters ended December 31, 1995 and March 31, 1996 were 22.0% and
27.6%, respectively.

24
<PAGE> 26

BUSINESS

OVERVIEW

The Company develops, manufactures and markets wireline and wireless
switching, transmission and access products primarily for the United States,
Caribbean Basin and Latin American telecommunications markets. The Company's
products allow telecommunications service providers to build and upgrade their
central office and outside plant networks in order to provide a wide array of
voice, data and video services to their business and residential customers. The
Company offers digital switches, intelligent multiplexers, protection switching
equipment, digital loop carriers, microwave and millimeterwave radio equipment
and other wireless communications products. The products offered by the Company
include those manufactured by the Company as well as those manufactured by OEMs.
To support and complement its product sales, the Company also provides its
customers with a broad range of design, manufacturing, testing, installation,
repair and other value-added services.

The Company believes that it is well positioned to take advantage of the
technological innovations, rapid industry growth and increased competition among
the Company's customers that is expected to occur in the telecommunications
industry over the next several years. The Company intends to capitalize on
trends within the telecommunications industry and its objective is to continue
to broaden its offering of wireline and wireless switching, transmission and
access products and its geographic market coverage to become a preferred
provider of telecommunications products and related services to the RBOCs, other
local exchange carriers, inter-exchange carriers, competitive access providers,
cable television companies and other telecommunications service providers
expected to enter the industry.

INDUSTRY BACKGROUND

The global telecommunications industry has undergone significant
transformation and growth in recent years due to continued domestic
deregulation, technological innovation and the growth in international markets.
In addition, business and residential demand for voice, data and video services
has increased the need for additional systems capacity and network bandwidth to
accommodate the provision of such services by telecommunications providers. The
Company believes that these market forces will intensify in the foreseeable
future and that an increased number of telecommunications service providers,
availability of new services and strong international demand for the deployment
of basic telephone service will provide the Company with extensive opportunities
to sell its wireline and wireless switching, transmission and access products in
the United States and in international markets.

Domestic Deregulation

The number of telecommunications service providers continues to increase as
a result of the federal and state deregulation of the United States
telecommunications industry. Changes in federal and state regulations have
created the opportunity for a number of new network operators to enter the
market and have fostered competition between both new and established network
operators. The recently-enacted Telecommunications Act of 1996 permits local and
long distance telecommunications companies, cable television companies and
electric utility companies, subject to certain conditions designed to facilitate
local exchange competition, to compete with each other to provide local and long
distance telephony, data and video services.

To accommodate the demand for enhanced wireless services, the Federal
Communications Commission (the "FCC") auctioned additional spectrum for wireless
communications in 1995, thus potentially doubling the number of operators
licensed to compete in each metropolitan statistical area from two to four, and
recently announced plans to auction additional spectrum in 1996. Changes in FCC
and certain state public utility commission regulations governing
interconnections have created opportunities for the RBOCs and other local
exchange carriers to provide services in markets and geographic regions in which
they traditionally have been prohibited. In addition, such changes have allowed
local exchange carriers, inter-exchange carriers, competitive access providers,
cable television companies and other telecommunications service providers to
enter these same markets and regions. The Company believes that the
Telecommunications Act of 1996,

25
<PAGE> 27

together with FCC and other government initiatives, will increase the demand for
telecommunications systems and services as network operators respond to the
changing competitive environment by constructing new or enhancing existing
networks and increasing the available bandwidth to meet customer demand for
voice, data and video services.

Technological Innovation

In recent years, there have been a number of significant developments
relating to telecommunications technology, including the continuing
miniaturization of large scale integrated circuits, the development of lower
cost, higher capacity memory devices and microprocessors and new network
protocols such as spread spectrum Code Division Multiple Access ("CDMA"), which
are now available to offer improved performance and increased security. These
developments have lowered the cost of delivering multifunctional services
combining voice, data and video. In addition, new low cost, modular,
software-driven products (so-called "intelligent" products) can be readily
upgraded to provide additional revenue generating features such as call waiting,
call forwarding and caller-ID without having to undertake costly hardware
replacement. Moreover, the increasing use of wireless systems and technology
permits the more rapid deployment of telecommunications systems at lower costs
than traditional wireline networks.

These technological advances make it possible for products to be used which
facilitate the delivery of telecommunications services and create new network
configuration options. For example, Integrated Services Digital Network ("ISDN")
service allows for the dynamic allocation of bandwidth between, and simultaneous
transmission of, any combination of voice, data and video, and individual call
set-up permits users to easily designate and change the service configuration.
Other new advanced technologies include Asymmetrical Digital Subscriber Line
("ADSL"), a communications technology which permits the transmission of
information at rates up to 50 Megabits per second over existing copper wires,
and High Speed Digital Subscriber Line ("HDSL,") a communications technology
which permits the digital transmission of information over longer distances
without adding signal regenerator equipment. These new technologies create
additional demands for switching systems, intelligent multiplexers and digital
loop carriers. In addition, cable television companies are beginning to expand
beyond one-way broadcast to provide interactive services using high-speed cable
modems and have announced plans to provide telephony and high speed data
services.

Growth in International Markets

The Company believes that international markets represent significant
opportunities for growth, particularly in Latin America, the Caribbean Basin and
other developing areas. According to industry sources, a small percentage of
businesses and residences throughout Latin America have basic telephone service.
For example, of the estimated 11 million people in Ecuador, approximately
300,000 have basic telephone service. In addition, advances in radio and antenna
technology make it feasible to provide basic communications access with wireline
quality without the construction cost and obstacles associated with establishing
a wireline grid, thereby further encouraging the deployment of
telecommunications networks in developing countries. The governments of a number
of developed and developing countries have privatized their state-owned
telecommunications service providers and have granted licenses to new network
operators to compete with them. In most instances, as part of the privatization,
these governments have imposed service requirements on all network operators,
resulting in an acceleration of capital expenditures on new or expanded network
systems.

STRATEGY

The Company's objective is to continue to broaden its offering of wireline
and wireless switching, transmission and access products and expand its
geographic market coverage to become a preferred provider of telecommunications
products and related services to RBOCs, other local exchange carriers,
inter-exchange carriers, competitive access providers, cable television
companies and other service providers entering the telecommunications industry.
In order to achieve this objective, the Company plans to implement the following
elements of its strategy.

26
<PAGE> 28

Acquire Switching, Transmission and Access Products Companies. The Company
intends to selectively acquire companies that manufacture, market or hold
proprietary interests in wireline and wireless switching, transmission and
access products in order to rapidly increase the number and range of products it
offers. The Company intends to focus its acquisition efforts on businesses that
have designed innovative, leading edge products for high growth
telecommunications applications. The Company believes that there are numerous
small private companies offering advanced products and services that can benefit
from the Company's broad range of complementary support services, existing
customer base and ability to provide working capital. Consistent with this
strategy, the Company has recently acquired switching products in connection
with the AIT Acquisition, wireless products in connection with the Westec
Acquisition and transmission and access products in connection with the Comtech
Acquisition. The Company believes that the Acquisitions have provided the
Company with a core group of telecommunications products and new product
development capabilities that will permit the Company to launch new products and
enhance existing products. See "The Company."

Pursue Opportunities to License and Manufacture Telecommunications
Products. The Company also intends to increase the number of telecommunications
products it offers by pursuing opportunities to license the right to
manufacture, market and sell products incorporating advanced telecommunications
technologies. The Company believes that license agreements can provide
significant benefits, including accelerated entry into new markets and cost
savings over acquiring or developing in-house certain technologies and products.
Consistent with this strategy, in March 1996 the Company executed a memorandum
of understanding to license the right to manufacture, market and sell a
cost-effective, microprocessor-based modular, digital central office switch
developed by Eagle Telephonics. The Company intends to market this switch
primarily in the international marketplace.

Leverage its Existing Customer Relationships and Distribution Base. For
over 10 years, the Company has provided a wide range of repair services for
wireline and wireless switching, transmission and access products to over 200
telecommunications service providers, including local exchange carriers
(including all the RBOCs), inter-exchange carriers, cable television companies
and other telecommunications service providers. As the number of switching,
transmission and access products offered by the Company increases as a result of
acquisitions, technology licensing agreements, new product development and other
strategic initiatives, the Company intends to market these products to its
existing customers and distribute these products through its existing
distribution channels. For example, AIT, which has realized significant
increases in sales of its switching products since its acquisition by the
Company in May 1995, has successfully marketed its products to many of the
Company's traditional service customers.

Focus on Emerging International Markets. Although only 5% of the Company's
total sales in 1995 were attributable to international sales, a key element of
the Company's long-term strategy is to focus on international markets in
developing countries, principally in Latin America and the Caribbean Basin,
which are privatizing state-owned telecommunications service providers and
granting licenses to new network operators. The Company believes that its
products, particularly its wireless products, are well suited for developing
countries that are rapidly deploying and expanding their telecommunications
networks in order to increase the quality and the service levels of their
existing telecommunications infrastructure on a timely basis to more of their
population. To this end, in the first quarter of 1996, the Company formed a
dedicated international sales group headed by an experienced officer of the
Company to pursue the sale of the Company's products in international markets.
To support the efforts of this new sales group, the Company has established a
network of in-country agents and representatives to market the Company's
products throughout Latin America and the Caribbean Basin.

Capitalize on Manufacturing, Test and Service Capabilities. Since 1992,
the Company has provided its customers with a full range of contract
manufacturing services, including production engineering, electronic component
selection, sourcing and procurement, manufacturing, assembly and
in-circuit/functional testing. Over the past four years, the Company has
significantly expanded its manufacturing capacity and technical capabilities and
improved the quality of these services through the hiring of manufacturing,
engineering and materials professionals and investments in facilities and
automatic insertion, wave solder and state-of-the-art surface mount and
automated testing equipment. The Company intends to significantly increase the
use of its

27
<PAGE> 29

manufacturing, test and service capabilities over the next few years as part of
the Company's strategy to acquire businesses and products that can be
manufactured internally and sold in its core telecommunications markets.

PRODUCTS AND SERVICES

The Company offers wireline and wireless switching, transmission and access
products for the worldwide telecommunications marketplace. These products allow
telecommunications service providers to build and upgrade their networks to
provide a wide range of voice, data and video services to business and
residential customers. To date, the majority of the products sold by the Company
has been switching and access products manufactured by OEMs, including Northern
Telecom and DSC. Through acquisitions, technology licensing agreements and
internal development, the Company expects to manufacture an increasing
proportion of its products in the future.

The diagram on the following page illustrates the uses of the Company's
products in a typical telecommunications network.

[Diagram to be inserted on following page]

Switching Products. The Company markets a broad range of digital telephone
switching products that recognize the dialed digits, route and complete calls
and provide billing records. These products include switches used for local,
tandem, combination local and tandem, toll, combination toll and tandem and
cellular applications. The switches offered by the Company have line capacities
ranging from 100 to 120,000 subscribers and 30 to 60,000 interexchange trunks.
Switching products currently offered by the Company are developed and
manufactured by OEMs, including Northern Telecom and AT&T. These products
include complete switching systems as well as add-on frames, line cards and
modified circuit boards for either newly constructed networks or upgrades to
existing networks. The Company has recently entered into an agreement with Lucky
Goldstar Information and Communications to market and distribute a family of
digital switching products, including the STAREX-CDMA Digital Cellular System.

Pursuant to a memorandum of understanding, the Company has recently started
to manufacture a microprocessor-based, modular, digital central office switch.
This microprocessor-based switch employs extensive large scale integrated
circuit technology, which permits the provision of advanced telephony services
such as call waiting, call forwarding and conference calling, and requires
reduced power and floorspace compared with existing products. The current switch
design serves applications up to 4,000 subscriber lines and is expandable to
over 60,000 lines through future software enhancements. This switch is targeted
for use in the international marketplace due to its compatibility with
international standards, "plug and play" installation features and tolerance of
a wide range of environmental conditions. The Company expects to execute a
definitive technology license agreement with respect to this switch in July 1996
and expects to begin selling and delivering this switch in the first quarter of
1997, although there can be no assurance that the Company will meet this
schedule or that the Company will generate material sales from this switch.

Current users of the Company's switching products are primarily local
exchange carriers, inter-exchange carriers, competitive access providers, cable
television companies and other telecommunications service providers. The Company
intends to expand its current customer base for switching products by actively
marketing its switching products to new network providers, principally in Latin
America and the Caribbean Basin, and within the United States to private network
users.

Transmission Products. The Company develops, manufactures and markets a
variety of wireline and wireless transmission products, which are used for high
capacity connectivity between points within a communications network. These
products are primarily digital and provide for the movement of any combination
of voice, data and video traffic across wireline or wireless media. The
Company's transmission products include intelligent multiplexers (a device which
combines or aggregates several channels or linkages carrying voice or data
signals into a higher speed link), protection switching equipment (which
protects a voice and data link against failure by rerouting circuits to maintain
continuity), mini-repeater housings (a housing used to protect electronic
repeaters from the elements), frame controllers (used to permit encrypted

28
<PAGE> 30

networks to use commercial transmission facilities), asynchronous and fractional
data cards, microwave and millimeterwave radio equipment and sophisticated high
speed modems used to carry voice and data in wireline or wireless networks. The
Company's multiplexers, which include intelligent fractional T1 multiplexers and
fractional T2 multiplexers, include features such as local and remote loopbacks,
built-in bit error rate detection, line code selection and built-in performance
monitoring.

The Company's wireless transmission products include radios using amplitude
or frequency modulation and spread spectrum technologies that provide data,
local area network, ethernet (a local area network used for connecting computer
equipment) and voice transmission over frequencies ranging from 900 MHZ to 31
GHZ. The Company also has recently developed antenna technology applications
that permit simultaneous voice and video transmission.

Current users of the Company's transmission products are primarily an RBOC
and private network users, including mining and exploration companies and
colleges and universities. The Company intends to expand its current customer
base for transmission products by actively marketing its transmission products
in emerging international markets.

Access Products. The Company offers access products for the local loop
(i.e., that portion of the public telecommunications network which extends from
the service provider's switch to the individual home or business end-user).
Historically, a majority of the access products sold by the Company has been
manufactured by third parties. As a result of the Comtech Acquisition, however,
the Company now manufactures and markets a digital loop carrier developed by
Comtech (which permits network operators to provide more reliable, basic and
enhanced services at a lower cost) and DS-3 telemetry equipment developed by
Comtech (used primarily by the military for range communications applications to
multiplex telemetry, digital video, T1, local area network, wide area network
and other signals into a DS-3 signal transmitting at 45 Megabits per second).
The Company also offers a high speed coaxial modem (used primarily by cable
television companies to deliver voice or data at speeds up to 10 Megabits per
second) and a point-to-multipoint wireless service distribution system.

Current users of the Company's access products are primarily local exchange
carriers, inter-exchange carriers, competitive access providers, cable
television companies and the United States military. The Company intends to
expand its current customer base by actively marketing its access products to
new network providers, principally in Latin America and the Caribbean Basin.

Related Services. The Company differentiates itself from other providers
of telecommunications equipment by offering a full range of complementary
design, manufacturing, installation, testing and repair services. The Company
also offers its customers ongoing systems maintenance and monitoring services,
including asset management services, which allow customers to reduce their
investment in spare and surplus plug-in circuit boards by relying on the
Company's inventories and management information systems. By providing these
services, the Company believes it is better able to offer its customers more
comprehensive telecommunications solutions.

The Company repairs a broad range of switching and transmission plug-in
circuit boards originally manufactured by leading telecommunications companies
such as Lucent Technologies, Northern Telecom, DSC, ITT and Rockwell
International. The Company's electronic manufacturing services consist of the
design, engineering, manufacturing and testing of circuit boards,
electromechanical assemblies, subsystems and complete systems. The Company's
wireless equipment repair business, which was acquired by the Company as part of
its acquisition of Westec, consists principally of the repair and upgrade of
amplitude modulation equipment typically used by cable television companies. The
Company's engineers also provide customers with a full range of support services
for wireless transmission equipment, including system design, site survey, path
calculations, installation and maintenance.

Other Products and Services. The Company's other products and services
include the refurbishment and upgrade of AT&T pay telephones to like-new
condition and the sale of related pay telephone products, such as stainless
steel and custom logo vault doors, handsets and volume amplifiers. To date,
substantially all of these refurbishment services and product sales have been
provided or made to certain RBOCs, primarily Bell Atlantic, BellSouth and SBC
Communications (formerly Southwestern Bell).

29
<PAGE> 31

SALES AND MARKETING

The Company's domestic sales and marketing group is comprised of 20
professionals who are divided into individual sales and marketing teams for each
of the Company's product lines and related services. Each team is responsible
for obtaining a thorough technical knowledge of its products or services,
soliciting new customers and maintaining relationships with existing customers.
Each team is supervised at the corporate level by the Company's Vice President
of Business Development, who coordinates the sales and marketing of
multi-product line sales and is responsible for advertising, trade show
appearances and other Company-wide marketing efforts. In connection with the
Acquisitions, the Company acquired product sales professionals which bring
technical product knowledge and long-term customer relationships to the Company.

Although only 5% of the Company's total sales for 1995 were derived from
international sales, the Company intends to focus an increased amount of its
sales and marketing efforts on emerging international markets, especially in
Latin America and the Caribbean Basin. In March 1996, the Company formed a
dedicated international sales and marketing group headed by an experienced
officer of the Company to pursue the sale of all of the Company's products and
services outside of the United States. Based primarily on previous service sales
to the international markets, the Company has already established a network of
agents and representatives covering 14 countries in the Caribbean Basin and
Latin America. These agents and representatives, whose compensation consists of
commissions based on sales, are expected to actively promote and market the
Company's products and services and ensure that the Company receives all
appropriate bid tenders issued within their territory.

The Company's marketing strategy is to sell its newly-acquired or developed
switching, transmission and access products, together with the switching and
access products the Company resells on behalf of third party OEMs, to its
existing base of service customers, which is comprised of over 200
telecommunications service providers operating in the United States, the
Caribbean Basin and Latin America. The Company will seek to supplement its
product offerings through distribution agreements and other strategic alliances
in order to provide complete telecommunications systems and related
infrastructure to new network providers in emerging international markets.

CUSTOMERS

During 1995 and the three months ended March 31, 1996, the Company sold its
products and services to over 200 telecommunication service providers, including
the RBOCs, other local exchange carriers, inter-exchange carriers, cable
television companies and other telecommunications service providers operating in
the United States, the Caribbean Basin and Latin America. The following table
sets forth a representative list of the Company's major customers and end-users.

<TABLE>
<CAPTION>
SWITCHING PRODUCTS TRANSMISSION PRODUCTS ACCESS PRODUCTS SERVICES
- ---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Ameritech ADC Telecom Ameritech Alltel
Cable & Wireless Lockheed-Martin Bell Atlantic Bell Atlantic
GTE Pacific Bell BellSouth BellSouth
Pacific Intertel PCS Primeco Bosch Telecom Cablevision
Puerto Rico Telephone Pacific Bell Century Telephone
SBC Communications U.S. Board of Regents Cox Cable
Sprint-United GTE
Thrifty Call Puerto Rico Telephone
SBC Communications
TCI
</TABLE>

A small number of customers have accounted historically for a significant
percentage of the Company's total sales. In the three months ended March 31,
1996, Ameritech and Communications Equipment Source (a distributor to Cable &
Wireless) accounted for 25.9% and 10.8% of the Company's total sales,
respectively, and the Company's top 10 customers accounted for 64.1% of total
sales. For the year ended December 31, 1995, on a pro forma basis to give effect
to the Acquisitions as if each had occurred on January 1, 1995,

30
<PAGE> 32

Ameritech and BellSouth accounted for 18.2% and 12.0% of the Company's total
sales, respectively, and the Company's top 10 customers accounted for 59.7% of
total sales. The Company's customers typically are not obligated contractually
to purchase any quantity of products or services in any particular period.

The Company expects its customer concentration to decrease in the future as
a result of the recent acquisitions of AIT, Westec and Comtech, which sell their
products and services primarily to non-RBOC telecommunications service
providers. In addition, the Company expects its customer base to expand due to
the entrance of new service providers into the telecommunications markets, the
recent establishment of a dedicated international sales and marketing group and
the availability of the Company's new products.

MANUFACTURING, ASSEMBLY AND TEST

The Company provides a broad range of electronic manufacturing, assembly
and test services to support its product sales and its contract customers. The
majority of these support services are performed at the Company's Orlando,
Florida facility, where state-of-the-art manufacturing and test equipment is
maintained. Historically, this equipment has been used primarily to perform
contract manufacturing services for third parties, primarily to large technology
companies that require a high level of professional materials management,
quality "turn-key" manufacturing and complete electronic and functional product
testing.

In 1995, the Company significantly enhanced its assembly and test
capabilities through the acquisition of approximately $1.0 million of new
surface mount manufacturing and automated testing equipment. This equipment
includes a surface mount assembly line, including advanced "pick-and-place"
equipment and a 3-D vision screen printer. The equipment allows for the
placement of fine pitch (as low as 12 mil) electronic components at a rate of up
to 14,400 placements per hour. This equipment is currently operating at less
than 50% of the line's capacity. In 1995, the Company also acquired a new board
test system that provides for high performance, automated testing of analog,
digital, mixed signal and memory devices resident on printed circuit boards.
When combined with the Company's existing testing equipment, the new equipment
gives the Company an extensive software library and technical capacity to test
integrated circuits, capacitors, resistors and related electronic components,
and ensures the quality of electronic products manufactured.

In connection with the Acquisitions, the Company acquired additional
manufacturing, assembly and test capacity and experience. At the Company's
Lakeland, Florida facility acquired as part of the AIT Acquisition, several
Northern Telecom switches and frames are dedicated to the testing of switching
products sold and to the development and verification of the configuration and
integration of custom systems. In addition, cable manufacturing equipment and
expertise is utilized to manufacture copper and fiber cables to specific
customer installation requirements.

At the Company's Scottsdale, Arizona facility, acquired as part of the
Westec Acquisition, test and tuning equipment is used to manufacture and service
wireless products. The Company also maintains electronic manufacturing and test
equipment at its Livermore, California facility acquired through the Comtech
Acquisition. In order to realize improvements in efficiency, product costs and
quality, the Company intends to integrate Comtech's manufacturing operations
into the Company's Orlando operations.

The Company has an experienced Director of Quality who, along with a staff
of quality assurance professionals, oversees the quality of the Company's
products and services. In June 1996, the Company's repair operations (conducted
at its Orlando facility) were ISO 9002 certified by an independent registrar.
The Company believes its manufacturing operations comply with ISO standards and
expects them to be ISO certified by the end of 1996.

In connection with its manufacturing and test services, the Company
generally provides warranties on its products and services ranging from three
months to five years. A one-year warranty is typically provided on switching,
transmission and access products.

The Company believes that it currently has the equipment, personnel and
experience necessary to efficiently manufacture high quality telecommunications
products in-house. This should assist the Company in controlling the costs,
quality and delivery of its products and allow the Company to bring new products
to market on a timely basis.

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<PAGE> 33

SUPPLIERS

Products manufactured by the Company typically require the procurement of
printed circuit boards, electronic components, cable assemblies, fabricated
metal, plastic parts and other materials, of which electronic components are the
most costly. The Company purchases electronic components from numerous
companies, including OEMs and parts distributors.

The Company purchases substantially all of its components and other parts
from suppliers on a purchase order basis and does not maintain long-term supply
arrangements. Most of the components used in the Company's products and related
services are available from multiple sources. However, several components,
primarily custom hybrid integrated circuits, are currently obtained from a
single source. To date, the Company has been able to obtain adequate supplies of
these components. The Company's inability in the future to obtain sufficient
quantities of limited-source components, or to develop alternative sources
therefor, could result in delays in product delivery and increased component
cost, either of which could have a material adverse effect on the Company's
business, financial condition and results of operations.

Although the Company has started to manufacture its own switching products,
a majority of the switching products sold to date by the Company has been new or
used Northern Telecom switching systems, add-on frames and circuit boards. The
major sources for such products are deinstallations by primary users, asset
recovery operations of telephone companies, repossessions by leasing companies
and formal distribution or consignment agreements. In August 1995, the Company
entered into a distribution agreement with Northern Telecom which allows the
Company to purchase and distribute certain surplus Northern Telecom circuit
boards. The distribution agreement expires in December 1996 and is renewable on
an annual basis. The Company also has entered into a consignment agreement with
Ameritech through December 1997, pursuant to which the Company inventories
Northern Telecom, AT&T and other OEM circuit boards for resale by the Company.
The Company is currently in the trial phase of similar supply programs with
Century Telephone, a large independent telephone company.

In addition, the Company supplements its product offerings with
distribution agreements with OEMs. For example, in September 1995, the Company
entered into a two-year, non-exclusive distribution agreement with DSC pursuant
to which the Company markets and sells certain access products manufactured by
DSC.

ENGINEERING AND DEVELOPMENT

Historically, the Company's engineering, development and technical support
efforts have focused on the repair of switching, transmission and access
products, and on electronic manufacturing processes. The Company has significant
experience in developing automated test systems, diagnostic programs and repair
procedures for electronic circuitry typically found within telecommunications
switching equipment. The Company's engineers have also used their expertise and
experience to create new revenue sources for the Company by developing upgrades
and enhancements to existing products, including those developed and
manufactured by OEMs.

As of June 1, 1996, the Company's engineering and development group
consisted of 19 persons involved in product development, wireless
communications, repair service development, systems integration and
manufacturing process and operations support. These employees are organized into
teams corresponding to the Company's product lines, and each team is responsible
for providing technical support to the Company's customers and for developing
and enhancing products. The Company's internal engineering resources permit the
Company to continually reduce the production cost and improve the functionality
of its products.

Following the AIT, Westec and Comtech Acquisitions, the Company's
engineering efforts have become more focused on developing new switching,
transmission and access products and enhancing the features and capabilities of
current products. The Company's engineers have significant experience in
switching systems configurations, transmission and access applications and
wireless technology such as spread spectrum, radio path calculations and
frequency licensing. The Company expects that, as it begins to manufacture and
sell more sophisticated telecommunications equipment, it will make more
significant investments in research and product development.

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<PAGE> 34

COMPETITION

The Company may face additional competition from the RBOCs, which have
historically been prohibited from manufacturing telecommunications equipment by
the terms of the Modification of Final Judgment entered into in connection with
the divestiture of the RBOCs by AT&T in 1984. The recently-enacted
Telecommunications Act of 1996 contains provisions that permit the RBOCs,
subject to satisfying certain conditions designed to facilitate local exchange
competition, to manufacture telecommunications equipment. In light of these
provisions, it is possible that one or more of the RBOCs, some of which are
major customers of the Company, may decide to manufacture telecommunications
equipment or to form alliances with other manufacturers. Any of these
developments could result in increased competition for the Company.

In the sale of switching, transmission and access products, the Company
competes with OEMs such as Northern Telecom, Lucent Technologies and DSC. The
Company believes it competes favorably against these companies by providing high
quality products, comprehensive support services, competitive prices and
shortened product delivery times. As the Company increases its international
sales efforts, the Company also expects to compete with established
telecommunications equipment companies such as Ericsson, Fujitsu, Siemens and
Alcatel Network Systems.

EMPLOYEES

As of June 1, 1996, the Company had 250 full-time employees, including 19
in engineering, 22 in sales and marketing, 88 in manufacturing, warehousing and
quality assurance, 90 in repair and refurbishment and 31 in finance,
administration and other support services. From time to time, the Company also
uses part-time employees in its manufacturing operations to accommodate changes
in production levels. None of the Company's employees are represented by any
collective-bargaining agreements, and the Company has never experienced a work
stoppage. The Company considers its employee relations to be good.

PROPERTIES

The Company leases certain office, manufacturing and warehouse facilities
under operating leases which expire at various dates during the next four years.
The Company's existing facilities are adequate for its current operations, and
the Company believes that convenient, additional facilities are readily
available should the business need arise. The Company's executive offices are
located at the Orlando, Florida facility listed below. The following provides a
summary of the facilities currently leased by the Company.

<TABLE>
<CAPTION>
SQUARE
LOCATION FOOTAGE LEASE EXPIRES
- ------------------------------------------------------------------- ------- --------------
<S> <C> <C>
Orlando, Florida................................................... 54,000 November 1998
Lakeland, Florida.................................................. 32,000 June 1997
Dallas, Texas...................................................... 27,000 July 1999
Livermore, California.............................................. 20,000 December 1998
Scottsdale, Arizona................................................ 11,000 October 1999
South Bend, Indiana................................................ 11,000 July 1997
-------
Total.................................................... 155,000
=======
</TABLE>

33
<PAGE> 35

LEGAL PROCEEDINGS

From time to time, the Company is involved in various legal proceedings
relating to claims arising in the ordinary course of its business. The Company
is not a party to any such legal proceeding, the adverse outcome of which,
individually or in the aggregate, is expected to have a material adverse effect
on the Company's financial condition or results of operations.

34
<PAGE> 36

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Set forth below is certain information, as of June 1, 1996, concerning the
Company's executive officers and directors.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------- --- -------------------------------------------
<S> <C> <C>
Steven A. Odom............................. 43 Chairman of the Board and Chief Executive
Officer
Hensley E. West............................ 51 President, Chief Operating Officer and
Director
Mark A. Gergel............................. 39 Vice President and Chief Financial Officer
Scott N. Madigan........................... 38 Vice President of Business Development
Stephen J. Clearman........................ 45 Director
William P. O'Reilly........................ 49 Director
John D. Phillips........................... 55 Director
Stephen E. Raville......................... 48 Director
</TABLE>

Steven A. Odom has served as a director of the Company since October 1994.
In November 1994, he was appointed to the newly-created position of Chairman of
the Board. In August 1995, he became Chairman and Chief Executive Officer of the
Company. From 1983 to 1987, he founded and served as Chairman and Chief
Executive Officer of Data Contract Company, Inc. ("DCC"), a designer and
manufacturer of intelligent data PBX systems, pay telephones and diagnostic
equipment. From 1987 to 1990, he was Vice President of the Public Communications
Division of Executone Information Systems, Inc., a public company that acquired
DCC in 1987. Mr. Odom has also served as a director of Telematic Products, Inc.,
a manufacturer of telephone central office equipment, and Resurgens
Communications Group, Inc. ("Resurgens"), a provider of long distance operator
services that later merged with LDDS Communications, Inc., now known as LDDS
WorldCom ("WorldCom").

Hensley E. West joined the Company in January 1996 as President and Chief
Operating Officer and was also elected a director in January 1996. From January
1994 to December 1995, he was Group Vice President for the Access Systems Group
of DSC, a publicly-held manufacturer of digital switching, transmission and
access telecommunications equipment. During his tenure with DSC from 1987 to
1995, he held six sales and general management positions, including Senior Vice
President of North American Sales from July 1993 to December 1993, Vice
President of the Access Products Division from March 1992 to July 1993, Vice
President of RBOC Sales from October 1991 to March 1992 and Vice President of
Business Development from March 1990 to October 1991. Prior to joining DSC, Mr.
West held general, engineering and sales management positions with California
Microwave, Inc., ITT Telecommunications Inc. and Western Electric Co.

Mark A. Gergel has served as Vice President and Chief Financial Officer
since he joined the Company in April 1992. From 1983 to March 1992, Mr. Gergel
held five positions of increasing responsibility with Federal-Mogul Corporation,
a publicly-held manufacturer and distributor of vehicle parts, including
International Accounting Manager, Assistant Corporate Controller, Manager of
Corporate Development and Director of Internal Audit. Prior to joining
Federal-Mogul, Mr. Gergel spent four years with the international accounting
firm of Ernst & Young. Mr. Gergel is a Certified Public Accountant.

Scott N. Madigan joined the Company in March 1996 as Vice President of
Business Development. Mr. Madigan has spent the last four years with DSC as Vice
President of Marketing for Litespan-2000, DSC's flagship access product, and
Vice President of Litespan International Operations and Wireless Access
Marketing. From 1987 to 1992, he held product and account management positions
with Northern Telecom, where he was responsible for identification, assessment
and development of new business opportunities for Northern Telecom's switching,
transmission and access products. Prior to 1987, Mr. Madigan held engineering
and operations management positions with California Microwave, Inc. and ITT
Telecommunications, Inc.

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<PAGE> 37

Stephen J. Clearman has served as a director of the Company since May 1988.
He has served as the general partner of four venture capital partnerships since
1984. Two of these partnerships (Geocapital Ventures and Geocapital II, L.P.)
are principal stockholders of the Company. Mr. Clearman currently serves as a
director of Expert Software, Inc. and several private companies, all of which
principally provide computer software and related services.

William P. O'Reilly has served as a director of the Company since December
1994. He has been Chairman of the Board of Eltrax Systems, Inc., a manufacturer
of medical information systems and telecommunications systems integration
products and services, since July 1995. He has over 20 years experience in the
telecommunications industry as a private investor and entrepreneur and has
initiated several successful business ventures. In 1981, he founded and served
as the Chief Executive Officer of Lexitel Corporation, a provider of long
distance services, which is now part of ALC Communications, Inc. Mr. O'Reilly
was also a founder and Chief Executive Officer of Digital Signal, Inc., a
leading provider of a low-cost fiber optic capacity to long distance carriers.
In 1989, Mr. O'Reilly acquired Military Communications Corporation ("MCC"),
which provides international public switched network services by means of phone
centers to the U.S. military worldwide. MCC was acquired by WorldCom in 1994.
Mr. O'Reilly is also a founder and past President of Comptel, an industry trade
association.

John D. Phillips has served as a director of the Company since December
1994. He currently serves as the President, Chief Executive Officer and a
director of Metromedia International Group, Inc., a global media, entertainment
and communications company established in November 1995 through the merger of
The Actava Group, Inc. ("Actava"), Orion Pictures Corporation, MCEG Sterling
Incorporated and Metromedia International Telecommunications, Inc. He served as
President, Chief Executive Officer and a director of Actava from April 1994
until November 1995. In May 1989, Mr. Phillips became Chief Executive Officer of
Resurgens and served in this capacity until September 1993 when Resurgens merged
with Metromedia Communications Corporation and WorldCom. From June 1985 to
October 1988, Mr. Phillips was President and Chief Operating Officer of Advanced
Telecommunications Corporation ("ATC").

Stephen E. Raville has served as a director of the Company since December
1994. He currently serves as President and is the controlling shareholder of
First Southeastern Corp., a private investment company he formed in 1992. In
1983, Mr. Raville founded TA Communications ("TA"), a long-distance telephone
company, and served as its President. In 1985, in conjunction with a merger
between TA and ATC, he became Chairman and Chief Executive Officer of ATC until
the merger of ATC into WorldCom in late 1992. Mr. Raville was a partner in the
Atlanta law firm of Hurt, Richardson, Garner, Todd & Cadenhead from 1978 to
1983. He currently serves on the board of advisors of First Union National Bank
of Atlanta and on the board of directors of Charter Communications Corporation
and several other private companies.

OTHER KEY EMPLOYEES

Michael R. Joe has served as the President of Comtech since its
incorporation in 1986. Prior to forming Comtech, Mr. Joe was a consultant to
several companies in the computer peripheral and telecommunications industries.
His early career was spent with Xerox Corporation, where he held several
manufacturing and financial management positions.

Robert N. O'Hara has served as the President of Westec since its
incorporation in 1976. Prior to forming Westec, Mr. O'Hara held various
engineering and technical marketing positions with Motorola, Inc., AlliedSignal,
Inc., Hughes Aircraft Company and Hughes Electronics Corporation.

Kent A. Osborne joined the Company in May 1996 as Vice President of
Operations. From 1990 to March 1996, Mr. Osborne served as Senior Director of
Operations and Director of Manufacturing Test of DSC's Access Systems Group.
From 1981 to 1990, Mr. Osborne held various corporate engineering and test
management positions with Northern Telecom.

Peter J. Rivers has served as Vice President of Materials since May 1996.
From May 1994 to May 1996, Mr. Rivers held various materials, sales and
operations management positions with the Company. From 1991 to 1994, Mr. Rivers
was Vice President of Materials and Transportation for Pameco Corporation, a
distributor

36
<PAGE> 38

of air conditioning and refrigeration equipment. Prior to 1991, Mr. Rivers held
various purchasing and materials management positions with ITT Corporation,
Martin Marietta Corp. and Harris Corporation.

Reynaldo Rodriguez has served as Vice President and General
Manager -- International since March 1996. From 1992 to March 1996, Mr.
Rodriguez served as Vice President of Sales and Marketing for the Company's
circuit board repair and supply services. Mr. Rodriguez joined the Company in
1989 as International Marketing Director and was promoted to Vice President in
1991. Prior to joining the Company in 1989, Mr. Rodriguez spent several years as
a Repair Operations Supervisor with Contel Corporation, where he supervised 36
warehouses in four states.

James H. Shirkey has served as the President of AIT since its incorporation
in 1992. From 1985 to 1992, Mr. Shirkey managed and provided consulting services
to several private companies in the PBX and key system sectors of the
telecommunications market. Prior to 1985, Mr. Shirkey spent 13 years with GTE
Service Corporation performing and managing the installation, test engineering
and site supervision of central office systems and other related
telecommunications equipment.

SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 26, 1996, and as adjusted to reflect
the sale of shares of Common Stock offered hereby, by each of the Selling
Stockholders. Except as otherwise noted, the person named has sole voting and
investment power over the shares indicated.

<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED BENEFICIALLY
PRIOR TO THE OWNED AFTER THE
OFFERING(1) OFFERING(1)
------------------- SHARES -----------------
NAME SHARES PERCENT BEING SOLD SHARES PERCENT
- ------------------------------------------------- --------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
Certain Limited Partners of GeoCapital II,
L.P............................................ 510,460 3.8% 350,600 159,860 *
Certain Limited Partners of GeoCapital
Ventures....................................... 311,074 2.3 199,180 111,894 *
Creditanstalt Bankverein(2)...................... 336,000 2.5 75,000 261,000 1.6%
James H. Shirkey(3).............................. 1,092,345 8.2 265,000 827,345 5.1
William D. Sims(4)............................... 39,258 * 10,000 29,258 *
The Robert N. O'Hara Charitable Remainder
Trust(5)....................................... 266,609 2.0 75,000 191,609 1.2
Keith I. Larsen and Sandra K. Larsen(5).......... 5,441 * 2,720 2,721 *
Steven Sherman(6)................................ 222,500 1.7 11,250 211,250 1.3
Steven R. Francis(6)............................. 11,250 * 5,625 5,625 *
Glen Fitchet(6).................................. 11,250 * 5,625 5,625 *
</TABLE>

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

* Less than one percent
(1) Beneficial ownership has been determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934 (the "Exchange Act"). Includes shares
of Common Stock which may be acquired upon the exercise of outstanding
stock options and warrants within the next 60 days.
(2) Creditanstalt Bankverein, the Company's primary lender, acquired these
shares of Common Stock upon the conversion of bank debt in December 1994
and the exercise of warrants in October 1995.
(3) Includes 520,970 shares which were pledged to the Company (the "Pledged
Shares") and 477,981 shares which were escrowed (the "Escrowed Shares") in
connection with the Company's acquisition of AIT. These shares will be
released to Mr. Shirkey, the President and former sole shareholder of AIT,
upon AIT's realization of certain levels of profitability during the period
January 1, 1996 to June 30, 1997. Mr. Odom, in his capacity as Chairman and
Chief Executive Officer of the Company, is entitled to vote all of the
Pledged Shares and the Escrowed Shares.
(4) Mr. Sims is the Vice President and General Manager of AIT. Includes 23,325
shares of Common Stock which are held in an escrow established in
connection with the Company's acquisition of AIT.
(5) Messrs. O'Hara and Larsen, the President and Operations Manager of Westec,
respectively, acquired these shares in connection with the Company's
acquisition of Westec.

37
<PAGE> 39

(6) In connection with its acquisition of Westec, the Company issued 245,000
shares of Common Stock to Sherman Capital Group L.L.C. ("Sherman Capital"),
of which 200,000 shares were deposited into escrow. Mr. Sherman, a
principal of Sherman Capital, will receive the escrowed shares over the
next four years if Westec achieves certain levels of profitability during
the period 1996 to 1999. In June 1996, Sherman Capital distributed an
aggregate of 45,000 shares to each of Messrs. Sherman, Francis and Fitchet.
Mr. Francis currently serves as Vice President of Sales for Westec.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company is authorized to issue 20,000,000 shares of Common Stock, par
value $.01 per share ("Common Stock"), and 500,000 shares of non-voting Class B
common stock, par value $.01 per share ("Class B Common Stock"). As of June 26,
1996, 13,287,420 shares of Common Stock were outstanding. No shares of Class B
Common Stock are currently outstanding.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by the stockholders. There is no cumulative
voting with respect to the election of directors; accordingly, holders of a
majority of the outstanding shares of Common Stock can elect all members of the
Company's Board of Directors, and holders of the remaining shares by themselves
cannot elect any member of the Board.

The holders of Common Stock are entitled to receive dividends when, as and
if declared by the Board of Directors out of funds legally available therefor.
The Credit Facility contains restrictions limiting the ability of the Company to
pay cash dividends. See "Dividend Policy." In the event of the liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining available for distribution to
them after payment of liabilities and after provision has been made for each
class of stock, if any, having preference over the Common Stock. Holders of
shares of Common Stock, as such, have no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to the
Common Stock. All of the outstanding shares of Common Stock are fully paid and
nonassessable.

DELAWARE BUSINESS COMBINATION STATUTE

Section 203 of the Delaware General Corporation Law (the "DGCL") provides
that, subject to certain exceptions specified therein, an "interested
stockholder" of a Delaware corporation shall not engage in any business
combination, including mergers or consolidations or acquisitions of additional
shares of the corporation, with the corporation for a three-year period
following the date that such stockholder becomes an interested stockholder
unless (i) prior to such date, the board of directors of the corporation
approved either the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder, (ii) upon consummation of
the transaction which resulted in the stockholder becoming an "interested
stockholder," the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
certain shares), or (iii) on or subsequent to such date, the business
combination is approved by the board of directors of the corporation and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the interested stockholder. Except as otherwise specified in Section 203, an
interested stockholder is defined to include (x) any person that is the owner of
15% or more of the outstanding voting stock of the corporation, or is an
affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock of the corporation at any time within three years
immediately prior to the date of determination, and (y) the affiliates and
associates of any such person.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period. The Company has not
elected to be exempt from the restrictions imposed under Section 203. The
provisions of Section 203

38
<PAGE> 40

may encourage persons interested in acquiring the Company to negotiate in
advance with its Board of Directors, since the stockholder approval requirement
would be avoided if a majority of the directors then in office approves either
the business combination or the transaction which results in any such person
becoming an interested shareholder. Such provisions also may have the effect of
preventing changes in the management of the Company. It is possible that such
provisions could make it more difficult to accomplish transactions which the
Company stockholders may otherwise deem to be in their best interests.

LIABILITY OF DIRECTORS

The Company's Restated Certificate of Incorporation provides that a
director of the Company will not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except, if required by the DGCL as amended from time to time, for liability (i)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL, which concerns unlawful payments of dividends, stock purchases or
redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit. Neither the amendment nor repeal of such provision
will eliminate or reduce the effect of such provision in respect of any matter
occurring, or any cause of action, suit or claim, that, but for such provision,
would accrue or arise prior to such amendment or repeal.

TRANSFER AGENT

The transfer agent for the Common Stock is Continental Stock Transfer &
Trust Company, 2 Broadway, New York, New York 10004.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
16,287,420 shares of Common Stock (16,887,420 shares of Common Stock assuming
the Underwriters' over-allotment option is exercised in full). All of these
shares are freely tradeable without restriction or further registration under
the Securities Act, except for (i) shares acquired in the Offering by
"affiliates" of the Company (defined in Rule 144 under the Securities Act as a
person who directly or indirectly through the use of one or more intermediaries
controls, is controlled by, or is under common control with, the Company); (ii)
shares subject to certain lock-up arrangements with the Underwriters
as described below; (iii) 597,246 shares issued in connection with the Comtech
Acquisition, 211,765 of which are held in escrow and 385,481 of which are
subject to a lock-up arrangement with the Company as described below; and (iv)
shares of "restricted securities" which may be sold only pursuant to
a registration statement under the Securities Act or an applicable exemption
from registration thereunder or pursuant to Rule 144 promulgated under the
Securities Act. In addition, certain of the Company's existing stockholders,
holding in the aggregate shares of Common Stock, have "piggy-back"
registration rights in connection with future offerings of Common Stock. All
expenses incurred in connection with any such registration (except for any
underwriting discount and attorneys' fees for the selling stockholders) are to
be borne by the Company.

In general, under Rule 144, a person (or persons whose shares are
aggregated) who has beneficially owned "restricted securities," as defined in
Rule 144, for at least two years, including "affiliates" of the Company, would
be entitled to sell within any three-month period that number of shares that
does not exceed the greater of (i) 1% of the number of shares of Common Stock
then outstanding or (ii) the average weekly trading volume of the Common Stock
during the four calendar weeks preceding such sale. Sales pursuant to Rule 144
are subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. Affiliates may
sell shares not constituting restricted securities only in accordance with the
foregoing volume limitations and other restrictions but without regard to the
two year holding period. A person (or persons whose shares are aggregated) who
is not deemed to have been an affiliate of the Company at any time during the 90
days preceding a sale, and who has beneficially owned the shares proposed to be
sold for at least three years, would be entitled to sell such shares under Rule
144(k) without regard to the requirements described above. The Company is unable
to estimate the number of shares that will

39
<PAGE> 41

be sold under Rule 144 since this will depend in part on the market price for
the Common Stock, the personal circumstances of the holders of such shares and
other factors.

The Commission has proposed reducing the initial Rule 144 holding period to
one year and the Rule 144(k) holding period to two years. There can be no
assurance as to when or whether such rule changes will be enacted. If enacted,
such modifications will have a material effect on the times when shares of the
Common Stock become eligible for resale.

The Company, each of its directors and executive officers and the Selling
Stockholders have agreed not to offer, sell, contract to sell, or otherwise
dispose of, any shares of Common Stock (except for any shares offered hereby) or
securities convertible into or exchangeable for Common Stock for 180 days after
the date of this Prospectus without the prior written consent of The
Robinson-Humphrey Company, Inc. on behalf of the Underwriters.

In connection with the Comtech Acquisition, the Comtech shareholders agreed
not to offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, 385,481 shares of Common Stock issued in connection therewith or any
security convertible into or exchangeable therefor, either publicly or
privately, until December 16, 1996 without the prior consent of the Company.
After such date, these shares (other than 320,786 shares held by affiliates,
which will be subject to the volume limitations of Rule 144 described above)
will be freely tradeable without restriction or further registration under the
Securities Act.

No prediction can be made as to the effect, if any, that future sales of
shares or the availability of shares for future sale will have on the prevailing
market price of the Common Stock. Sales of substantial amounts of the Common
Stock in the public market, or the perception that such sales might occur, could
adversely affect the prevailing market price of the Common Stock.

40
<PAGE> 42

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, for whom The Robinson-Humphrey Company, Inc., Wheat,
First Securities, Inc. and Interstate/Johnson Lane Corporation are acting as
representatives, have severally agreed to purchase from the Company and the
Selling Stockholders, and the Company and the Selling Stockholders have agreed
to sell to the Underwriters, the number of shares of Common Stock set forth
opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
The Robinson-Humphrey Company, Inc. ......................................
Wheat, First Securities, Inc. ............................................
Interstate/Johnson Lane Corporation.......................................
---------
Total........................................................... 4,000,000
========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligation is such that they are committed to purchase all shares of Common
Stock offered hereby (other than the shares subject to the Underwriters'
over-allotment option) if any are purchased.

The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the public offering price set forth on the cover page
of this Prospectus, and to certain dealers at such price less a concession not
in excess of $ per share. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per share to certain other
brokers. After the shares of Common Stock are released for sale to the public,
the offering price and other selling terms may from time to time be varied by
the Underwriters.

The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an additional 600,000 shares
of Common Stock at the public offering price less the underwriting discount set
forth on the cover page of this Prospectus to cover over-allotments, if any. If
the Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by each of them, as shown in the foregoing table, bears to the
4,000,000 shares of Common Stock offered hereby.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against, and to contribute to losses arising out of, certain
liabilities, including liabilities under the Securities Act.

In connection with the Offering, certain underwriters and selling group
members (if any) or their respective affiliates who are qualified registered
market makers on the Nasdaq National Market may engage in passive market making
transactions in the Common Stock on the Nasdaq National Market in accordance
with Rule 10b-6A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), during the two business day period before commencement of
offers of sales of the Common Stock. The passive market making transactions must
comply with applicable volume and price limits and be identified as such. In
general, a passive market maker may display its bid at a price not in excess of
the highest independent bid for the security; however, if all independent bids
are lowered below the passive market maker's bid, such bid must then be lowered
when certain purchase limits are exceeded.

41
<PAGE> 43

LEGAL MATTERS

Rogers & Hardin, Atlanta, Georgia, counsel to the Company, has rendered an
opinion that the shares of Common Stock offered hereby, when issued, delivered
and paid for in accordance with the terms of the Underwriting Agreement, will be
duly and validly issued, fully paid and nonassessable. Hunton & Williams,
Richmond, Virginia, has served as counsel to the Underwriters in connection with
the Offering.

EXPERTS

The consolidated financial statements of World Access, Inc., f/k/a Restor
Industries, Inc., as of December 31, 1995 and 1994 and for each of the three
years in the period ended December 31, 1995 included in this Prospectus have
been so included in reliance on the report of Price Waterhouse LLP, independent
certified public accountants, given on the authority of said firm as experts in
auditing and accounting.

The financial statements of Comtech Sunrise, Inc. for the year ended
December 31, 1995 incorporated in this Prospectus by reference have been so
incorporated in reliance on the report of Tedder, Grimsley & Company, P.A.,
independent certified public accountants, given on the authority of said firm as
experts in auditing and accounting.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act and the rules and regulations promulgated thereunder and, in accordance
therewith, regularly files reports, proxy and information statements and other
information with the Commission. These reports, proxy statements and other filed
information can be inspected and copied or obtained by mail upon payment of the
Commission's prescribed rates at the public reference facilities maintained by
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at its regional offices at Seven World Trade Center,
13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. The Common Stock is
included in the Nasdaq National Market, and certain of the Company's
registration statements, reports, proxy and information statements and other
information may also be inspected at the offices of the National Association of
Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.

The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments thereto, called the "Registration
Statement") of which this Prospectus constitutes a part, under the Securities
Act and the rules and regulations promulgated thereunder. This Prospectus omits
certain information contained in the Registration Statement, and reference is
made to the Registration Statement, including the exhibits thereto, for further
information with respect to the Company and the securities offered hereby.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents; when any such document is an exhibit to
the Registration Statement, each such statement is qualified in its entirety by
reference to the copy of such document filed with the Commission. Copies of the
Registration Statement and the exhibits and schedules thereto are on file at the
offices of the Commission and may be obtained upon payment of the fee prescribed
by the Commission, or may be examined without charge at the public reference
facilities of the Commission described above.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents have been filed with the Commission by the Company
and are hereby incorporated by reference into this Prospectus: (i) the Company's
Annual Report on Form 10-K for the year ended December 31, 1995 (File No.
1-13582); (ii) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, as amended by Form 10-Q/A which was filed with the Commission on
June 24, 1996; (iii) the Company's Current Report on Form 8-K filed on June 19,
1996; and (iv) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed with the Commission pursuant to Section
12 of the Exchange Act. All other documents and reports filed pursuant

42
<PAGE> 44

to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of this
Prospectus and prior to the termination of the Offering shall be deemed to be
incorporated by reference herein and shall be a part hereof from the date of the
filing of such reports and documents.

Any statement contained in a document incorporated or deemed incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document that is also deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company hereby undertakes to provide without charge to each person to
whom a Prospectus is delivered, upon written or oral request of such person, a
copy of any document incorporated herein by reference (not including exhibits to
documents that have been incorporated herein by reference unless such exhibits
are specifically incorporated by reference in the document that this Prospectus
incorporates). Requests should be directed to Mr. Mark A. Gergel, Vice President
and Chief Financial Officer, World Access, Inc., 4501 Vineland Road, Orlando,
Florida 32811.

43
<PAGE> 45

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants.................................... F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and March 31, 1996....... F-3
Consolidated Statements of Operations for the years ended December 31, 1993, 1994 and
1995 and for the three months ended March 31, 1995 and 1996......................... F-4
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 1993, 1994 and 1995 and for the three months ended March 31, 1996...... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and
1995 and for the three months ended March 31, 1995 and 1996......................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE> 46

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of World Access, Inc.,

In our opinion, the accompanying financial statements present fairly, in
all material respects, the financial position of World Access, Inc., formerly
known as Restor Industries, Inc., at December 31, 1995 and 1994, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

Price Waterhouse LLP

Orlando, Florida
March 29, 1996

F-2
<PAGE> 47

WORLD ACCESS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------- MARCH 31,
1994 1995 1996
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and equivalents............................. $ 753,264 $ 1,886,819 $ 2,083,293
Accounts receivable.............................. 2,553,380 9,648,817 10,081,971
Inventories...................................... 2,244,355 4,549,721 6,832,668
Notes receivable from stockholders............... -- 3,879,728 --
Unbilled revenue under customer contract......... -- 379,333 379,333
Prepaid expenses and other current assets........ 170,378 309,034 385,214
------------ ------------ ------------
Total Current Assets..................... 5,721,377 20,653,452 19,762,479
Property and equipment............................. 2,724,978 2,062,749 2,292,594
Intangible assets.................................. 325,730 5,084,184 6,420,853
Other assets....................................... 170,485 714,848 884,980
------------ ------------ ------------
Total Assets............................. $ 8,942,570 $ 28,515,233 $ 29,360,906
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt.................................. $ 211,598 $ 5,385,220 $ 2,406,933
Accounts payable................................. 2,399,205 3,648,734 3,764,365
Accrued payroll and benefits..................... 272,724 731,659 897,078
Other accrued liabilities........................ 570,688 665,585 962,986
------------ ------------ ------------
Total Current Liabilities................ 3,454,215 10,431,198 8,031,362
Long-term debt..................................... 4,328,438 3,750,000 3,600,000
------------ ------------ ------------
Total Liabilities........................ 7,782,653 14,181,198 11,631,362
------------ ------------ ------------
Stockholders' Equity
Common stock, $.01 par value, 20,000,000 shares
authorized, 6,918,272, 12,558,279 and
13,221,295 shares issued and outstanding at
December 31, 1994 and 1995, and March 31,
1996, respectively............................ 69,182 125,583 132,214
Capital in excess of par value................... 14,776,433 27,641,543 29,883,019
Note receivable from affiliate................... -- (919,836) (982,752)
Accumulated deficit.............................. (13,685,698) (12,513,255) (11,302,937)
------------ ------------ ------------
Total Stockholders' Equity............... 1,159,917 14,334,035 17,729,544
------------ ------------ ------------
Total Liabilities and Stockholders'
Equity................................. $ 8,942,570 $ 28,515,233 $ 29,360,906
=========== =========== ===========
</TABLE>

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

F-3
<PAGE> 48

WORLD ACCESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------- -----------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales of products................. $ 3,320,374 $ 2,776,094 $17,383,904 $1,555,810 $8,354,310
Service revenues.................. 12,440,962 12,507,302 12,754,585 3,063,845 4,038,935
----------- ----------- ----------- ---------- ----------
Total Sales..................... 15,761,336 15,283,396 30,138,489 4,619,655 12,393,245
----------- ----------- ----------- ---------- ----------
Cost of products sold............. 2,514,044 2,195,588 12,657,218 1,073,911 6,214,844
Cost of services.................. 10,642,505 11,111,942 11,118,411 2,711,135 3,403,141
----------- ----------- ----------- ---------- ----------
Total Cost of Sales............. 13,156,549 13,307,530 23,775,629 3,785,046 9,617,985
----------- ----------- ----------- ---------- ----------
Gross Profit.................... 2,604,787 1,975,866 6,362,860 834,609 2,775,260
Engineering and development....... 502,686 580,917 577,299 142,334 176,495
Selling, general and
administrative.................. 2,949,202 2,657,710 3,124,559 556,931 1,277,061
Amortization of goodwill.......... 95,695 29,776 157,394 4,812 111,172
Special charges................... 725,000 -- 980,000 -- --
----------- ----------- ----------- ---------- ----------
Total Operating Expenses........ 4,272,583 3,268,403 4,839,252 704,077 1,564,728
----------- ----------- ----------- ---------- ----------
Operating Income (Loss)......... (1,667,796) (1,292,537) 1,523,608 130,532 1,210,532
Interest expense.................. 422,434 523,011 493,797 126,304 103,005
Debt conversion costs............. -- 80,109 -- --
Interest and other income......... (30,247) (13,071) (142,632) (6,538) (102,791)
----------- ----------- ----------- ---------- ----------
Income (Loss) from Continuing
Operations................... (2,059,983) (1,882,586) 1,172,443 10,766 1,210,318
Net loss from discontinued
operations...................... (60,337) -- -- -- --
----------- ----------- ----------- ---------- ----------
Net Income (Loss)............... $(2,120,320) $(1,882,586) $ 1,172,443 $ 10,766 $1,210,318
========== ========== ========== ========= =========
Net Income (Loss) Per Common Share:
Primary:
Continuing operations........ $ (.54) $ (.41) $ .13 $ -- $ .09
Discontinued operations...... (.02) -- -- -- --
----------- ----------- ----------- ---------- ----------
Net Income (Loss)............ $ (.56) $ (.41) $ .13 $ -- $ .09
========== ========== ========== ========= =========
Assuming Full Dilution:
Continuing operations........ $ (.54) $ (.41) $ .12 $ -- $ .09
Discontinued operations...... (.02) -- -- -- --
----------- ----------- ----------- ---------- ----------
Net Income (Loss)............ $ (.56) $ (.41) $ .12 $ -- $ .09
========== ========== ========== ========= =========
Weighted Average Shares Outstanding:
Primary......................... 3,764,577 4,630,895 8,690,563 6,277,385 13,548,727
========== ========== ========== ========= =========
Assuming Full Dilution.......... 3,764,577 4,630,895 9,083,260 6,277,385 13,548,727
========== ========== ========== ========= =========
</TABLE>

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

F-4
<PAGE> 49

WORLD ACCESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
CAPITAL IN NOTE
COMMON EXCESS OF RECEIVABLE ACCUMULATED
STOCK PAR VALUE FROM AFFILIATE DEFICIT TOTAL
-------- ----------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993............. $ 28,946 $ 8,261,321 $ -- $ (9,682,792) $(1,392,525)
Net loss............................... (2,120,320) (2,120,320)
Issuance of 810,399 shares in private
placement, net of expenses........... 8,104 1,109,194 1,117,298
Issuance of 798,844 shares upon
conversion of debentures............. 7,989 2,540,631 2,548,620
Issuance of 200,000 shares upon
conversion of customer deposit....... 2,000 298,000 300,000
Issuance of 115,349 shares for stock
options and other transactions....... 1,154 63,255 64,409
Receipt of 77,777 shares upon sale of
50% interest in ATC.................. (778) (174,222) (175,000)
-------- ----------- -------------- ------------ -----------
Balance at December 31, 1993........... 47,415 12,098,179 -- (11,803,112) 342,482
Net loss............................... (1,882,586) (1,882,586)
Issuance of 1,656,000 shares in private
placements, net of expenses.......... 16,560 1,953,440 1,970,000
Issuance of 93,634 shares upon
conversion of debentures............. 936 196,217 197,153
Issuance of 344,000 shares upon
conversion of bank debt.............. 3,440 401,560 405,000
Issuance of 48,578 shares for stock
options and other transactions....... 486 73,357 73,843
Issuance of 34,567 shares for matching
contribution to 401K plan............ 345 53,680 54,025
-------- ----------- -------------- ------------ -----------
Balance at December 31, 1994........... 69,182 14,776,433 -- (13,685,698) 1,159,917
Net income............................. 1,172,443 1,172,443
Issuance of 2,583,988 shares for stock
warrants and options................. 25,840 6,703,561 6,729,401
Issuance of 1,181,770 shares in private
placement, net of expenses........... 11,818 2,857,607 2,869,425
Issuance of 1,351,603 shares for AIT
acquisition.......................... 13,516 2,259,902 2,273,418
Issuance of 517,050 shares for Westec
acquisition.......................... 5,171 1,023,279 1,028,450
Loans to affiliate..................... (919,836) (919,836)
Issuance of 5,596 shares for matching
contribution to 401K plan............ 56 20,761 20,817
-------- ----------- -------------- ------------ -----------
Balance at December 31, 1995........... 125,583 27,641,543 (919,836) (12,513,255) 14,334,035
(Unaudited):
Net income............................. 1,210,318 1,210,318
Issuance of 562,365 shares for Comtech
acquisition.......................... 5,624 2,082,494 2,088,118
Loans to affiliate..................... (62,916) (62,916)
Issuance of 99,488 shares for stock
options and warrants................. 995 149,248 150,243
Issuance of 1,163 shares for matching
contribution to 401K plan............ 12 9,734 9,746
-------- ----------- -------------- ------------ -----------
Balance at March 31, 1996.............. $132,214 $29,883,019 $ (982,752) $(11,302,937) $17,729,544
========= ============ ============ ============= ============
</TABLE>

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

F-5
<PAGE> 50

WORLD ACCESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss)............................... $(2,120,320) $(1,882,586) $ 1,172,443 $ 10,766 $ 1,210,318
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Depreciation and amortization................. 1,009,525 966,168 894,484 246,195 309,632
Provision for inventory reserves.............. 144,200 353,855 162,345 22,500 41,250
Provision for bad debts....................... 24,608 160,000 7,568 6,000 18,300
Stock contributed to employee benefit plan.... -- 52,877 19,317 6,000 6,825
Special charges............................... 571,117 (312,233) 823,714 -- --
Debt conversion costs......................... -- 80,109 -- -- --
Changes in operating assets and liabilities,
net of effects from businesses acquired:
Accounts receivable......................... 919,798 (1,188,911) (6,809,851) (270,945) (297,023)
Inventories................................. 702,501 (155,063) (1,627,479) (268,921) (2,007,482)
Unbilled revenue under customer contract.... -- -- (379,333) -- --
Accounts payable............................ (1,452,515) 649,938 177,090 282,220 (39,026)
Other assets and liabilities................ (719,306) 3,450 (629,286) (41,419) (406,958)
----------- ----------- ----------- ----------- -----------
Net Cash Used By Operating Activities......... (920,392) (1,272,396) (6,188,988) (7,604) (1,164,164)
----------- ----------- ----------- ----------- -----------
Cash Flows From Investing Activities:
Acquisition of businesses....................... -- -- (649,769) -- 222,860
Loans to affiliate.............................. -- -- (1,502,336) -- 519,584
Expenditures for property and equipment......... (584,289) (239,741) (279,571) (62,062) (165,992)
Prepaid rent on equipment lease................. -- -- (255,544) (219,992) 1,907
Net proceeds from sales of discontinued
operations.................................... 803,046 25,000 -- -- --
Debt issue costs................................ -- -- -- -- (56,546)
Other........................................... -- -- -- -- (62,859)
----------- ----------- ----------- ----------- -----------
Net Cash From (Used By) Investing
Activities.................................. 218,757 (214,741) (2,687,220) (282,054) 458,954
----------- ----------- ----------- ----------- -----------
Cash Flows From Financing Activities:
Net proceeds from private equity offerings...... 1,117,298 1,850,000 2,835,000 -- --
Issuance of short-term debt..................... -- 340,000 5,426,152 -- 2,500,000
Short-term debt repayments...................... (412,281) (288,490) (1,087,596) (173,814) (5,628,287)
Issuance of long-term debt...................... 26,656 -- -- -- --
Long-term debt repayments....................... (70,000) (322,935) (125,000) (30,000) --
Proceeds from exercise of stock warrants and
options....................................... 48,409 37,293 2,961,207 80,913 4,029,971
----------- ----------- ----------- ----------- -----------
Net Cash From (Used By) Financing
Activities.................................. 710,082 1,615,868 10,009,763 (122,901) 901,684
----------- ----------- ----------- ----------- -----------
Increase (Decrease) in Cash and Equivalents... 8,447 128,731 1,133,555 (412,559) 196,474
Cash and Equivalents at Beginning of Period... 616,086 624,533 753,264 753,264 1,886,819
----------- ----------- ----------- ----------- -----------
Cash and Equivalents at End of Period......... $ 624,533 $ 753,264 $ 1,886,819 $ 340,705 $ 2,083,293
=========== =========== =========== =========== ===========
Supplemental Schedule of Noncash Financing and
Investing Activities:
Conversion of debt to common stock.............. $ 2,548,620 $ 540,000
Conversion of bridge loan to common stock....... 120,000
Receipt of common stock upon sale of ATC........ 175,000
Conversion of customer deposit to common
stock......................................... 300,000
Issuance of common stock for stockholder
notes......................................... $ 3,828,194
Issuance of common stock for businesses
acquired...................................... 3,301,868 $ 2,088,118
Reduction in note receivable from affiliate to
recognize contingent purchase price earned.... 582,500
Issuance of common stock for commissions on
private placement............................. 34,425
</TABLE>

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

F-6
<PAGE> 51

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A: GENERAL

Nature of Business

World Access, Inc., formerly known as Restor Industries, Inc. and its three
wholly owned subsidiaries (the "Company") operate in one business segment as a
provider of systems, products and services to the global telecommunications
marketplace. The Company develops, manufactures and markets wireline and
wireless switching, transmission and access products primarily for the United
States, Caribbean Basin and Latin American telecommunications markets. The
Company's products allow telecommunications service providers to build and
upgrade their central office and outside plant networks in order to provide a
wide array of voice, data and video services to their business and residential
customers. The Company offers digital switches, intelligent multiplexers,
protection switching equipment, digital loop carriers, microwave and
millimeterwave radio equipment and other wireless communications products. The
products offered by the Company include those manufactured by the Company as
well as those manufactured by original equipment manufacturers ("OEM"). To
support and complement its product sales, the Company also provides its
customers with a broad range of design, manufacturing, testing, installation,
repair and other value-added services.

Basis of Presentation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, Restor-AIT, Inc., Westec Communications, Inc.
and Comtech Sunrise, Inc. All material intercompany accounts and transactions
are eliminated in consolidation.

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 revenues 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 herein
are based on pertinent information available to management as of December 31,
1995. Although management is not aware of any factors that would significantly
affect the estimated fair value amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements since that
date and current estimates of fair value may differ significantly from the
amounts presented herein.

The fair values of cash equivalents, accounts receivable, notes receivable
from stockholders, 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.

Unaudited Financial Statements

The consolidated financial statements as of March 31, 1996 and for the
three months ended March 31, 1995 and 1996 have been prepared by the Company in
accordance with generally accepted accounting principles and the rules and
regulations of the Securities and Exchange Commission regarding interim
financial reporting, and on a basis consistent with the audited consolidated
financial statements. In the opinion of management, the unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position of the
Company and its

F-7
<PAGE> 52

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

subsidiaries as of March 31, 1996, and the results of their operations and their
cash flows for the three months ended March 31, 1995 and 1996. The results of
operations for the three months ended March 31, 1996 are not necessarily
indicative of the results to be expected for the full year.

Discontinued Operations

In December 1992, the Company's Smart Phones division ceased operations as
a part of a major restructuring program. During 1993 and 1994, the Company
received net cash proceeds of $695,000 from the sale of the division's assets
and the Company's 50 percent investment in Advanced Telecommunications Concepts
Corp. ("ATC"), a pay telephone parts supplier located in Taiwan. Net sales and
net loss for these discontinued operations in 1993 were $136,000 and ($60,337),
respectively.

Significant Customers

A portion of the Company's total sales have been derived from significant
customers. During 1993, two customers individually accounted for 17.6% and 10.8%
of total sales. Four customers individually accounted for 18.5%, 13.6%, 12.3%
and 11.2% of total sales in 1994. During 1995, two customers individually
accounted for 22.7% and 15.1% of total sales. Two customers individually
accounted for 25.9% and 10.8% of total sales for the three months ended March
31, 1996.

Cash and Equivalents

Cash equivalents include demand deposits with banks and all highly liquid
investments with original maturities of three months or less.

Accounts Receivable

Accounts receivable are presented net of an allowance for doubtful accounts
of $231,000 and $207,960 and $275,974 at December 31, 1994 and 1995 and March
31, 1996, respectively.

Notes Receivable from Stockholders

In October 1995, the Company received approximately $4.1 million in
interest bearing notes receivable from stockholders in connection with the
exercise of warrants (see "Note J"). As of March 29, 1996, the notes were paid
in full.

Earnings Per Share

The computation of earnings per share is based on the weighted average
number of outstanding common shares during the period plus, when their effect is
dilutive, common stock equivalents consisting of shares subject to stock options
and warrants. A total of 895,744 and 1,107,509 shares of common stock for the
year ended December 31, 1995 and three months ended March 31, 1996,
respectively, held in escrow from the Company's initial public offering (see
"Note I") and the Westec and Comtech Mergers (see "Note C") have been excluded
from the earnings per share calculations because the conditions for release of
shares from escrow have not been satisfied.

Reclassifications

Certain items in the prior year financial statements have been reclassified
to conform to the current presentation.

F-8
<PAGE> 53

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE B: REVENUE RECOGNITION

In general, revenues are recognized when the Company's products are shipped
or services are rendered. Occasionally, the Company will enter into long-term
contracts which may require special accounting treatment.

In the third quarter of 1995, the Company, through its AIT subsidiary,
entered into a contract to sell $5 million of telephone switching equipment to a
U.S. customer who has been awarded a long-term concession to upgrade and operate
telephone services in Madagascar. Payment terms consist of a $400,000 down
payment received in July 1995, with the $4.6 million balance payable over 18
months beginning in early 1996. The contract included a $200,000 guarantee to
the Company by a third party in the event of any contract default by the
customer.

The Company has elected to account for this contract using a form of the
percentage of completion method. The first $600,000 of revenues are being
recognized on a pro-rata basis as equipment is shipped. The remaining $4.4
million of revenues will be recognized as scheduled cash payments associated
with the delivery of the equipment are received by the Company or when it
becomes highly probable that such payments will be received. Equipment and other
costs directly related to this contract are being charged to operations in
proportion to the percentage of revenues recognized based on a ratio of
estimated total contract costs to total contract revenues.

During 1995, $335,000 of revenues were recognized for the Madagascar
contract. As of December 31, 1995 and March 31, 1996, deferred contract costs
amounted to $444,333. This amount, net of a $65,000 customer deposit not yet
recorded as revenue, has been classified as Unbilled Revenue Under Customer
Contract on the Company's balance sheet.

NOTE C: ACQUISITIONS

AIT Acquisition

On May 17, 1995, the Company entered into an agreement to acquire AIT, Inc.
("AIT"), a Lakeland, Florida based provider of new and used Northern Telecom
switching systems and related circuit boards to the telecommunications industry.
On July 11, 1995, the transaction was completed in its final form whereby AIT
was merged with and into Restor-AIT, Inc., a wholly-owned subsidiary of the
Company (the "AIT Merger"). In connection with the AIT Merger, the sole
stockholder of AIT received 685,970 restricted shares of the Company's common
stock. These shares had an initial fair value of approximately $2.50 a share or
$1.7 million.

In July 1995, the Company loaned the sole stockholder of AIT $1.3 million
in cash in connection with a $2,330,000 promissory note executed as an integral
part of the merger agreement between the two companies. An additional $1,030,000
may be loaned to the stockholder as specific accounts receivable, notes
receivable and inventories on AIT's May 17, 1995 balance sheet are collected
and/or realized by the Company. As of December 31, 1995, the Company had loaned
an aggregate of $1,502,336 to the stockholder. All borrowings under the
promissory note, along with interest charged at an annual rate of six percent,
are to be repaid to the Company on August 15, 1997, or earlier if certain
contingent cash payments are earned by the stockholder in connection with AIT's
gross profit performance. All loans to the stockholder under this promissory
note are collateralized by 685,970 shares of the Company's common stock owned by
the stockholder. As a result of this pledge agreement, the note receivable from
the stockholder has been accounted for as a reduction of stockholders' equity.

In addition to the 685,970 shares noted above, the sole stockholder of AIT
was issued 637,308 restricted shares of the Company's common stock. These shares
were immediately placed into escrow, and along with $2,330,000 in potential cash
payments, may be released to the sole stockholder over a two year period ending

F-9
<PAGE> 54

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

August 15, 1997 contingent upon the realization of predefined levels of gross
profit from AIT's operations during this same period. To the extent cash
consideration is paid, the sole stockholder will immediately be required to
repay the equivalent amount of borrowings outstanding under the promissory note
described above. Once repaid, the stockholder will not be entitled to reborrow
such funds.

Upon issuance, the 637,308 escrowed shares were valued by the Company at
par value only, or $6,373. Once conditions for release from escrow have been
met, the fair market value of the shares as measured at that time, along with
any contingent cash payment earned, will be recorded as additional goodwill and
stockholders' equity, respectively. The first measurement period for purposes of
releasing escrowed shares and paying contingent cash consideration was May 17,
1995 to December 31, 1995. In reviewing AIT's gross profit performance as of
September 30, 1995, the Company determined that it was highly probable that the
conditions for release and payment for this first period would be met.
Accordingly, 159,327 escrowed shares were accounted for as if released and
$582,500 in contingent cash payments were accounted for as if paid as of
September 30, 1995. The net effect of this accounting was to increase goodwill
and stockholders' equity by approximately $1.1 million at September 30, 1995.
These shares were released and payment was made on February 15, 1996.

As part of the AIT Merger, the sole stockholder of AIT may also receive an
additional $3.1 million in purchase price on August 15, 1997 contingent upon the
realization of predefined levels of pre-tax income from AIT's operations during
the periods of May 17, 1995 to June 30, 1996 and July 1, 1996 to June 30, 1997.
This additional consideration may be paid, at the option of the Company, in the
form of cash or restricted shares of the Company's common stock valued at the
then current market prices. If earned, this future payment will be capitalized
as additional goodwill and stockholders' equity.

The acquisition of AIT has been accounted for using the purchase method of
accounting. Accordingly, the results of AIT's operations have been included in
the accompanying consolidated financial statements from May 17, 1995, the
effective date of acquisition. The purchase price was allocated to the assets
acquired and liabilities assumed based on their estimated fair values as of the
date of acquisition. The excess of purchase price over the fair value of net
assets acquired, currently estimated at approximately $3.6 million, has been
recorded as goodwill and is being amortized over a 15 year period.

Westec Acquisition

On October 2, 1995, the Company entered into an agreement to acquire Westec
Communications, Inc. ("Westec"), a Scottsdale, Arizona based provider of
wireless systems and repair services to the cable television and
telecommunications industries. On October 31, 1995, the transaction was
completed in its final form whereby Westec was merged with and into
Restor-Westec, Inc., a wholly-owned subsidiary of the Company (the "Westec
Merger"). Restor-Westec, Inc. subsequently changed its name to Westec
Communications, Inc. In connection with the Westec Merger, the sole stockholder
of Westec received $550,000 and 272,050 restricted shares of the Company's
common stock. These shares had an initial fair value of approximately $3.25 a
share or $880,000.

As part of the Westec merger agreement, the sole stockholder of Westec may
also receive $1.0 million in additional purchase price contingent upon the
realization of predefined levels of pre-tax income from Westec's operations
during five calendar years beginning in 1996. This additional consideration may
be paid, at the option of the Company, in the form of cash or restricted shares
of the Company's common stock valued at the then current market prices. If
earned, this future consideration will be capitalized as additional goodwill and
stockholders' equity.

In connection with the Westec merger, the Company entered into a
Compensation Agreement with Sherman Capital Group L.L.C. ("Sherman"), a merchant
banking firm that had a pre-existing letter of intent to acquire Westec.
Pursuant to the Compensation Agreement, Sherman received $100,000 and 45,000

F-10
<PAGE> 55

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

restricted shares of the Company's common stock. These shares had an initial
fair value of approximately $3.25 per share or $150,000. The compensation paid
to Sherman will be accounted for as part of the purchase price of Westec. In
addition, 200,000 restricted shares of the Company's common stock were placed in
escrow and may be released to Sherman in installments over a four year period on
February 15 of each year beginning on February 15, 1997, contingent upon the
realization of predefined levels of pre-tax income from Westec's operations.
Upon issuance, the 200,000 escrowed shares were valued by the Company at par
value only, or $2,000. Once conditions for release from escrow have been met,
the fair market value of the shares as measured at that time will be recorded as
additional goodwill and stockholders' equity.

The acquisition of Westec has been accounted for using the purchase method
of accounting. Accordingly, the results of Westec's operations have been
included in the accompanying consolidated financial statements from October 2,
1995, the effective date of acquisition. The purchase price was allocated to the
assets acquired and liabilities assumed based on their estimated fair values as
of the date of acquisition. The excess of purchase price over the fair value of
net assets acquired, currently estimated at approximately $1.3 million, has been
recorded as goodwill and is amortized over a 15 year period.

Comtech Acquisition

In February 1996, the Company entered into a letter of intent to acquire
Comtech Sunrise, Inc. ("Comtech"), a Livermore, California based manufacturer of
intelligent telecommunications access products such as T1 multiplexors and
digital loop carrier equipment. In April 1996, a definitive agreement, plan of
merger and irrevocable proxies were executed whereby Comtech will be merged with
and into Restor-Comtech, Inc., a wholly owned subsidiary of the Company (the
"Comtech Merger"). The consummation of the merger is expected to occur in June
1996, after a mandatory registration process is completed in the State of
California.

In connection with the Comtech Merger, the stockholders of Comtech are
expected to receive approximately $300,000 in cash and 350,600 restricted shares
of the Company's common stock. These shares have an initial fair value of
approximately $6.00 a share or $2.1 million.

In addition to the 350,600 shares noted above, the stockholders of Comtech
will be issued 211,765 restricted shares of the Company's common stock (the
"Escrowed Shares"). These shares will be placed in escrow, and along with $1.8
million in additional purchase price (the "Additional Consideration"), will be
released and paid to the stockholders of Comtech contingent upon the realization
of predefined levels of pre-tax income from Comtech's operations during three
one-year periods beginning January 1, 1996. This Additional Consideration may be
paid, at the option of the Company, in the form of cash or restricted shares of
the Company's common stock valued at the then current market prices.

Escrowed Shares were valued by the Company at par value only, or $2,118.
Once conditions for release from escrow have been met, the fair market value of
the shares as measured at that time, along with any Additional Consideration
earned, will be recorded as additional goodwill and stockholders' equity,
respectively.

The acquisition of Comtech has been accounted for using the purchase method
of accounting. Accordingly, the results of Comtech's operations have been
included in the accompanying consolidated financial statements from January 1,
1996, the effective date of acquisition as defined in the definitive agreement
and plan of merger. The purchase price was allocated to the assets acquired and
liabilities assumed based on their estimated fair values as of the date of
acquisition. The excess of purchase price over the fair value of net assets
acquired, currently estimated at approximately $1.5 million, has been recorded
as goodwill and is being amortized over a 15 year period.

F-11
<PAGE> 56

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Pro Forma Results of Operations

The following unaudited pro forma combined results of operations for the
years ended December 31, 1994 and 1995 give effect to the AIT, Westec and
Comtech Mergers as if they had occurred on January 1, 1994, after giving effect
to certain adjustments including interest income and expense, amortization of
goodwill, increased depreciation due to the adjusted basis of fixed assets
acquired and elimination of intercompany sales. These unaudited pro forma
combined results have been prepared for comparative purposes only and are not
necessarily indicative of the results of operations which would have occurred
had the acquisitions been in effect on the date indicated:

<TABLE>
<CAPTION>
1994 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
Total sales............................................... $26,438,000 $38,100,000
Operating income (loss)................................... (886,000) 2,190,000
Net income (loss)......................................... (1,594,000) 1,755,000
Net income (loss) per common share........................ $ (.26) $ .17
</TABLE>

NOTE D: SPECIAL CHARGES

1993 Charges

During 1993, process changes were implemented throughout the Company to
reduce costs, improve operational efficiencies, maintain high quality and ensure
customer satisfaction. To address these areas, total restructuring charges of
$725,000 or $(.19) per share were recorded in 1993 for the following:

<TABLE>
<S> <C>
Estimated loss on remaining terms of facility leases........... $173,000
Write-off of building leasehold improvements................... 217,000
Equipment and personnel relocation............................. 55,000
Provision for excess inventory................................. 100,000
Severance and benefits......................................... 160,000
Bank loan restructuring fees and related legal costs........... 20,000
--------
$725,000
========
</TABLE>

In the second half of 1993, management recorded a one-time charge for the
consolidation of its Florence, Kentucky and Ocoee, Florida circuit board repair
operations into existing facilities in Orlando, Florida and South Bend, Indiana.
The Florence and Ocoee facilities were closed in December 1993. These plant
closings and consolidations were initiated to reduce the overhead costs of the
Company's circuit board repair operations due to declining revenues.

The Company's lease agreements for its Florence and Ocoee facilities were
scheduled to expire in August and November 1995, respectively. As part of the
1993 restructuring charge, an estimate of the termination cost for these leases
was included. In addition, the remaining net book value for leasehold
improvements for these facilities were written down to zero as part of the
restructuring. During 1994, the Company entered into agreements with both
landlords that terminated these leases early. The costs incurred for 1994 rent
and cancellation fees negotiated as part of these two agreements approximated
the amount included in the 1993 restructuring charge.

In addition to the rent and leasehold improvement charges, additional
restructuring charges associated with the consolidation of facilities included
the costs incurred in connection with personnel relocation, equipment
relocation, rearrangement of the Orlando facility, severance benefits for
terminated employees and a provision for excess inventories.

F-12
<PAGE> 57

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The nature of the Company's circuit board repair business, i.e. average
repair turnaround time to customers of approximately two weeks, required the
Company to maintain minimum levels of inventory at each of its repair
facilities. As the Company's repair operations are now primarily conducted at
one facility instead of three, excess inventory was considered a cost of the
facility consolidation program.

1995 Charges

In the second quarter of 1995, the Company recorded a one-time special
charge of $980,000 or $(.11) per share for the following items:

<TABLE>
<S> <C>
Write-down of test equipment and related tooling............... $675,000
Consolidation of repair operations............................. 95,000
Retirement benefits, search and relocation costs for Chief
Executive Officer............................................ 150,000
Other.......................................................... 60,000
--------
$980,000
========
</TABLE>

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

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

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

General

As of March 31, 1996, $61,900 remains as a liability for the unexpended
portion of the above special charges. This liability consists of approximately
$17,500 related to plant consolidations and $44,400 for CEO relocation costs.

NOTE E: INVENTORIES

Inventories are stated at the lower of cost or market as determined
primarily on a first-in, first-out basis. To address obsolete and slow moving
inventories and related market valuation adjustments, the Company charged to
operations for the years ended December 31, 1993, 1994 and 1995 and the three
months ended March 31, 1995 and 1996 approximately $144,000, $354,000, $162,000,
$22,500 and $41,250, respectively.

F-13
<PAGE> 58

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1994 1995 1996
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Switching systems, frames and related circuit
boards........................................ $ 39,321 $2,127,653 $4,236,032
Electronic components........................... 1,463,503 1,595,281 1,730,932
Pay telephone parts............................. 228,716 346,978 402,155
Work in progress................................ 388,610 307,438 238,388
Other finished goods............................ 124,205 172,371 225,161
------------ ------------ ------------
$2,244,355 $4,549,721 $6,832,668
========== ========== ==========
</TABLE>

NOTE F: PROPERTY AND EQUIPMENT

Property and equipment is stated at cost, less accumulated depreciation as
computed using the straight-line method. Leasehold improvements are depreciated
over their remaining estimated lease term. Estimated lives for other depreciable
assets range from three to eight years.

Property and equipment consist of the following:

DECEMBER 31, DECEMBER 31, MARCH 31,
1994 1995 1996
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Leasehold improvements.......................... $ 493,849 $ 557,308 $ 570,618
Technical equipment and software................ 5,172,025 5,679,692 5,960,113
Office equipment................................ 738,276 847,800 950,221
Vehicles........................................ 51,691 70,095 84,975
------------ ------------ ------------
6,455,841 7,154,895 7,565,927
Accumulated depreciation........................ (3,730,863) (5,092,146) (5,273,333)
------------ ------------ ------------
$2,724,978 $2,062,749 $2,292,594
========== ========== ==========
</TABLE>

The Company leases various facilities and equipment under operating leases.
Future minimum payments under noncancelable operating leases with initial or
remaining terms of more than one year are approximately: 1996 -- $1,075,000;
1997 -- $868,000; 1998 -- $614,000; and 1999 -- $122,000.

In March 1995, the Company entered into a four year agreement to lease
approximately $1 million of new surface mount assembly and automated testing
equipment. The new equipment became fully operational in the third quarter of
1995 and the lease was declared effective at that time. As part of the lease
agreement, the Company paid approximately $220,000 as a first payment and
$24,000 for a security deposit which will be returned after the 18th month of
the lease. The remaining 47 payments approximate $24,000 for months two through
25 and $10,000 for months 26 through 48. The transaction has been accounted for
as an operating lease with approximately $25,000 in monthly rent expense charged
to operations on a straight-line basis over a 46 month period beginning in
August 1995. Other Assets on the March 31, 1996 balance sheet include
approximately $253,000 in prepaid rent for this lease agreement.

Total rental expense under operating leases for the years ended December
31, 1993, 1994, and 1995 and the three months ended March 31, 1995 and 1996 was
approximately $530,000, $568,000, $670,000, $154,000 and $310,000, respectively,
exclusive of property taxes, insurance and other occupancy costs generally
payable by the Company.

F-14
<PAGE> 59

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE G: INTANGIBLE ASSETS

Intangible assets consist entirely of goodwill from acquisitions as
follows:

DECEMBER 31, DECEMBER 31, MARCH 31,
1994 1995 1996
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
AIT............................................... $ -- $3,639,812 3,639,812
Westec............................................ -- 1,276,035 1,276,035
Comtech........................................... -- -- 1,447,841
Other............................................. 384,902 384,902 384,902
------------ ------------ -----------
384,902 5,300,749 6,748,590
Accumulated amortization..................... (59,172) (216,565) (327,737)
------------ ------------ -----------
$325,730 $5,084,184 $ 6,420,853
========== ========== =========
</TABLE>

Net intangible assets are being amortized on a straight-line basis over
their estimated lives of 15 years. The Company reviews the net book value of
intangible assets on a regular basis, and if deemed necessary, charges are
recorded against current operations for any impairment in the value of these
assets. No significant impairment charges have been recorded to date. Intangible
assets are removed from the books when fully amortized.

NOTE H: DEBT

Summary

Debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1994 1995 1996
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Revolving credit loans payable to bank........... $ -- $4,926,142 $ 2,000,000
Term loan payable to bank........................ 4,355,500 4,200,500 4,000,000
Other notes payable.............................. 184,536 8,578 6,933
------------ ------------ ------------
Total debt....................................... 4,540,036 9,135,220 6,006,933
Amount due within one year....................... (211,598) (5,385,220) (2,406,933)
------------ ------------ ------------
Long-term debt................................... $4,328,438 $3,750,000 $ 3,600,000
========== ========== ==========
</TABLE>

Interest paid for the years ended December 31, 1993, 1994 and 1995 and the
three months ended March 31, 1995 and 1996 was $509,242, $480,395, 507,020,
$134,400 and $131,000, respectively.

Bank Debt

In May 1992, the Company entered into an agreement with a large European
bank for a five and one-half year, $6 million credit facility, consisting of a
$1.5 million term loan and a $4.5 million revolving credit facility. The
facility required the Company to issue to the bank warrants to purchase 225,000
shares of common stock, or non-voting Class B common stock convertible into
common stock, at $9.375 per share.

In April 1993, in connection with a December 1992 restructuring program,
the bank agreement was amended to reduce the total facility to the December 31,
1992 outstanding balance of $5,503,435. The amount outstanding from the
revolving credit facility was converted into a term loan due in November 1997.
As consideration for the renewed commitment, the Company issued the bank an
additional 75,000 warrants to purchase common stock at its then current market
price of $2.06 per share, repriced the existing 225,000

F-15
<PAGE> 60

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

warrants at $2.06 per share and agreed to a one point increase in interest
rates. In addition, the Company made principal payments of $370,000 to the bank
out of proceeds received from asset sales and a private equity offering.

At December 31, 1993, the Company was in violation of several financial
covenants established by the bank. In March 1994, the bank agreed to waive all
preexisting covenant violations and restructure future financial covenants to
more favorable terms, subject to the execution of a $250,000 bridge loan from
the Company's major stockholder. At the same time, the repayment schedule of the
term loan was amended to defer all scheduled 1994 principal payments and
$175,000 of the $400,000 due in 1995. In consideration for the renewed
commitment, the Company issued the bank an additional 60,000 warrants to
purchase common stock at its then current market price of $1.25 per share,
repriced the existing 300,000 warrants at $1.25 per share and agreed to a one
point increase in interest rates.

In connection with a December 1994 private offering completed by the
Company, the bank again waived all preexisting covenant violations, reduced 1995
scheduled principal payments from $225,000 to $125,000 and restructured certain
financial covenants to more favorable terms. As part of the new agreement, the
Company made a $225,000 principal prepayment to the bank and the bank converted
$430,000 of debt into shares of the Company's common stock at its then current
market price of $1.25 per share.

In July 1995, the Company received a new $2 million revolving line of
credit from the bank through November 1997. Borrowings under the line are
subject to a borrowing base and, along with the existing term loan, are secured
by a first lien on all the assets of the Company. The amendment reinstated a
Libor based rate option that has allowed the Company to reduce its current
interest rate on the term loan. In consideration for the line of credit and
amended terms, the Company paid the bank a $30,000 origination fee and issued
the bank warrants to purchase 100,000 shares of the Company's common stock at
its then current market price of $3.82 per share on or prior to October 31,
1999.

In October 1995, the bank paid the Company $832,000 to exercise all 460,000
warrants (see "Note J").

In December 1995, the Company and the bank amended the credit agreement
temporarily increasing the revolving line of credit to $5 million until February
1, 1996. In March 1996, the agreement was further amended to permanently
increase the revolving line of credit to $6 million, reduce the interest rate by
one point and extend the bank's commitment until March 2001. The existing term
loan, originally scheduled to mature in November 1997, was replaced with a new
$4 million term loan requiring escalating quarterly payments through March 2001.
The bank agreement contains covenants pertaining to financial ratios,
restrictions on dividends and limitations on additional debt and the disposition
of Company assets.

Aggregate maturities of long-term debt are as follows: 1997 -- $600,000;
1998 -- $800,000; 1999 -- $1,000,000; 2000 -- 1,000,000; 2001 -- $350,000.

Interest on the new bank facility is set at prime plus 1 1/4% or Libor plus
2 1/2%, at the option of the Company. As of March 29, 1996, the interest rate on
all bank debt was approximately 8%.

Subordinated Debentures

As an integral part of the Company's December 1992 restructuring and its
new commitment from the bank, the holders of 8 1/2% and 4% subordinated
debentures convertible into common stock at $4.60 and $4.80 per share,
respectively, were offered a reduced price of $2.06 per share to convert their
debentures into shares of the Company's common stock. In March 1993, all but
$110,000 of the debentures were converted into common stock at the reduced
price.

In December 1994, the remaining $110,000 of 8 1/2% debentures were
converted into shares of the Company's common stock at a reduced price of $1.25
per share. In connection with the incremental shares issued, a debt conversion
expense and a credit to stockholders' equity of $80,109 was recorded.

F-16
<PAGE> 61

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Bridge Loan From Major Stockholder

In March 1994, the Company executed a $250,000 note payable to its major
stockholder, the Geocapital Funds. The note had a maturity date of September 30,
1994 and required monthly interest payments at prime plus 2 1/2%. In May 1994,
$120,000 of the note was converted into common stock at $1.25 per share and the
$130,000 remaining balance was repaid out of proceeds from a private equity
offering. As additional consideration for the bridge loan, the Geocapital Funds
were issued 39,200 warrants to purchase common stock of the Company at its then
current market price of $1.25 per share on or prior to October 31, 1999. In
October 1995, the Geocapital Funds exercised these warrants (see "Note J").

NOTE I: STOCKHOLDERS' EQUITY

In connection with the Company's initial public offering in August 1991,
all of the existing holders of the Company's common stock and holders of
options, except non-management employees, placed in escrow simultaneous with the
effective date of the Company's registration statement on Form S-18 an aggregate
of 672,419 shares of common stock and options to purchase 88,770 shares of
common stock (78,663 of these options have subsequently lapsed). While in escrow
and to the extent outstanding, such stockholders will continue to vote their
respective escrow shares, however, the escrow shares are not assignable or
transferable. The escrow shares will be released from escrow if (1) the average
closing price of the Company's common stock exceeds $12.35 over a period of 40
consecutive business days prior to August 12, 1996 or (2) at any time prior to
August 12, 1996, the Company completes a transaction through which it sells all
or substantially all of its assets or if the majority of its then outstanding
shares of common stock are sold. As a result of not obtaining a stipulated level
of profitability for 1991, 92,750 common shares held in escrow are subject to
release only upon the occurrence of event (2) above. If the escrowed shares and
options are not released by August 12, 1996, the shares will return to the
Company's treasury and the options will lapse.

February 1993, 810,399 shares of the Company's common stock were sold in a
private placement for a gross consideration of $1,215,600, or $1.50 per share.
Approximately $365,000 of the offering was purchased by the senior management
and directors of the Company and the Geocapital Funds. In February 1993, a Smart
Phones customer deposit of $300,000 was also converted into common stock at
$1.50 per share.

During May and June 1994, 940,000 shares of the Company's common stock were
sold in a private placement offering for a gross consideration of $1,175,000, or
its then current market price of $1.25 per share. Participants in the offering
also received warrants to purchase a total of 94,000 additional shares of common
stock at $2.06 per share on or prior to June 30, 1999. Approximately $480,000 of
the offering was purchased by the senior management and directors of the Company
and the Geocapital Funds.

During December 1994, 716,000 shares of the Company's common stock were
sold in a private placement offering for a gross consideration of $895,000, or
its then current market price of $1.25 per share. Participants in the offering
also received warrants to purchase a total of 358,000 additional shares of
common stock at $2.00 per share on or prior to December 22, 1999. Approximately
$270,000 of the offering was purchased by directors of the Company and the
Geocapital Funds.

During June and July 1995, 1,168,000 restricted shares of the Company's
common stock were sold in a private offering for a gross consideration of
$2,920,000, or its then current market price of $2.50 per share. Approximately
$275,000 of the offering was purchased by the directors and management of the
Company. Participants in the offering also received warrants to purchase a total
of 1,168,000 of additional shares of restricted common stock at $3.50 per share
on or prior to June 30, 2000.

In October 1995, stockholders paid the Company approximately $5 million to
exercise all warrants issued as a result of the private offerings discussed
above (see "Note J").

F-17
<PAGE> 62

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE J: STOCK WARRANTS AND OPTIONS

Stock Warrants

In connection with various financial transactions completed by the Company
during 1992 to 1995, equity investors (see "Note I"), debtors (see "Note H") and
certain consultants were issued warrants to purchase shares of the Company's
common stock in the future. All of these warrants had exercise prices that were
set at or above the current market price of the Company's common stock at the
respective dates of grant.

In October 1995, the Company raised approximately $6.5 million of new
capital through the exercise of previously issued warrants and non-qualified
options to purchase 2,433,853 shares of the Company's common stock. Of the $6.5
million raised, approximately $1.6 million was invested by the directors,
management and the principal lender of the Company. In exercising their warrants
or options, investors had the option of paying cash or executing an 8% interest
bearing note made payable to the Company. Approximately $2.4 million of the
total proceeds was paid in cash and $4.1 million through notes. The notes were
paid in full by March 29, 1996.

As of December 31, 1995, GKN Securities, the underwriters of the Company's
initial public offering held 73,500 warrants at an exercise price of $1.73 per
share. These warrants were exercised in February 1996.

As of March 1996, there were no significant warrants outstanding to
purchase Company common stock except for the Director warrant plans.

Director Warrant Plans

In December 1994, in an effort to attract and retain experienced executives
to serve as outside directors for the Company, the Company's Board of Directors
adopted an Outside Directors' Warrant Plan (the "Plan").

In December 1994, three new outside directors of the Company were awarded a
total of 450,000 warrants. Each director received 150,000 warrants and each
warrant entitles the director to purchase one share of the Company's common
stock on or prior to December 15, 1999 per the following terms:

<TABLE>
<CAPTION>
EXERCISE
WARRANTS PRICE VESTING
--------------------------------------------------------- -------- -----------------
<S> <C> <C>
50,000................................................... $ 1.50 December 15, 1995
50,000................................................... 2.25 December 15, 1995
50,000................................................... 4.00 December 15, 1996
</TABLE>

Concurrent with the above initial grant, a fourth outside director of the
Company representing the Geocapital Funds was awarded 126,000 warrants. The
terms of this grant were exactly as those described above except the number of
warrants at the $1.50 exercise price was set at 26,000 instead of 50,000.

In December 1994, the Company's Board of Directors awarded Steven A. Odom,
who joined the Board in October 1994 and became Chairman in November, an initial
grant of 450,000 warrants under the Plan. Each warrant entitles Mr. Odom to
purchase one share of the Company's common stock on or prior to December 15,
1999 per the following terms:

<TABLE>
<CAPTION>
EXERCISE
WARRANTS PRICE VESTING
--------------------------------------------------------- -------- ------------------
<S> <C> <C>
150,000.................................................. $ 1.50 December 15, 1995
150,000.................................................. 2.25 December 15, 1995
150,000.................................................. 4.00 December 15, 1996
</TABLE>

F-18
<PAGE> 63

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

If Mr. Odom were to resign as Chairman of the Board prior to December 15,
1996, but otherwise meets all other vesting criteria, he would forfeit 100,000
warrants at $1.50, 100,000 warrants at $2.25 and 100,000 warrants at $4.00.

In December 1994, the Board also adopted the Directors Warrant Incentive
Plan, pursuant to which the Board may grant to each director on an annual basis
warrants to purchase up to 50,000 shares of common stock at an exercise price
per share equal to no less than 110% of the fair market value of the common
stock at the date of grant. No warrants have been granted under this plan.

The vesting of all warrants awarded pursuant to the plans above will be
subject to the director to whom such warrants have been granted attending at
least 75% of the meetings of the Board of Directors for the year in which such
warrants are scheduled to vest. Notwithstanding this limitation, the warrants to
be awarded pursuant to the plans will become immediately exercisable (i) if the
Company is to be consolidated with or acquired by another entity in a merger,
(ii) upon the sale of substantially all of the Company's assets or the sale of
at least 90% of the outstanding common stock of the Company to a third party,
(iii) upon the merger or consolidation of the Company with or into any other
corporation or the merger or consolidation of any corporation with or into the
Company (in which consolidation or merger the shareholders of the Company
receive distributions of cash or securities as a result thereof), or (iv) upon
the liquidation or dissolution of the Company.

Stock Option Plans

The Company's stockholders adopted Stock Option Plans in 1988 and 1991.
These plans allow the Board of Directors to grant incentive stock options to
purchase the Company's common stock at an exercise price not less than fair
market value as of the grant date. Options issued under these plans vest on a
one to five year period and expire generally after five years. The 1988 Stock
Option Plan, which is no longer active, provided for the granting of 150,387
options. In June 1993, the Board of Directors increased the authorized shares in
the 1991 Stock Option Plan (the "1991 Plan") from 315,000 to 515,000. In
December 1994 and December 1995, the Board further increased the authorized
shares to 915,000 and 2.5 million, respectively.

At December 31, 1995, 668,916 options were available for future grant under
the 1991 Plan. The following table summarizes the activity relating to both
plans:

<TABLE>
<CAPTION>
NUMBER AVERAGE
OF OPTIONS PRICE
---------- -------
<S> <C> <C>
Balance at January 1, 1993...................................... 209,304 $3.54
Options granted................................................. 458,950 2.06
Options exercised............................................... (14,847) .56
Options lapsed or canceled...................................... (213,871) 3.75
---------- -------
Balance at December 31, 1993.................................... 439,536 1.99
Options granted................................................. 380,912 1.35
Options exercised............................................... (7,662) 1.07
Options lapsed or canceled...................................... (46,929) 1.74
---------- -------
Balance at December 31, 1994.................................... 765,857 1.70
Options granted................................................. 1,246,327 5.62
Options exercised............................................... (167,400) 1.86
Options lapsed or canceled...................................... (162,955) 1.93
---------- -------
Balance at December 31, 1995.................................... 1,681,829 4.57
---------- -------
(Unaudited):
Options granted................................................. 94,000 7.81
Options exercised............................................... (25,988) 1.27
Options lapsed or canceled...................................... (2,638) 1.25
---------- -------
Balance at March 31, 1996....................................... 1,747,203 $4.80
======== ======
Exercisable at March 31, 1996................................... 391,150 $2.60
======== ======
</TABLE>

F-19
<PAGE> 64

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In June 1993, the Company hired a new President and Chief Executive
Officer. In connection therewith, the Board of Directors granted this officer
300,000 incentive stock options at an exercise price of $2.06 per share, 200,000
from the Company's 1991 Plan and 100,000 in a non-qualified plan. In August
1995, the President and CEO retired from the Company and exercised 100,000
vested options from the 1991 Plan and 50,000 vested options in the non-qualified
plan.

Of the 380,912 options granted in 1994, 285,062 were granted in December
1994 at the then current market price of $1.25 per share in connection with a
$285,062 voluntary salary reduction program for the year 1995. Under this
program, the salaried employees who agreed to decrease their salaries received
in exchange an equivalent number of stock options that vest one-twelfth for each
month the Company is profitable in 1995 and 1996. As of March 31, 1996, these
options had become fully vested.

In December 1995, the Company offered a similar voluntary salary reduction
program for 1996 that resulted in the grant of 424,627 options at the then
current market price of $7.00 per share. Salaried employees voluntarily agreed
to reduce their salaries by $849,254, i.e. $2 in exchange for each stock option
granted. The options will vest based upon the Company achieving pre-defined
levels of pre-tax income during the four quarters of 1996 and when management
meets specific operational objectives during the year.

An additional element of the 1995 and 1996 voluntary salary reduction
programs provides for the potential repayment of salaries if certain pre-tax
income amounts are realized by the Company. Based on the Company's 1995 results,
a full repayment was earned and paid to employees during December 1995 and
January 1996. The 1996 participants will be repaid all or a portion of their
salary reduction in February 1997 if the Company achieves certain levels of
pre-tax profitability in excess of 1995's actual results.

In August 1995, the Company granted its new President and Chief Operating
Officer 400,000 options at $3.78 per share, the market price of the Company's
common stock on the date his offer of employment was accepted. These options
vest 25% on each of the first four anniversaries from the initial date of
employment.

In December 1995, the Company granted its Chairman and Chief Executive
Officer, and its Vice President and Chief Financial Officer, 200,000 and 50,000
options, respectively, at $7.00 per share. The 200,000 options vest 50% on the
first two anniversaries from the date of grant. The 50,000 options vest 25%
immediately and the remaining 25% on each of the next three anniversaries from
the date of grant.

Options awarded under the 1991 Plan are subject to the same vesting
acceleration provisions described above under the Director warrant plans.

General

In June 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation". The Statement allows companies to
measure compensation cost in connection with employee stock compensation plans
using a fair value based method or to continue to use an intrinsic value based
method, which generally does not result in compensation cost. The Company
currently plans to continue using the intrinsic value based method.

NOTE K: RETIREMENT SAVINGS PLAN

The Company has a Retirement Savings 401(K) Plan that covers substantially
all employees. The Plan provides for the employees to voluntarily contribute a
portion of their compensation on a tax deferred basis and allows for the Company
to make discretionary contributions as determined by the Board of Directors. For
the years ended December 31, 1994 and 1995 and the three months ended March 31,
1995 and 1996, the Company contributed approximately $53,000, $19,000, $6,000
and $7,000, respectively, in the form of the Company's common stock to the Plan.
The 1994 and 1995 contributions were based on matching employee

F-20
<PAGE> 65

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

contributions, up to the first six percent contributed, at 25% and 50%,
respectively. No Company contributions were made to the Plan for 1993.

NOTE L: INCOME TAXES

The Company uses the asset and liability approach for financial accounting
and reporting for income taxes. Certain expenses are reported for financial
accounting purposes in different periods than reported for income tax purposes.
These temporary differences arise primarily from differences in depreciation,
bad debt reserves, inventory valuation, and various reserves.

As a result of the net losses realized, there was no provision for income
taxes in 1994 and 1993. There was no provision in 1995 and 1996 due to the
utilization of the net operating loss carryforward.

As of December 31, 1995, the Company has tax net operating loss
carryforwards available to reduce future income through 2010 of approximately
$8.5 million. In addition, the Company has capital loss carryforwards of
approximately $1.2 million expiring in 1998. Due to the exercise of certain
stock options and warrants and the issuance of Company common stock related to
acquisitions during 1995, the Company may have undergone an ownership change
under Internal Revenue Service regulations which would limit the annual
utilization of net operating loss carryforwards. If an ownership change has
occurred, the annual limitation would currently be set at approximately $4.4
million.

Significant components of the Company's deferred income tax assets and
liabilities are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1994 1995 1996
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets
Accrued liabilities........................... $ 572,292 $ 525,852 $ 561,070
Net operating loss carryforwards.............. 3,959,458 3,246,535 2,695,960
Capital loss carryforward..................... 472,535 477,182 479,099
Other......................................... 19,213 738,560 765,051
------------ ------------ ------------
5,023,498 4,988,129 4,501,180
Deferred tax liabilities
Depreciation/amortization..................... (455,889) (386,072) (363,673)
Valuation allowance............................. (4,567,609) (4,602,057) (4,137,507)
------------ ------------ ------------
Net deferred taxes.............................. $ -- $ -- $ --
========== ========== ==========
</TABLE>

The net change in the valuation allowance for deferred tax assets was an
increase of $34,448 in 1995. The change related primarily to the utilization of
the net operating loss carryforward netted against the temporary differences
related to the acquisitions of AIT and Westec and the write-down of the
Company's repair division assets. A reduction to goodwill of approximately
$391,000 will be recorded upon recognition of the valuation allowance.

F-21
<PAGE> 66

WORLD ACCESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following is a reconciliation of the tax computed at the statutory
federal rate to the income tax expense in the consolidated statements of
operations:

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1995 MARCH 31, 1996
------------------- -------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Federal tax at statutory rate.............. $ 398,631 34.0% $ 411,508 34.0%
Effect of:
State income tax net of federal
benefit............................... 51,253 4.4 49,976 4.1
Nondeductible purchase adjustments....... 47,599 4.0 36,319 3.0
Utilization of net operating loss
carryforward.......................... (497,483) (42.4) (497,803) (41.1)
--------- ----- --------- -----
Income tax expense......................... $ -- --% $ -- --
========= ===== ========= =====
</TABLE>

F-22
<PAGE> 67

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, ANY OF THE SELLING STOCKHOLDERS, ANY OF THE UNDERWRITERS, OR ANY
OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
The Company........................... 10
Use of Proceeds....................... 11
Price Range of Common Stock........... 11
Dividend Policy....................... 12
Capitalization........................ 13
Selected Consolidated Financial
Data................................ 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 16
Business.............................. 25
Management............................ 35
Selling Stockholders.................. 37
Description of Capital Stock.......... 38
Shares Eligible for Future Sale....... 39
Underwriting.......................... 41
Legal Matters......................... 42
Experts............................... 42
Available Information................. 42
Incorporation of Certain Information
by Reference........................ 42
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
4,000,000 SHARES

WORLD ACCESS, INC.

COMMON STOCK

--------------------
PROSPECTUS
--------------------
THE ROBINSON-HUMPHREY
COMPANY, INC.

WHEAT FIRST BUTCHER SINGER

INTERSTATE/JOHNSON LANE
CORPORATION
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 68

PART II.

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses to be paid in connection with
the issuance and distribution of the securities being registered hereby, other
than underwriting discounts and commissions, and all such expenses will be borne
by the Registrant. All amounts are estimates except for the SEC registration fee
and the NASD filing fee. It is estimated that the Registrant will incur the
following expenses in connection with the offering of the securities being
registered.

<TABLE>
<S> <C>
SEC Registration Fee............................................................... $16,751
NASD Filing Fee.................................................................... 5,358
Accounting Fees and Expenses....................................................... *
Blue Sky Fees and Expenses......................................................... *
Legal Fees and Expenses............................................................ *
Printing and Mailing Expenses...................................................... *
Transfer Agent Fees and Expenses................................................... *
Miscellaneous Expenses............................................................. *
-------
Total*................................................................... $ *
=======
</TABLE>

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

* To be supplied by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 102 of the Delaware General Corporation Law ("DGCL") allows a
corporation to eliminate or limit the personal liability of directors of a
corporation to the corporation or to any of its stockholders for monetary
damages for a breach of fiduciary duty as a director, except (i) for breach of
the director's duty of loyalty, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
certain unlawful dividends and stock repurchases, or (iv) for any transaction
from which the director derived an improper personal benefit.

Section 145 of the DGCL provides that in the case of any action other than
one by or in the right of the corporation, a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
in such capacity on behalf of another corporation or enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.

Section 145 of the DGCL provides that in the case of an action by or in the
right of a corporation to procure a judgment in its favor, a corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any action or suit by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation in such capacity on behalf of another corporation
or enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted under standards similar to those set forth in the
proceeding paragraph, except that no indemnification may be made in respect of
any action or claim as to which such person shall have been adjudged to be
liable to the corporation unless a court determines that such person is fairly
and reasonably entitled to indemnification.

Articles VIII and IX of the Company's Restated Certificate of
Incorporation, as amended, provides for indemnification of directors, officers
and employees to the fullest extent permissible under the DGCL.

II-1
<PAGE> 69

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- -----------------------------------------------------------------------------------
<C> <S> <C>
1.1 -- Underwriting Agreement.*
4.1 -- Restated Certificate of Incorporation of the Registrant and Amendment to Restated
Certificate of Incorporation incorporated herein by reference to the Registrant's
Registration Statement on Form S-18, Registration No. 33-41255-1, Exhibits 2 and
2.1, respectively, and Second Amendment to Restated Certificate of Incorporation
incorporated herein by reference to Exhibit 3.2 to the Registrant's Form 10-K for
the year ended December 31, 1992.
4.1-1 -- Third Amendment to Restated Certificate of Incorporation, incorporated herein by
reference to Exhibit 4.1-1 to the Registrant's Amendment No. 1 to its Registration
Statement on Form S-2, Registration No. 33-87026.
4.1-2 -- Certificate of Amendment to Restated Certificate of Incorporation, as amended.
4.2 -- Copy of Bylaws of the Registrant, as amended, incorporated herein by reference to
Registrant's Registration Statement on Form S-18 Registration, No. 33-41255-A,
Exhibit 3 and First Amendment to Bylaws incorporated herein by reference to Exhibit
3.4 to the Registrant's Form 10-K for the year ended December 31, 1992.
5.1 -- Opinion and Consent of Rogers & Hardin.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Tedder, Grimsley & Company, P.A.
24 -- Power of attorney (Included in the Signature Pages Hereto).
</TABLE>

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

* To be filed by amendment.

ITEM 17. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer of controlling
person of the Registrant in the successful defense of any action, suit or
proceedings) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

II-2
<PAGE> 70

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 71

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Orlando, Florida, on this 27th day of
June, 1996.

WORLD ACCESS, INC.

By: /s/ STEVEN A. ODOM
------------------------------------
Steven A. Odom
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Act, this Registration
Statement of World Access, Inc. has been signed below by the following persons
in the capacities and on the dates indicated.

We, the undersigned officers and directors of World Access, Inc., hereby
severally constitute and appoint Steven A. Odom and Mark A. Gergel, and each of
them, with full power of substitution, our true and lawful attorneys and agents,
to execute in our names and on our behalf in the capacities indicated below, any
and all amendments (including, without limitation, post-effective amendments) to
this Registration Statement and any and all other instruments which such
attorneys and agents, or any one of them, deem necessary or advisable to enable
World Access, Inc. to comply with the Securities Act, the rules, regulations and
requirements of the Securities Act in respect thereof, and the securities laws
of any state or other political subdivision or jurisdiction; and the undersigned
officers and directors do hereby severally ratify and confirm as our own acts
and deeds all that such attorneys and agents, and each of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------------- --------------
<C> <S> <C>
/s/ STEVEN A. ODOM Chairman of the Board and Chief June 27, 1996
- --------------------------------------------- Executive Officer
Steven A. Odom

/s/ MARK A. GERGEL Vice President and Chief June 27, 1996
- --------------------------------------------- Financial Officer (Principal
Mark A. Gergel Financial Officer)

/s/ HENSLEY E. WEST Director and President (Chief June 27, 1996
- --------------------------------------------- Operating Officer)
Hensley E. West

/s/ MARTIN D. KIDDER Controller and Secretary June 27, 1996
- --------------------------------------------- (Principal Accounting Officer)
Martin D. Kidder

/s/ STEPHEN J. CLEARMAN Director June 27, 1996
- ---------------------------------------------
Stephen J. Clearman

/s/ WILLIAM P. O'REILLY Director June 27, 1996
- ---------------------------------------------
William P. O'Reilly

/s/ JOHN D. PHILLIPS Director June 27, 1996
- ---------------------------------------------
John D. Phillips

/s/ STEPHEN E. RAVILLE Director June 27, 1996
- ---------------------------------------------
Stephen E. Raville
</TABLE>

II-4
<PAGE> 72

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBITS NUMBERED PAGE
- ------ ----------------------------------------------------------------------- -------------
<C> <C> <S> <C>
1.1 -- Underwriting Agreement.*
4.1 -- Restated Certificate of Incorporation of the Registrant and Amendment
to Restated Certificate of Incorporation incorporated herein by
reference to the Registrant's Registration Statement on Form S-18,
Registration No. 33-41255-1, Exhibits 2 and 2.1, respectively, and
Second Amendment to Restated Certificate of Incorporation incorporated
herein by reference to Exhibit 3.2 to the Registrant's Form 10-K for
the year ended December 31, 1992.
4.1-1 -- Third Amendment to Restated Certificate of Incorporation, incorporated
herein by reference to Exhibit 4.1-1 to the Registrant's Amendment No.
1 to its Registration Statement on Form S-2, Registration No. 33-87026.
4.1-2 -- Certificate of Amendment to Restated Certificate of Incorporation, as
amended.
4.2 -- Copy of Bylaws of the Registrant, as amended, incorporated herein by
reference to Registrant's Registration Statement on Form S-18
Registration, No. 33-41255-A, Exhibit 3 and First Amendment to Bylaws
incorporated herein by reference to Exhibit 3.4 to the Registrant's
Form 10-K for the year ended December 31, 1992.
5.1 -- Opinion and Consent of Rogers & Hardin.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Tedder, Grimsley & Company, P.A.
24 -- Power of attorney (Included in the Signature Pages Hereto).
</TABLE>

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

* To be filed by amendment.

<PAGE> 1

EXHIBIT 4.1.2

CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
RESTOR INDUSTRIES, INC.

RESTOR INDUSTRIES, INC. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify:

FIRST: That, the Board of Directors of the Corporation unanimously adopted
resolutions setting forth a proposed amendment to the Restated Certificate of
Incorporation, as amended, of the Corporation, declaring said amendment to be
advisable, and directing that said amendment be presented to the stockholders of
the Corporation for consideration at the annual meeting of the stockholders. The
resolution setting forth the proposed amendment is as follows:

"RESOLVED, that the Corporation's Restated Certificate of
Incorporation, as amended, be amended by deleting Article I of the Restated
Certificate of Incorporation, as amended, in its entirety and substituting
the following in lieu thereof:

'The name of the Corporation is WORLD ACCESS, INC.' "

SECOND: That the foregoing amendment was adopted by the stockholders of the
Corporation entitled to vote thereon at the Corporation's annual meeting of the
stockholders held on May 23, 1996.

THIRD: That the foregoing amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.

IN WITNESS WHEREOF, RESTOR INDUSTRIES, INC. has caused this Certificate of
Amendment to be signed as of this 19th day of June, 1996.

RESTOR INDUSTRIES, INC.

By: /s/ STEVEN A. ODOM
------------------------------------
Steven A. Odom
Chairman of the Board
and Chief Executive Officer

Attested by:

/s/ MARK A. GERGEL
- --------------------------------------
Mark A. Gergel
Assistant Secretary

<PAGE> 1

EXHIBIT 5.1

[The following text appears as letterhead:

Rogers & Hardin
Attorneys At Law
2700 International Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
(404) 522-4700
TELEX: 54-2335
TELECOPIER: (404) 525-2224]

June 26, 1996

WORLD ACCESS, INC.
4501 Vineland Road
Orlando, Florida 32811

Gentlemen:

We have acted as counsel to World Access, Inc. (the "Company") in
connection with the registration by the Company on Form S-3 (hereinafter
referred to, together with any amendments thereto, as the "Registration
Statement") under the Securities Act of 1933, as amended, of an aggregate of
4,600,000 shares of common stock, $.01 par value per share, of the Company (the
"Shares"), of which (a) 4,000,000 shares will be purchased by certain
underwriters (the "Underwriters") from the Company and certain selling
stockholders of the Company (the "Selling Stockholders") and (b) up to 600,000
additional shares will be purchased by the Underwriters from the Company if the
Underwriters exercise the option granted to them by the Company solely to cover
over-allotments, if any.

In connection with this opinion, we have examined such corporate records
and documents and have made such examinations of law as we have deemed
necessary. In rendering this opinion, we have relied, without investigation,
upon various certificates of public officials and of officers and
representatives of the Company. In our examination of documents, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals and the conformity with the originals of all documents
submitted to us as copies.

Based upon the foregoing and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that the
Shares have been duly authorized and, when sold as contemplated in the
Registration Statement and in the Underwriting Agreement to be entered into
among the Company, the Selling Stockholders and The Robinson-Humphrey Company,
Inc., Wheat, First Securities, Inc. and Interstate/Johnson Lane Corporation, as
representatives of the several Underwriters, will be legally issued, fully paid
and non-assessable.
<PAGE> 2

We consent to the filing of this opinion as an exhibit to the Registration
Statement and as an exhibit to applications to the securities commissioners of
the various states and other jurisdictions of the United States for registration
or qualification of the Shares in such states and other jurisdictions. We
further consent to the reference to our firm under the caption "Legal Matters"
in the Prospectus which is a part of the Registration Statement.

Very truly yours,

By: /s/ ROGERS & HARDIN
------------------------------------
ROGERS & HARDIN

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of our report dated March 29, 1996 relating
to the consolidated financial statements of World Access, Inc., F/K/A Restor
Industries, Inc., which appears in such Prospectus. We also consent to the
reference to us under the headings "Experts" and "Selected Consolidated
Financial Data" in such Prospectus. However, it should be noted that Price
Waterhouse LLP has not prepared or certified such "Selected Consolidated
Financial Data".

PRICE WATERHOUSE LLP

Tampa, Florida
June 26, 1996

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the incorporation by reference of our report dated May
23, 1996 relating to the financial statements of Comtech Sunrise, Inc. in the
Prospectus constituting part of World Access, Inc.'s Registration Statement on
Form S-3. We also consent to the reference to us under the heading "Experts" in
such Prospectus.

Tedder, Grimsley & Company, P.A.

June 26, 1996