Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-KSB

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

                                       OR

[  ]     TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from _______________to_________________

                         Commission File Number 001-1200

                           EUROWEB INTERNATIONAL CORP.
           (Name of small business issuer as specified in its charter)

           Delaware                                            13-3696015

 (State or other jurisdiction of                             (I.R.S.  Employer
  incorporation or organization)                             Identification No.)

                   1122 Budapest, Varosmajor utca 13. Hungary
                    (Address of principal executive offices)

                Issuer's telephone number, including area code:
                 (+36) 1-88-97-101, Facsimile: (+36)-1-88-97-100
                 -----------------------------------------------

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

      Title of Each Class              Name of Each Exchange on which Registered
Common Stock, par value $.001 per share          NASDAQ SMALL CAP

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirement for the past 90 days. Yes X No ___

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

Issuer had revenues of  $14,761,374  for the year ended December 31, 2003. As of
March 25,  2003,  4,665,332  shares of Common  Stock were  outstanding  of which
2,324,318 were held by non-affiliates of the Company. The aggregate market value
of the Common  Stock held by  non-affiliates  of the Company as of March 1, 2004
was $11,389,158  (based upon the closing bid price on such date on the Nasdaq of
$4.90).




Transitional Small Business Disclosure Format (check one):

Yes ___  No  X
             -

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

                                                                                                               Page

<S>                                                                                                              <C>
PART I       .....................................................................................................3

   Item 1.        Description of Business.........................................................................3
                  EuroWeb Strategy................................................................................3
                  Entry into ISP Market in Central Europe and History of Acquisitions.............................3
                  Products and Services...........................................................................5

                  Customers.......................................................................................6
                  Network Operations and Technical Support........................................................6
                  Sales and Marketing.............................................................................7
                  Government Regulations..........................................................................7
                  Employees.......................................................................................7

   Item 2.        Description of Properties.......................................................................7

   Item 3.        Legal Proceedings...............................................................................8

   Item 4.        Submission of Matters to a Vote of Security Holders.............................................8

PART II      .....................................................................................................9

   Item 5.        Market For Registrant's Common Equity And Related Stockholder Matters...........................9
                  Market Information..............................................................................9
                  Holders of Common Stock.........................................................................9
                  Dividends......................................................................................10

   Item 6.        Management's Discussion and Analysis of Financial Condition and Results of Operations..........10
                  Operations.....................................................................................10
                  Results of Operations..........................................................................13
                  Year Ended December 31, 2003 compared to Year Ended December 31, 2002..........................14
                  Liquidity and Capital Resources................................................................17
                  Inflation and Foreign Currency.................................................................18
                  Effect of Recent Accounting Pronouncements.....................................................18
                  Risk Factors...................................................................................19

                  Forward-Looking Statements.....................................................................23

   Item 7.        Financial Statements...........................................................................24

   Item 8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...........24

   ITEM 8A    CONTROLS AND
              PROCEDURES.........................................................................................22



PART III          ...............................................................................................25

                                       -i-

<PAGE>


   Item 9.        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF
                  THE EXCHANGE ACT...............................................................................25


   Item 10.       EXECUTIVE COMPENSATION.........................................................................27

   Item 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................................29

   Item 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................................30

PART IV      30

   Item 13.       EXHIBITS AND REPORTS ON FORM 8-K...............................................................30


   Item 14.       PRINCIPAL ACCOUNTANT FEES AND SERVICES.........................................................30
</TABLE>

                                       2
<PAGE>

                                     PART I



ITEM 1.      Description of Business

History of Business

     EuroWeb  International  Corp.  (the  "Company" or  "EuroWeb") is a Delaware
corporation  which was organized on November 9, 1992. It was a development stage
company through  December 31, 1993. The Company  operates in the Czech Republic,
Slovakia , and Romania,  through its  subsidiaries  Euroweb Czech Republic spol.
s.r.o. ("Euroweb Czech"), Euroweb Slovakia a.s. ("Euroweb Slovakia") and Euroweb
Romania S.A.  ("Euroweb  Romania").  The Company  provides  Internet  access and
additional  value added services to business  customers.  The Company also has a
49%  ownership  interest in Euroweb  Hungary Rt., with the remaining 51% held by
Pantel Telecommunication Rt., Hungary ("Pantel Rt."), of which KPN Telecom BV is
the  controlling  owner.  Effective  March 1, 2004,  the Company  purchased  the
remaining 51% of Euroweb Hungary Rt. from Pantel Rt.

KPN Telecom BV owns approximately 50.18% of EuroWeb's outstanding shares of
common stock as at December 31, 2003.

EuroWeb Strategy

     The  Company  strives  to  be a  leading  supplier  in  Central  Europe  to
businesses of complete  communications  solutions  using Internet  technologies.
Rather than  servicing  individual  users,  the  Company  focuses its efforts on
business  users and seeks to  satisfy  all their  needs  with high  quality  and
reliable service.

     The  Company's  business  has shown  continued  growth since it entered the
Internet field in January 1997, and the Company has made various acquisitions in
Hungary, the Czech Republic, Slovakia and Romania. As a continuing consolidation
is taking place in the  industry,  the Company is constantly  reviewing  various
business opportunities, which may include either an acquisition or a merger with
another  company.No  assurances  can be  given  that we will  be  successful  in
locating or negotiating with any of these potential business opportunities.

Entry into ISP Market in Central Europe and History of
Acquisitions/Dispositions

     The Company entered the Internet Service Provider ("ISP") market in Central
Europe through various acquisitions of companies in that area over the past five
years. On January 2, 1997, the Company acquired all of the outstanding  stock of
three  Hungarian ISPs for a total purchase  price of  approximately  $1,785,000,
consisting  of 28,800  shares of common stock of the Company and  $1,425,000  in
cash  (collectively,  the "1997  Acquisitions").1  Thereafter in 1997, the three
Hungarian  companies  were  combined  and merged  into a new  Hungarian  entity,
EuroWeb  Hungary  Rt.  On  November  22,  1998,  the  Company  sold  51%  of the
outstanding  shares of EuroWeb  Hungary Rt. to Pantel Rt. for $2,200,000 in cash
and an agreement to

-------------------
1 1997 Acquisitions were as follows:

(a) Eunet (Hungary Ltd.) for a total cash cost of $1,000,000, and an assumption
of $128,000 in liabilities;
(b) E-Net Hungary Telecommunications and Multimedia
for a total cash cost of $200,000 and $150,000 in stock (12,000 shares); and
(c) MS Telecom  Rt.  for a total cash cost of  $225,000  and  $210,000  in stock
(16,800 shares).

                                       3
<PAGE>
increase the share capital of EuroWeb Hungary Rt. by $300,000  without  changing
the  ownership  ratio (after the capital  increase,  the  ownership  ratio would
remain  49 - 51  percent).  The  Company  currently  uses the  equity  method of
accounting to record its interest in EuroWeb Hungary Rt.

     On February 12, 2004,  Euroweb  International  Corp.  entered into a Shares
Purchase  Agreement to re-acquire  Pantel Rt.'s 51% interest in Euroweb  Hungary
Rt. See Note 18 in the Consolidated Financial Statements.

     The Company  continued with its acquisitions of ISPs in the Czech Republic,
Slovakia and Romania in 1999 and 2000.  On June 11, 1999,  the Company  acquired
all of  the  participating  interests  of  Luko  CzechNet,  an ISP in the  Czech
Republic,  for a total cost of  $1,862,154  consisting  of 90,000  shares of the
Company's  common stock and 50,000  options  valued at $2.00 per share,  and the
balance paid in cash. This acquisition was effective as of June 1, 1999.

     On July 15, 1999,  the Company  acquired all of the  outstanding  shares of
capital stock of EUnet Slovakia, an ISP in the Slovak Republic, for a total cost
of $813,299  consisting of 47,408 shares of the Company's common stock valued at
$400,005  issued August 9, 1999 and the balance paid in cash.  This  acquisition
was effective as of August 1, 1999. The Company then made another acquisition of
a Slovak ISP on July 15, 1999 with the purchase of 70% of the outstanding shares
of Dodo s.r.o.'s  subsidiary,  R-Net, for a total cost of $630,234 consisting of
29,091 shares of the Company's common stock valued at $200,000 issued August 13,
1999 and the balance paid in cash.  This  acquisition was effective as of August
1, 1999.

     On September  23, 1999 and November 16,  1999,  the Company  acquired  from
Slavia  Capital  o.c.p.,  a.s.  70% and 30%,  respectively,  of the  issued  and
outstanding  stock of Global Network Services  a.s.c.,  a Slovakian  corporation
providing  Internet  service  primarily to businesses  located in Bratislava and
other  major  cities  in  Slovakia  for a total  purchase  price of  $1,633,051,
consisting  of 71,114  shares of the  Company's  common stock valued at $499,929
issued on September 23, 1999, and the balance paid in cash. This acquisition was
effective as of October 1, 1999. All Slovakian  operations were then merged into
one company under the name of Euroweb Slovakia.

     On April 21,  2000,  the Company  acquired all of the  outstanding  capital
stock of  Isternet  SR,  s.r.o.,  an  Internet  service  provider  in the Slovak
Republic,  for  $1,029,299  in  cash.  Goodwill  arising  on this  purchase  was
$945,200. This acquisition was effective May 1, 2000.

     On May 19, 2000, the Company  purchased all of the Internet  related assets
of Sumitkom  Rokura,  S.R.L.  an  Internet  service  provider  in  Romania,  for
$1,561,125 in cash. The  acquisition has been accounted for as an asset purchase
with a value of $1,150,000 being assigned to customer lists acquired.

     On May 22,  2000,  the Company  acquired  the  remaining  30% of R-Net (the
initial 70% being  acquired in 1999) for $355,810 in cash.  Goodwill  arising on
this purchase was $357,565.

     On June 14, 2000,  the Company  acquired all of the  outstanding  shares of
capital stock of Mediator  S.A., an Internet  service  provider in Romania for a
total  cost  of  $2,835,569.  This  consisted  of  $2,040,000  in  cash  and the
assumption  of a  $540,000  liability  to the  former  owner  payable  in annual
installments of $180,000  commencing on June 1, 2001.  Goodwill  arising on this
purchase was $2,455,223.  Immediately after the purchase the name was changed to
Euroweb Romania, S.A. This acquisition was effective as of July 1, 2000.

     On August 25,  2000,  the  Company,  through  its  subsidiary,  Luko Czech,
acquired  all of the  outstanding  capital  stock of Stand  s.r.o.,  an Internet
service  provider in the Czech  Republic for $280,735 in cash,  which was merged
into Luko Czech under the name of Euroweb Czech Republic.  This  acquisition was
effective as of September 1, 2000.

     On February 11, 2000, a special  meeting of the  shareholders  was held and
two proposals were approved.  Proposal  number one approved the amendment of the
Company's certificate of incorporation increasing the number of shares of common
stock that is authorized for issuance by the Company from  20,000,000  shares of
common stock to 60,000,000 shares of common stock.  Proposal number two approved
the issuance and sale by the Company to KPN Telecom B.V. ("KPN"),  a Netherlands
Limited Liability  Company,  of 2,057,348 shares at $7.9 per share and rights to
shares equal to all other outstanding warrants,  options and other securities at
$6.9 per share.  At closing KPN exercised its option to purchase  303,362 shares
at $6.9 per share in addition to the 2,057,348  shares at $7.9 per share.  These
approvals  gave KPN control of 51% of the Company's  common stock,  representing
voting control of the Company.  This transaction  provided the Company with more
than $18,000,000 in capital to fund future acquisitions.

     On October 24,  2000,  KPN Telecom  B.V.  exercised  its option for 100,302
shares of the  Company's  common stock at $ 6.9 per share,  in order to maintain
its 51% equity interest in the Company.

     All share figures in the discussion above have been restated to reflect the
one for five reverse stock split effective August 21, 2001.


                                       4
<PAGE>
     On February 23, 2004, the Company entered into a Shares Purchase  Agreement
with the owners of 100%  interest in Elender  Business  Communications  Services
Ltd., a Hungarian corporation ("Elender"), which is an Internet service provider
located  in  Hungary  that  provides   internet  access  to  the  corporate  and
institutional (public) sector and, amongst others, 2,300 schools in Hungary. The
total  purchase  price to be paid by the Company for Elender shall be $9,500,000
as follows: (i) cash in the amount of $6,500,000; and (ii) 677,201 shares of the
Company's common stock valued at $3,000,000. The number of shares was calculated
by dividing  $3,000,000  by $4.43,  which is the average  trade  weighted  stock
market  price  during the 60 days prior to  signing  of the  binding  term sheet
between the parties.  At Closing,  Elender shall have debt valued at $2,900,000,
consisting of a bank loan and a  non-transferable  shareholders  loan payable by
Elender  to the  Sellers.  The  Company  guarantees  the full  repayment  of the
non-transferable  shareholders  loan in a period of one and a half years and, in
addition,  the Company has also placed in escrow 248,111 shares, which are to be
issued to the  Sellers in the event that there is a default in  connection  with
the  non-transferable  shareholders  loan.  The closing of the Elender  purchase
remains  subject to the  satisfaction  of customary terms and conditions and the
approval of the Hungarian Competition Office.


Products and Services

The activity of the Company can be divided into the following categories:

     o    Traditional ISP services:  (a) Internet access,  (b) Content,  Web and
          other services

     o    International/national  leased line, IP data services (IP  connections
          between different countries);

     o    Voice over IP services; and

     o    Facilities  (sale,rent  and  maintenance  of dark  fiber  between  the
          Hungarian border and the Romanian City of Timisoara).

Traditional ISP services

Internet access

Access to the  Internet  can be either  through a leased  line / DSL,  microwave
technology, which enables a constant connection to the Internet at all times, or
through dial-up service,  which requires  subscribers to dial a telephone number
to connect to the  Internet.  EuroWeb  offers a variety  of access  options  and
packages.

Content and Web services

In addition to internet access services,  EuroWeb provides  services such as the
design,  development,  hosting and  maintenance  of home pages and web  servers,
domain registration, consulting, and other services.

International/domestic leased line, IP data services

     In  order to meet  requests  of  International  customers,  EuroWeb  offers
international/national  data connection for companies across borders,  or within
the countries to connect premises in different countries.  This service includes
single (one to one point) and also Virtual  Private Network (many to many point)
IP connections.  In most cases,  PanTel Rt. acts as a partner in the development
of international network possibilities.

Voice over IP services

     Capitalizing  on its  existing  international  presence  and  cross  border
connections,  EuroWeb  offers voice services to major carriers and its customers
based on Internet  Protocol  (IP)  technology.  Carriers and partners send Voice
minutes to/from the region in which EuroWeb operates. Euroweb's most significant
VOIP partner is Pantel Rt.

Customers

     EuroWeb's customers are mainly local businesses and professionals including
telecommunication  carriers and multinational  corporations.  EuroWeb's customer
base  uses  more  than 780  leased  lines and over  6,550  dial up  accounts  in
Slovakia, the Czech Republic and in Romania as of December 31, 2003.

Network Operations and Technical Support

     As of December 31, 2003,  EuroWeb had a network operations group consisting
of approximately 42 people,  including technical and customer support employees.
EuroWeb's network  operations  personnel located at EuroWeb's network operations
center  in  Slovakia,  the  Czech  Republic  and  Romania  are  responsible  for
continuously monitoring traffic across EuroWeb's network infrastructure and also
to carry out  implementation  of new customer  connections both for Internet and
other IP data connections. Both technical support and customer support personnel
are currently  available from 8 a.m. to 8 p.m.,  Monday through Friday. At other
times,  these personnel  respond to technical  support requests via telephone 24


                                       5
<PAGE>
hours a day. By the end of December  2003,  EuroWeb owned or contracted 61 Point
of Presences  (POPs) covering the territory of the Czech Republic,  Slovakia and
Romania.

Sales and Marketing

     EuroWeb employs  approximately 25 persons in sales and marketing.  To date,
EuroWeb has sold its  Internet  access and  applications  products  and services
primarily through direct personal and telephone  contact.  The sales force works
closely with the customer and technical support group,  which is responsible for
installation  at  multiple  sites  and  for  support  and  technical  consulting
services,  thereby  demonstrating  our  commitment to account  management to our
customers. v. vi. Government Regulations


     EuroWeb is not currently subject to direct government regulation other than
laws and  regulations  applicable  to businesses  generally.  There are specific
industry laws that may apply to the local  subsidiaries in the field of Internet
and  Telecommunications.  However, with the increasing popularity and use of the
Internet, it is likely that new laws and regulations involving the Internet will
be adopted at the local,  state,  national  or  international  levels,  covering
issues such as user  privacy,  freedom of  expression,  pricing of products  and
services,  taxation,  information  security or the  convergence  of  traditional
communications services with Internet communications.

Employees

     The Company employs a total of 115 persons in the Czech Republic,  Slovakia
and  Romania  all of  which  are  full-time  employees.  None  of the  Company's
employees are represented by a labor organization.

ITEM 2.       Description of Properties

     The  following  table  lists the office  spaces  that the  Company  and its
subsidiaries lease from unaffiliated persons:
<TABLE>
<CAPTION>

                                                                                                Rent
                                                                                                Amount/
       Lessor                Address of Property               Primary Use         Sq. feet     Month          Lease Terms
<S>                                <C>                          <C>                 <C>           <C>               <C>
--------------------     --------------------------    -------------------------- --------     ----------     -------------

Euroweb                   Varosmajor utca 13.           stockholder relations        250            -           Month-to-month-
                          H-1122                        and general executive
                          Budapest, Hungary

Euroweb Czech             Argentinska 38                general operations         3,617         EUR            3 years and
Republic                  CS-170 05                                                             4,469           4 months
                          Prague, Czech Republic                                                                non-cancelable
Euroweb Slovakia          Priemyselna 1/A               general operations        14,274         EUR            3 years and
                          SK - 821 09                                                            7,365          8 months
                          Bratislava, Slovakia                                                                  non-cancelable
Euroweb Romania           Bd. Unirii 33, Bl. A2,        general operations         4,951       $7,664          1-month
                          Sc.3, 6th Floor, Sector                                                                notice
                          3 Bucharest, Romania
</TABLE>

                                       6
<PAGE>
     The Company's Chief Executive, Csaba Toro, uses offices provided by Euroweb
Rt. No rent was charged in 2003.

ITEM 3.  Legal Proceedings

     Euroweb  Slovakia  has been the  National  registrar  of Top Level  Domains
(suffix attached to Internet domain names e.g. .sk, .net, etc.) since the middle
of 2003. The Company has been subject to legal  proceedings  and  submissions to
different  authorities  in  connection  with its  exclusive  right to manage the
system.  The Company has succeeded in its defense on all occasions to date,  but
there is no  assurance  that it will be able to keep these  rights  and/or  that
penalties will not be charged in the future.


     From time to time, we are a party to litigation or other legal  proceedings
that we consider to be a part of the ordinary course of our business. We are not
involved  currently in legal  proceedings  that could  reasonably be expected to
have a material adverse effect on our business,  prospects,  financial condition
or results of operations.  We may become involved in material legal  proceedings
in the future.



ITEM 4.  Submission of Matters to a Vote of Security Holders

     No matters  were  submitted  to a vote of the  Company's  security  holders
through the solicitation of proxies or otherwise, during the last quarter of the
fiscal year ended December 31, 2003.


                                       7
<PAGE>
                                    PART II

ITEM 5.  Market For Registrant's Common Equity And Related Stockholder Matters

Market Information

     The Company's Common Stock is traded in the over-the-counter  market on the
Nasdaq SmallCap Market  ("Nasdaq") under the symbol "EWEB".  On August 30, 2001,
the  shareholders  approved a one-for-five  reverse stock split of the Company's
Common Stock.

     The  following  table sets forth the high and low bid prices for the Common
Stock during the periods  indicated as reported by Nasdaq.  The prices  reported
reflect inter-dealer  quotations,  and may not represent actual transactions and
do not include retail mark-ups, mark-downs or commissions.



                                    High                      Low
Quarter Ending:                    ------                    ------

2002
----
March 31, 2002                      2.95                      1.47
June 30, 2002                       2.85                      1.84
September 30, 2002                  2.50                      1.88
December 31, 2002                   2.14                      1.72


2003
----
March 31, 2003                      3.73                      1.53
June 30, 2003                       3.25                      1.92
September 30, 2003                  8.30                      2.45
December 31, 2003                   4.82                      3.10



On March 25, 2004 the closing bid price on the Nasdaq for the Common Stock was
$5.01.

Holders of Common Stock

         As of February 27, 2004, the Company had 4,665,332 shares of Common
Stock outstanding and 177 shareholders of record. The Company was advised by its
transfer agent, the American Stock Transfer & Trust Company, that according to a
search made, the Company has approximately 6,153 beneficial owners who hold
their shares in street names.

Dividends

     It has been the  policy of the  Company  to  retain  earnings,  if any,  to
finance the development and growth of its business.

                                       8
<PAGE>
<TABLE>
<CAPTION>


Equity Compensation Plans

-------------------------------   ----------------------------   ----------------------------   ----------------------------
<S>                                    <C>                                  <C>                            <C>
Plan Category                     Number   of  shares  to  be    Weighted-average   exercise    Number of shares  remaining
                                  issued  upon   exercise  of    price    of     outstanding    available     for    future
                                  outstanding   options   and    options and warrants           issuance    under    equity
                                  warrants                                                      compensation plans

-------------------------------   ----------------------------   ----------------------------   ----------------------------
Approved by security holders      46,000                         $ 7.97                          44,500

-------------------------------   ----------------------------   ----------------------------   ----------------------------
Not   approved   by   security    263,000                        $5.60                           --
holders

-------------------------------   ----------------------------   ----------------------------   ----------------------------
Total                             309,000                        $5.95                           44,500
-------------------------------   ----------------------------   ----------------------------   ----------------------------
</TABLE>


     The equity  compensation plans are discussed in Notes 16 and 17 to the 2003
Consolidated Financial Statements.

Sale of Securities that were not Registered Under the Securities Act of 1933

The Company did not sell any securities that were not registered under the
Securities Act of 1933 during the year ended December 31, 2003.


ITEM 6   Management's Discussion and Analysis of Financial
         Condition and Results of Operations

  Operations

     The Company operates through three  wholly-owned  subsidiaries,  located in
the Czech  Republic,  Slovakia and  Romania,  known as Euroweb  Czech  Republic,
Euroweb  Slovakia,  and Euroweb Romania,  respectively.  The Company made no new
acquisitions in 2003 and 2002.

The revenues are derived from the following four activities:

     (1)  Internet Service Provider (Internet access, Content, Web services
         and Other services);

     (2)  International/domestic leased line, Internet Protocol data services;

     (3)  Voice over Internet Protocol services; and

     (4)  Facilities  (sale,  rent and  maintenance  of dark fiber  between  the
          Hungarian border and the Romanian City of Timisoara)

For the services in points (2) and (3), the Company's main customer in 2003 and
2002 was Pantel Rt.

                                       9
<PAGE>
     The results of  operations  of each ISP have been included in the Company's
consolidated results of operations from the effective date of acquisition.

Critical Accounting Policies

     The  Company's  discussion  and  analysis of its  financial  condition  and
results of operations are based upon its consolidated  financial statements that
have been prepared in accordance with generally accepted  accounting  principles
in  the  United  States  of  America  ("US  GAAP").  This  preparation  requires
management to make estimates and assumptions that affect the reported amounts of
assets,  liabilities,  revenues and expenses,  and the  disclosure of contingent
assets and liabilities.  US GAAP provides the framework from which to make these
estimates,  assumptions and disclosures. The Company chooses accounting policies
within US GAAP that management believes are appropriate to accurately and fairly
report the Company's  operating  results and financial  position in a consistent
manner.  Management  regularly  assesses  these policies in light of current and
forecasted economic conditions.  The Company's accounting policies are stated in
Note 2 to the  Consolidated  Financial  Statements.  The  Company  believes  the
following  accounting  policies  are  critical to  understanding  the results of
operations and the effect of the more  significant  judgments and estimates used
in the preparation of the consolidated financial statements:

     Revenue  Recognition  Policies -- Revenues from services are  recognized in
the month in which the services are  provided.  Invoices  for  traditional  ISP,
International  leased  line and IP Data  services  are  generally  issued at the
beginning of the month except where local legislation  prohibits such treatment.
VOIP traffic is measured  during the month and invoiced at the end of the month.
Billed revenues for which the services are to be provided in the future, are not
disclosed  as revenues  in the  reporting  period,  but are accrued and shown as
deferred revenue.

     In 2002,  the Company  entered into an  agreement  to provide  transmission
capacity  to a customer  pursuant  to an  indefeasible  rights-of-use  agreement
("IRUs") that management believe qualifies as an operating lease under Financial
Accounting  Standards Board Interpretation No. 13, "Accounting for Leases" ("FAS
13"),  since the IRU agreement  provides rights to use a specific  subject asset
for a defined  period.  Revenue  attributable  to the lease is  recognized  on a
straight-line basis over the term of the 20-year lease agreement.

     Under Financial  Accounting  Standards Board  Interpretation  No. 43, "Real
Estate Sales, an  interpretation of FASB Statement No. 66" ("FIN 43"), leases of
fiber and  capacity  that are  deemed  integral  equipment  are  required  to be
accounted  for in the same  manner  as  leases  of real  estate.  If  fiber  and
equipment  are  considered  integral to the related  real  estate,  a lease must
include a provision transferring title of such integral equipment to the lessee,
in order for that lease to be accounted  for as a sales-type  lease.  Failure to
satisfy the title transfer  requirements  results in operating lease  treatment,
and  recognition  of the related lease income over the lease term. The Company's
IRU does not involve a transfer of title.

     IRUs  generally  require the customer to make a down payment upon execution
of the  agreement,  with the balance due upon  delivery  and  acceptance  of the
fiber.  This has  resulted in a  substantial  amount of deferred  revenue  being
recorded on the balance sheet.  The Company is obligated  under the fiber IRU to
maintain its network in efficient  working order and in accordance with industry
standards.  Customers  are  obligated  for the term of the  agreement to pay for
their  allocable  share of the costs for operating and  maintaining the network.
The Company recognizes this revenue monthly as services are provided.


                                       10
<PAGE>
     Accounts  Receivable  -  Allowance  for  Doubtful  Accounts  -- The Company
regularly  reviews the  valuation  of accounts  receivable.  The  allowance  for
doubtful  accounts  is  estimated  based on  historical  experience  and  future
expectations of conditions that might impact the collectibility of accounts.

     Property Plant & Equipment  Recovery -- Changes in technology or changes in
the Company's intended use of these assets may cause the estimated period of use
or the value of these assets to change. These assets are reviewed for impairment
whenever events or changes in circumstances indicate that their carrying amounts
may  not  be  recoverable.  Estimates  and  assumptions  used  in  both  setting
depreciable  lives and  reviewing  recoverability  require  both  judgement  and
estimation  by  management.  Impairment  is deemed to have occurred if projected
undiscounted  cash flows related to the asset are less than its carrying  value.
If impairment is deemed to have occurred,  the carrying values of the assets are
written down, through a charge against earnings, to their fair value.

     Goodwill - Goodwill  results from business  acquisitions and represents the
excess  of  purchase  price  over  the  fair  value  of  net  assets   acquired.
Amortization was computed over the estimated future period of benefit (generally
five years) on a straight-line basis until December 31, 2001. On January 1, 2002
the Company adopted  Statement of Financial  Accounting  Standard No. 142 ("SFAS
142"),  "Goodwill and Other Intangible Assets," which establishes new accounting
and reporting  standards for acquired  goodwill and other intangible  assets and
supersedes  APB  Opinion  No.  17.  Goodwill  and  intangible  assets  that have
indefinite  useful lives are no longer  amortized but rather are tested at least
annually  for  impairment.  Intangible  assets  that have  finite  useful  lives
(whether  or  not  acquired  in a  business  combination)  will  continue  to be
amortized  over their  estimated  useful  lives.  The  adoption  of SFAS 142 has
eliminated  the  goodwill  charge in 2002.  During  2003 and 2002,  the  Company
performed the required SFAS No. 142 impairment  test,  with respect to goodwill.
The first step of this test  requires the Company to compare the carrying  value
of any  reporting  unit that has  goodwill  to the  estimated  fair value of the
reporting unit. When the current fair value is less than the carrying value, the
Company  performs  the second  step of the  impairment  test.  This  second step
requires  the Company to measure the excess of the  recorded  goodwill  over the
current value of the goodwill by  performing  an exercise  similar to a purchase
price  allocation,  and to record  any excess as an  impairment.  Based upon the
results, the Company recorded an impairment of $980,538 to the carrying value of
its goodwill in its financial  statements  for the year ended  December 31, 2003
(2002: $2,016,000).

     Other  Intangibles  - Other  Intangibles  reflects  customer  lists and the
amount  represented  on the balance sheet  reflects the  unamortized  difference
between  the  purchase  price and fair value of  businesses  acquired,  less any
impairment recognized. Customer lists were acquired as a result of a purchase of
assets and are being  amortized  over the estimated  future period of benefit of
five years.  The  assessment  of  recoverability  and  possible  impairment  was
determined  using  estimates  of  undiscounted  future cash flows in a manner in
accordance  with the provisions of Statement of Financial  Accounting  Standards
No. 144,  "Accounting  for the  Impairment  or Disposal of  Long-Lived  Assets,"
("SFAS No.  144"),  with a  write-down  recorded  in the fourth  quarter of 2003
($100,364),  and the third  quarter of 2002  ($448,500).  The carrying  value of
customer  lists is considered  impaired when the projected  undiscounted  future
cash flows  related to the asset are less than its carrying  value.  The Company
then measures  impairment based on the amount by which the carrying value of the
customer lists exceeds its fair market value. Fair

                                       11
<PAGE>
market  value is  determined  primarily  using the  projected  future cash flows
discounted at a rate  commensurate  with the risk  involved..  The impairment in
2003 has resulted in the customer lists being written down to zero.

Commitments and contingencies

The Company's subsidiaries have entered into various capital leases for vehicles
and  internet  equipment,  as  well  as  non-cancelable  agreements  for  office
premises. Refer to Note 9 (Leases) of the Financial Statements for details.

An employment  agreement  with the Chief  Executive  Officer which  provided for
aggregate  annual  compensation of $96,000 through December 31, 2005 was amended
in 2004. The amended  agreement  provides for an annual salary of $150,000 and a
bonus of up to $100,000  (guaranteed  minimum of $50,000) in 2004, and an annual
salary of $200,000 and a bonus of up to $150,000 in 2005.

The following table summarizes the commitments described above:
<TABLE>
<CAPTION>


----------------------------------- ------------- ------------ ------------- ------------- ------------ ------------
<S>                                       <C>         <C>          <C>           <C>           <C>          <C>
Contractual Cash Obligations        Less than 1   1-2 Years    2-3 Years     3-4 Years     4-5 Years    After 5
                                    year                                                                Years

----------------------------------- ------------- ------------ ------------- ------------- ------------ ------------
Capital Lease Obligations             109,293       36,801        8,391           -             -            -

----------------------------------- ------------- ------------ ------------- ------------- ------------ ------------
Capital Lease Obligations for          35,213       35,213       26,411
Vehicles delivered in January 2004

----------------------------------- ------------- ------------ ------------- ------------- ------------ ------------
Operating Leases                      168,264      168,264      168,264        96,964                       -
----------------------------------- ------------- ------------ ------------- ------------- ------------ ------------

Employment agreements (including      200,000      200,000         -             -             -            -
guaranteed bonus)
----------------------------------- ------------- ------------ ------------- ------------- ------------ ------------

Total Contractual Cash Obligations    512,770      440,278      203,066        96,964          -            -
----------------------------------- ------------- ------------ ------------- ------------- ------------ ------------
</TABLE>

                                       12
<PAGE>
In addition to the above contractual cash obligations,  the Company's subsidiary
in  Romania  has  entered  into a 20 year  Indefeasible  Right of Use  agreement
whereby for the duration of the agreement, Euroweb Romania is obliged to use all
reasonable  endeavours  to ensure the Cable  System is  maintained  in efficient
working order and in accordance with industry standards. The total consideration
of  $920,000  has  already  been  received,  and is  being  accounted  for as an
operating lease.  Refer to Note 9 (Leases) of the Financial  Statements.  v. vi.
Results of Operations

Year Ended December 31, 2003 compared to Year Ended December 31, 2002

Revenues

     The Company  experienced  a 14.07%  revenue  growth  compared to 2002.  The
increase in revenue can be attributed to the weakness of the US Dollar  relative
to the Czeck Koruna and Slovak Koruna, as well as to revenues generated from the
International/Domestic  leased  line and VOIP  services,  which were  introduced
during 2001. A significant  portion of these services is provided to Pantel Rt.,
a related party (see discussion under `revenues').



                                                    2003               2002
                                                    ----               ----
  Total Revenues                                 14,761,374         12,940,631


     The following table  summarize the main changes in revenue  compared to the
previous year with respect to the revenue structure:
<TABLE>
<CAPTION>

------------------------------------ ---------------- --------------------- -----------------
Revenue / services                        2003                2002             % increase

------------------------------------ ---------------- --------------------- -----------------
<S>                                        <C>                 <C>                <C>
ISP activity                            $5,497,222          $4,814,690            14.17%

------------------------------------ ---------------- --------------------- -----------------
Int./dom. leased line *(a)              $6,487,607          $6,100,530             6.34%

------------------------------------ ---------------- --------------------- -----------------
VOIP ** (a)                             $2,491,212          $2,025,411            23.00%

------------------------------------ ---------------- --------------------- -----------------
Facilities (a)                            $285,333               0                  N/A

------------------------------------ ---------------- --------------------- -----------------
Total                                  $14,761,374         $12,940,631            14.07%
------------------------------------ ---------------- --------------------- -----------------
</TABLE>

* - primarily Pantel or Pantel related sales, ** - substantially all direct
sales to Pantel (a) substantially all generated by the Romanian subsidiary

Overall,  each revenue  category has experienced an increase in 2003 compared to
the previous year,  while  facilities  became a new revenue source in 2003 after
the installation of the fibre optic cables in Romania in May 2003.

     The following table  summarize the main changes in revenue  compared to the
previous year with respect to the geographical source of revenue:

<TABLE>
<CAPTION>

--------------------------- ----------------- -------------------- ----------------- -----------------
Revenue/country *               Slovakia        Czech Republic         Romania            Total
--------------------------- ----------------- -------------------- ----------------- -----------------
<S>         <C>               <C>                     <C>                 <C>                <C>
Revenues in 2003              $3,424,633           $1,163,662          $10,173,079        $14,761,374
--------------------------- ----------------- -------------------- ----------------- -----------------

Revenues in 2002              $2,757,086           $1,415,541           $8,768,004        $12,940,631
--------------------------- ----------------- -------------------- ----------------- -----------------

Change in USD                        24%                (18%)                  16%                14%
--------------------------- ----------------- -------------------- ----------------- -----------------
</TABLE>

* Revenues allocated to the respected countries

Euroweb Czech Republic and Slovakia generate purely internet related revenue
representing 83% of the total ISP turnover.

     In 2003, Euroweb Slovakia experienced an approximate 8% decrease in revenue
from its  traditional ISP revenue  sources,  which was wholly offset by revenues
generated  from  domain  registration  (Euroweb  Slovakia  became  the  National
registrar of Top Level Domains in 2003).  The increase in USD terms of 24% (from
the table above) is due to the strengthening of the Slovak Koruna against the US
Dollar.

     In 2003,  Euroweb Czech Republic  experienced an approximately 30% decrease
in its  overall  revenue  in local  currency,  which  was  partly  offset by the
strength  of the US Dollar,  with the  decrease in Dollar  terms being 18%.  The
decrease was due to a smaller  customer base compared

                                       13
<PAGE>
to the previous  year. The decrease in the customer base was due mainly to lower
pricing  by  competitors  and  to  customers  switching  to  fibre  optic  cable
providers.

Euroweb Romania generated 17% of the total ISP revenue,  however this represents
only 9% of Euroweb  Romania's  total revenue,  as Euroweb Romania is focusing on
the  international/national  leased line,  VOIP and facilities  services,  where
Pantel Rt. is the main Client.

In 2003,  Pantel  Rt., (a related  party  controlled  by KPN Telecom  B.V. as of
December  31,  2003),  was  the  most   significant   customer  of  the  Company
representing  approximately  38% of the total  revenue of Euroweb  International
Corp.  and 55% of total  revenue of Euroweb  Romania.  In  connection  with VOIP
services,  over 95% of VOIP  sales are  provided  directly  to Pantel Rt. In the
event that Pantel Rt. should no longer use the Company's VOIP services, then the
Company's VOIP revenue would almost completely disappear.

Although  the  direct  sales to Pantel  Rt.  were 38% of  consolidated  revenue,
Euroweb's  dependency  on Pantel Rt. is even greater than this figure  suggests.
Some third party sales involve Pantel Rt. as the subcontractor/service  provider
for the  international/domestic  lines,  and some third party customers are also
clients of Pantel Rt. outside of Romania (i.e.  their  relationship  with Pantel
Rt. is stronger than that with Euroweb Romania).

Effective  dependency  on Pantel Rt.,  taking into account the direct as well as
Pantel  Rt.-related  sales,  represents  approximately 60% of total consolidated
revenues of Euroweb  International  Corp. or approximately 87% of total sales of
Euroweb  Romania.  There is no such  dependency  in the case of Euroweb Czech or
Euroweb Slovakia.


Cost of revenues

                                                        2003         2002
Total Cost of revenues                               10,149,609    8,613,196


     Cost of revenues comprise mostly telecommunication network telecom expenses
which are related to the  provision  of access  facilities  to  customers.  This
category also includes costs of phone calls in connection with VOIP services.

     Network costs were $10,149,609 in 2003 in comparison to $8,613,196 in 2002.
The  increase  of 18% is larger  than the  increase  of revenue  due to a higher
proportion  of VOIP  services in 2003 which have a lower  margin  compared  with
margins on other revenue  categories.  There were no significant  pricing policy
changes  within the Company  during  2003.  Pantel Rt. was the largest  supplier
representing approximately 26% of the total direct cost.


Operating expenses (excluding depreciation,  amortization,  goodwill/intangibles
impairment, and 2002 severance payments to officers)

                                                             2003         2002
   Compensation and related costs                       1,888,417    1,884,891
   Consulting, professional and directors fees          1,289,295    1,078,908
   Other selling, general and administrative expenses   1,336,613    1,439,912
                                                        ---------    ---------
               Total                                    4,514,325    4,403,711
                                                        ---------    ---------

                                       14
<PAGE>
     Operating     expenses     (excluding      depreciation,      amortization,
goodwill/intangibles  impairment,  and  2002  severance  payments  to  officers)
increased from $4,403,711 to $4,514,325,  or 2.5%  ($110,614),  which is smaller
than the increase related to gross margin.  This is due mainly to the continuing
process of cost  rationalization  and a better utilization of internal resources
leading to an improvement in efficiency.

     The proportion of salaries versus  consulting,  professional  and directors
fees for the year ended December 31, 2003 as compared to the year ended December
31, 2002 has changed.  Salaries have  remained the same,  while the Company paid
slightly  higher (20%)  professional  fees and  directors'  fees compared to the
previous year. A portion of the increase in professional  fees was in connection
the successfully resolving a VAT dispute with the Romanian Tax Authorities.

Depreciation, amortization, goodwill impairment and writedown of intangibles

                                                 2003               2002
                                                 ----               ----
   Depreciation and amortization              886,698          1,038,166
   Goodwill impairment                        980,538          2,016,000
   Impairment of intangibles                  100,364            448,500


     Amortization and depreciation has decreased by approximately  15% from 2002
due  mostly to the fact  that  amortization  on the  customer  lists in  Romania
significantly  decreased  between  2002  ($189,227)  and  2003  ($66,909).  This
decrease is due to the fact that a  significant  portion of the  customer  lists
($448,500) were considered  impaired in the third quarter of 2002 (see writedown
of  intangibles   below)  and  so  the  remaining  amount  being  amortized  was
significantly lower than in the first 9 months of 2002.

     At the end of 2003 and 2002,  the Company  performed  an annual  impairment
test relating to the goodwill  recorded in its books.  Euroweb Romania,  Euroweb
Czech, and Euroweb Slovakia were identified as `Reporting Units' under SFAS 142.
The Company  compared the fair value of the reporting  units  (determined  using
discounted  cash flow  projections) to their carrying  amounts,  noting that the
carrying  amounts in some cases were higher  than their fair values  taking into
account the market  developments,  actual  performance and outlook.  The Company
then  compared the implied fair value of each  reporting  unit's  goodwill  with
their  carrying  amounts and recorded an  impairment  charge of $980,538  (2002:
$2,016,000),  with  $92,881  relating  to Euroweb  Czech,  $563,000  relating to
Euroweb Slovakia, and $324,657 relating to Euroweb Romania. An average annual 1%
growth rate for  revenues  was used in the  calculations  for Euroweb  Czech and
Euroweb  Slovakia,  and 3% for Euroweb Romania.  After the 2003 impairment,  the
Goodwill relating to Euroweb Czech and Euroweb Slovakia have a net book value of
zero,  while the  Goodwill  relating to Euroweb  Romania has a net book value of
$566,000.

     The  Romanian  customer  lists  acquired,  were  being  amortized  over  an
estimated  period of benefit of 5 years.  However,  an analysis of the customers
and revenues as at September 2002  indicated that most of the expected  revenues
to be  generated  by this  customer  list did not  materialize  and the  Company
recorded an  impairment  of  $448,500.  At the end of 2003,  the  company  again
assessed  the  recoverability  of the  outstanding  amount  and  wrote  down the
remaining value ($100,364) to zero.

                                       15
<PAGE>
Net interest income

                                               2003               2002
                                               ----               ----
 Net interest income                         355,690            385,177

         Net interest income is approximately 8% lower than last year. The
decrease is due to the reduction in interest-generating funds available, and
also because the effective interest rate on these investments has decreased. The
major revenue source is the approximately $12 million cash which is invested
into US Government Securities bearing interest at 3.1%. The remaining amount was
invested in other securities and /or was held in interest bearing accounts.

Equity interest in affiliate

                                               2003               2002
                                               ----               ----
   Equity in net loss of                       -                (679,637)
affiliate

The Company's 49% interest in Euroweb Hungary Rt. was written down to zero in
2002 and the Company has no legal or commercial commitments to provide
continuing financial support as of December 31, 2003. Therefore, the 49%
interest in net loss of Euroweb Rt. for the year ended December 31, 2003 of
$17,206 (2002: $809,967) has not been recorded.

Sale or disposal transactions

     During  2003  and  2002,  the  Company  focused  purely  on  improving  its
operations and  introduction  of new services and thus did not divest any of its
assets. Consequently,  no gain/loss on sale or disposals are recorded in 2003 or
2002.

Liquidity and Capital Resources

     The  Company's  cash,  cash  equivalents  and  marketable  securities  were
approximately  $13,391,338  as of December 31, 2003, a decrease of $811,749 from
the end of fiscal year 2002.  The decrease was  influenced by two major reasons:
(1)  unrealised  loss on marketable  securities and (2) purchase of fixed assets
(mostly fiber optic cables in Romania).

     The  Company has  $13,391,338  of cash,  cash  equivalents  and  marketable
securities  compared  to  $2,713,877  total  short  and  long  term  liabilities
(excluding  deferred  revenue),  while the working capital  (current assets less
current  liabilities) of the company is $12,684,692  indicating that the Company
is in a strong financial position.

     The Company has entered into share  purchase  agreements to acquire 100% of
Elender Rt and the remaining  51% of Euroweb  Hungary Rt in the first quarter of
2004. These agreements will  significantly  influence the liquidity  position of
the  Company,  which can be  separated  into three  parts:  (1) cash  portion of
purchase price will be $8,607,000 (2)  liabilities  (approximately  $ 2,000,000)
for short term loans  related to Euroweb  Hungary  Rt.,  which cannot be covered
from Euroweb Hungary Rt.'s nor Elender Rt.'s working capital and (3) funding the
working  capital  shortage  (approximately  $600,000) of Euroweb Hungary Rt. and
Elender  Rt.  The  closing  of  the  Elender  purchase  remains  subject  to the
satisfaction of customary terms and conditions and the approval of the Hungarian
Competition Office.

                                       16
<PAGE>
     After the acquisitions,  the consolidated working capital (without deferred
revenue) is estimated  to be more than  $2,000,000  indicating  that the Company
will be able to meet its working capital and capital  expenditure needs over the
next twelve  months.  The  Company's  financial  situation  is still  stable and
strong,  as current assets covers all current trade,  loan and other liabilities
of the company.

     Management believes, although it cannot provide guarantees, that the
synergy effects and potential business opportunities of the merged entities will
significantly improve cash generating ability and will reduce the loans of the
Company in the coming few years. Management also believes that with its existing
cash, cash equivalents, marketable securities and internally generated funds,
there will be sufficient funds to meet the Company's currently projected working
capital requirements and other cash requirements until at least the next 12
months taking into account the new acquisitions.

     In the event the Company  makes  future  acquisitions  of Internet  service
providers in Central and Eastern  Europe,  the excess cash on hand or additional
fund raising may be used to finance such future acquisitions.

Inflation and Foreign Currency

     The  Company  maintains  its books in local  currencies:  Czech  koruna for
Euroweb  Czech  Republic and the Slovak  koruna for Euroweb  Slovakia.  However,
given the  hyper-inflationary  situation in Romania,  the U.S. dollar is used as
the functional currency.


The Slovakian Koruna has strengthened by 18.6%, while the Czech Korona has
strengthened against the U.S. dollar by approximately 14% when compared with
2002.

Effect of Recent Accounting Pronouncements



     At the January 23, 2003  meeting,  the  Emerging  Issues Task Force  (EITF)
reached  consensuses on EITF 02-18  Accounting for Subsequent  Investments in an
Investee after Suspension of Equity Method Loss  Recognition.  Issues 1 and 2 of
EITF 02-18 which  considered  whether,  (i) an  investor  should  recognize  any
previously  suspended  losses when accounting for a subsequent  investment in an
investee that does not result in the ownership  interest  increasing from one of
significant  influence to one of control, and (ii), if the additional investment
represents the funding of prior losses,  whether all previously suspended losses
should be recognized or whether only the  previously  suspended  losses equal to
the portion of the  investment  determined  to be funding prior losses should be
recognized. The EITF concluded that if the additional investment, represents, in
substance, the funding of prior losses, the investor should recognize previously
suspended losses only up to the amount of the additional  investment  determined
to represent the funding of prior losses.  At its February 5, 2003 meeting,  the
FASB  ratified  the  consensuses  reached  by the Task Force in this  Issue.  As
discussed in notes 1 (i) and 6, the Company has discontinued recording losses on
its equity method investment in Euroweb Hungary Rt., and purchased the remaining
51% owned by Pantel Rt. in February 2004.

     On April 30, 2003,  the FASB issued FASB  Statement  No. 149,  Amendment of
Statement 133 on Derivative  Instruments  and Hedging  Activities,  which amends
FASB  Statement  No. 133,  Accounting  for  Derivative  Instruments  and Hedging
Activities,  to address (1) decisions reached

                                       17
<PAGE>
by the  Derivatives  Implementation  Group,  (2)  developments  in  other  Board
projects  that address  financial  instruments,  and (3)  implementation  issues
related to the definition of a derivative.  Statement 149 has multiple effective
date  provisions  depending on the nature of the amendment to Statement 133, and
the Company is  currently  considering  its  potential  effect on the  financial
statements.

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
Financial Instruments with Characteristics of Both Liabilities and Equity". This
statement  establishes  standards  for how an  issuer  classifies  and  measures
certain  financial  instruments  with  characteristics  of both  liabilities and
equity.  It  requires  that an issuer  classify a financial  instrument  that is
within its scope as a  liability  (or an asset in some  circumstances).  Many of
those  instruments  were  previously  classified  as equity.  This  statement is
effective  for  contracts  entered  into or  modified  after May 31,  2003,  and
otherwise is effective at the  beginning of the first interim  period  beginning
after June 15, 2003, except for mandatorily  redeemable financial instruments of
non-public  entities.  The Company has adopted SFAS 150 and has  concluded  that
there is no current impact on its consolidated financial statements.

     In December 2003, the  Securities and Exchanges  Commission  ("SEC") issued
Staff Accounting Bulletin ("SAB") 104, "Revenue Recognition". SAB 104 revises or
rescinds  certain  SAB  guidance  in order to make  this  interpretive  guidance
consistent with current  authoritative  accounting and auditing guidance and SEC
rules  and  regulations  relating  to  revenue  recognition.  This  bulletin  is
effective immediately. The Company's current revenue recognition policies comply
with SAB 104.

Risk Factors

     The Company is subject to certain risk factors due to the industry in which
it  competes  and  the  nature  of its  operations.  Theses  risks  include  the
following:

     Limited Operating History; Accumulated Deficit.

     Although  the Company was founded in  November  1992,  it only  entered the
Internet  business  in  January  1997  by  acquiring  three  operating  Internet
businesses. Accordingly, the Company has only limited operating history on which
to base an evaluation of its present business and prospects. The Company and its
prospects  must be considered in light of the risks,  expenses and  difficulties
frequently   encountered  by  companies  in  an  early  stage  of   development,
particularly companies in new and rapidly evolving markets such as the Internet.
Such risks for the Company include, but are not limited to, an evolving business
model and the  management of both  internal and  acquisition  based  growth.  To
address these risks,  the Company must,  among other things,  continue to expand
its client base, continue to develop the strength and quality of its operations,
maximize the value delivered to clients, respond to competitive developments and
continue to attract,  retain and motivate qualified  employees.  There can be no
assurance  that the Company will be successful in meeting these  challenges  and
addressing  such risks and the  failure  to do so could have a material  adverse
affect on the Company's business, results of operations and financial condition.

     Regulations and Legal Uncertainties.

     In eastern Europe,  the business engaged in by the Company is not currently
subject to direct regulation other than federal and state regulation  applicable
to  businesses  generally and  multi-level  marketing.  However,  changes in the
regulatory  environment relating to the

                                       18
<PAGE>
telecommunications,  Internet and media  industries  could have an effect on its
business,  which  effect  may be  materially  adverse  to the  interests  of the
Company. Additionally,  legislative proposals from international, federal, state
and foreign governmental bodies in the areas of content regulation, intellectual
property, privacy rights and tax issues, could impose additional regulations and
obligations upon all online service and content  providers,  which effect may be
materially  adverse to the interests of the Company.  The Company cannot predict
the likelihood that any such legislation will pass, nor the financial impact, if
any, the resulting regulation may have on it.

     Moreover,  the  applicability  to persons  engaged in Internet  commerce of
existing laws governing issues such as intellectual  property  ownership,  libel
and personal  privacy is uncertain.  Recent events relating to the use of online
services for certain  activities  has  increased  public focus and could lead to
increased pressure on foreign and national legislatures to impose regulations on
online  service  providers.  While the Company  intends to provide  only content
which meets the highest  standards in quality,  creativity  and ethical  values,
should  actions be  initiated  against  it,  costs  incurred as a result of such
actions could have a material adverse effect on the business of the Company.

     Dependence on Key Personnel; Limited Management; Need for Qualified
     Management and Other Personnel.

     The success of the Company will be  dependent  on the  personal  efforts of
Csaba Toro, Chief Executive  Officer (CEO). The loss of the services of Mr. Toro
could have a material  adverse  effect on the Company's  business and prospects.
The Company does not have and does not intend to obtain  "key-man"  insurance on
the life of any of its officers. The success of the Company is largely dependent
upon its ability to hire and retain additional qualified management,  marketing,
technical, financial and other personnel. Competition for qualified personnel is
intense,  and there can be no assurance that the Company will be able to hire or
retain  additional  qualified  management.  The  inability to attract and retain
qualified  management and other personnel will have a material adverse effect on
the Company.

     Dependence on Pantel Rt.

     The majority  owner of Pantel Rt. and Euroweb  International  Corp.  is KPN
Telecom B.V.  Such  ownership has led to improved  co-operation  between the two
companies,  which has  resulted  in a high  level of  dependency  in the case of
Euroweb  Romania.  Actual  dependency  from Pantel Rt.,  taking into account the
direct and Pantel Rt. related sales,  represents  approximately  50-56% of total
consolidated revenue of Euroweb  International Corp. and approximately 80-90% of
total sales of Euroweb Romania.  Despite the fact that  co-operation is based on
arm's length agreements,  disagreements between the management of Pantel Rt. and
EuroWeb,  or an  effective  change of ownership  in one or both  companies,  may
result in the loss of the  Pantel Rt.  related  revenues  and their  significant
margin.

         Developing Market; New Entrants; Unproven Acceptance of the Products;
Uncertain Adoption of Internet as a Medium of Commerce and Communications.

     The market for Internet  Programs and services has only  recently  begun to
develop and is rapidly evolving.  The Internet is characterized by an increasing
number of market entrants who have introduced or developed products and services
for  communication  and commerce over the Internet and private  networks.  As is
typical in the case of a new and rapidly  evolving  industry,

                                       19
<PAGE>
demand and market acceptance for recently  introduced  products and services are
subject  to  a  high  level  of  uncertainty.  Critical  issues  concerning  the
commercial use of the Internet (including security,  reliability,  cost, ease of
use and access,  and quality of service)  remain  unresolved  and may impact the
growth of  Internet  use.  While the  Company  believes  that its  products  and
services  offer  significant  advantages  for  Internet  users,  there can be no
assurance that its products and services will become widely chosen for access to
the Internet or that,  if chosen,  will hold the  attention of users in order to
allow it to continue to attract users.

     Because  the market  for the  Company's  proposed  business,  products  and
services is new and evolving, it is difficult to predict the future growth rate,
if any, and size of this market.  There can be no assurance  that the market for
its products and services will develop,  that the Company's products or services
will be adopted,  or that individual  personal  computer users in business or at
home will use the Internet for commerce and  communication.  If the market fails
to  develop,  develops  more  slowly  than  expected,   becomes  saturated  with
competitors,  or if its products do not achieve market acceptance, the Company's
business, operating results and financial condition will be materially adversely
affected.

     Competition.

     The market for  Internet-based  products  and  services  is new,  intensely
competitive,  rapidly evolving and subject to rapid  technological  change.  The
Company  expects  competition to persist,  intensify and increase in the future.
Such  competition  could  materially  adversely  affect the Company's  business,
operating results or financial condition.

         We believe that the main competitors of Euroweb Slovakia are four of
the largest or most active providers in Slovakia:

     o    Nextra;

     o    GTS Inec;

     o    SLOVANET; and

     o    the incumbent telecom operator, Slovak Telecom. The above are all also
          providing internet services.  Both Nextra and GTS Inec have a customer
          base similar to that of the Company's.

     Romania's  Internet  market  is in the  initial  phase of  development.  At
present,  other then  Euroweb  Romania,  there are two other  data  transmission
companies providing internet services,  which also cover the entire territory of
Romania:

     o    Global One Romania; and

     o    Logic Telecom.

     The Company may face  intense  competition  from other  companies  directly
involved  in the same  business  and also from  many  other  companies  offering
products which can be used in lieu of those offered by the Company.  Competition
can take many forms,  including  convenience  in  obtaining  products,  service,
marketing  and  distribution  channels.  Although  the  Company  believes it can
compete on the basis of the quality and  reliability of its services,  there can

                                       20
<PAGE>
be no assurance  that the Company will be able to compete  successfully  against
current or future competitors or that competitive pressures faced by the Company
will not materially  adversely affect the Company's business,  operating results
or financial condition.

      Volatility of Stock Prices.

     Market  prices for the  Company's  common stock will be  influenced by many
factors  and  will  be  subject  to  significant  fluctuations  in  response  to
variations  in  operating  results  of the  Company  and other  factors  such as
investor perceptions of the Company,  supply and demand, interest rates, general
economic conditions and those specific to the industry, developments with regard
to the Company's  activities,  future financial condition and management.  There
can be no assurance  regarding the future  prices at which the Company's  common
stock will trade, if any.

     Foreign Currency and Exchange Risks and Rate Revaluation.

     The Company will be subject to significant foreign exchange risk. There are
currently no meaningful ways to hedge currency risk in either Hungary, the Czech
Republic,  Romania or Slovakia.  Therefore,  the Company's  ability to limit its
exposure to currency  fluctuations is  significantly  restricted.  The Company's
ability to obtain  dividends or other  distributions  is subject to, among other
things,  restrictions  on  dividends  under  applicable  local laws and  foreign
currency  exchange  regulations of the  jurisdictions  in which its subsidiaries
operate. The laws under which the Company's operating subsidiaries are organized
provide generally that dividends may be declared by the partners or shareholders
out of yearly  profits  subject to the  maintenance  of  registered  capital and
required reserves and after the recovery of accumulated losses.



     Other factors affecting shareholders/investors

     Possible Future Capital Needs.

     The Company currently anticipates that its available cash resources will be
sufficient  to meet  its  presently  anticipated  working  capital  and  capital
expenditure  requirements  for at least the next 12 months and has  currently no
immediate  plans for  acquisitions  that would exceed the available funds (other
than the  acquisition  of the  remaining  51% of  Euroweb  Hungary  Rt.  and the
acquisition of Elender Business  Communications  Ltd.  (subject to approval from
Hungarian  Competition  Office)).   However,  the  Company  may  need  to  raise
additional funds in order to support more rapid expansion, acquire complementary
businesses or  technologies  or take  advantage of  unanticipated  opportunities
through  public  or  private   financing,   strategic   relationships  or  other
arrangements. There can be no assurance that such additional funding, if needed,
will be available  on terms  acceptable  to the Company,  or at all. If adequate
funds are not  available  on  acceptable  terms,  the  Company  may be unable to
develop or  enhance  its  services  and  products  or take  advantage  of future
opportunities  either  of which  could  have a  material  adverse  effect on the
Company's business, results of operations and financial condition.

     No Dividends.

     It has been the  policy of the  Company  to not pay cash  dividends  on its
common stock.  At present,  the Company will follow a policy of retaining all of
its earnings, if any, to finance the development and expansion of its business

                                       21
<PAGE>
     Potential Issuance of Additional Common and Preferred Stock.

     The Company is currently authorized to issue up to 12,500,000 shares (after
obtaining shareholder approval in 2003 to amend its Certificate of Incorporation
so as to  decrease  the  number  of  authorizes  shares  of  common  stock  from
60,000,000  to  12,500,000).  The Board of the  Company  will have the  ability,
without seeking stockholder approval, to issue additional shares of common stock
in the future for such consideration as the Board may consider  sufficient.  The
issuance of additional  common stock in the future will reduce the proportionate
ownership and voting power of the common stock offered hereby. The Board intends
to seek  shareholder  approval in 2004 to  increase  the  authorized  limit from
12,500,000 to 25,000,000  shares of common stock. The Company is also authorized
to issue up to 5,000,000  shares of preferred  stock, the rights and preferences
of which  may be  designated  in  series  by the  Board.  To the  extent of such
authorization,  such designations may be made without stockholder approval.  The
designation and issuance of series of preferred stock in the future would create
additional securities which may have voting,  dividend,  liquidation preferences
or other  rights  that are  superior to those of the common  stock,  which could
effectively deter any takeover attempt of the Company.

Forward-Looking Statements

     When used in this Form  10-KSB,  in other  filings by the Company  with the
SEC,  in  the  Company's   press   releases  or  other  public  or   stockholder
communications,  or in oral  statements  made with the approval of an authorized
executive officer of the Company, the words or phrases "would be," "will allow,"
"intends to," "will likely  result," "are  expected  to," "will  continue,"  "is
anticipated,"  "estimate,"  "project,"  or similar  expressions  are intended to
identify  "forward-looking   statements"  within  the  meaning  of  the  Private
Securities Litigation Reform Act of 1995.

     The  Company   cautions   readers  not  to  place  undue  reliance  on  any
forward-looking  statements,  which speak only as of the date made, are based on
certain  assumptions and expectations  which may or may not be valid or actually
occur,  and which  involve  various risks and  uncertainties,  including but not
limited to the risks set forth above. See "Risk Factors." In addition, sales and
other revenues may not commence  and/or continue as anticipated due to delays or
otherwise.  As a result,  the Company's  actual results for future periods could
differ materially from those anticipated or projected.

     Unless  otherwise   required  by  applicable  law,  the  Company  does  not
undertake,   and   specifically   disclaims  any   obligation,   to  update  any
forward-looking statements to reflect occurrences,  developments,  unanticipated
events or circumstances after the date of such statement.

ITEM 7.  Financial Statements

     Reference is made to the Consolidated  Financial Statements of the Company,
beginning with the index thereto on page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

ITEM 8A. CONTROLS AND PROCEDURES

                                       22
<PAGE>
As of December 31, 2003, an evaluation was performed under the supervision and
with the participation of the Company's management, including the Chief
Executive Officer and the Chief Accounting Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on that evaluation, the Company's management, including the Chief Executive
Officer and the Chief Accounting Officer, concluded that the Company's
disclosure controls and procedures were effective as of December 31, 2003. There
have been no significant changes in the Company's internal controls or in other
factors that could significantly affect internal controls subsequent to December
31, 2003.


                                       23
<PAGE>
ITEM 9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND CONTROL  PERSONS;
COMPLIANCE  WITH SECTION  16(A) OF THE EXCHANGE ACT


The  following  table sets forth  certain  information  regarding  the executive
officers and directors of the Company as of March 25, 2004

Name                 Age     Position with Company
----                 ---     ---------------------
Csaba Toro           38      Chief Executive Officer, Board Chairman, Treasurer
Howard Cooper        47      Director
Stewart Reich        59      Director
Hans Lipman          43      Director
Daniel Kwantes       43      Director

Csaba Toro,  age 38,  Chairman and CEO of the Company since June 2002,  has been
with the Company since  September 1998 in various other  positions.  During 2001
and 2002,  Mr. Toro held the  positions of COO and CEO in Pantel Rt. He resigned
as CEO of Pantel Rt. as of March 2003.  From 1997 to 1999, Mr. Toro was managing
director of the Company's Hungarian  subsidiary.  Prior thereto,  since 1994, he
was managing director of ENET Kft., which was acquired by the Company in 1997.

Howard Cooper, age 47, has been the President, CEO and Chairman, Teton Petroleum
Company - Denver, CO (AMEX:TPE) from 1996. Teton has raised institutional equity
and US Trade and  Development  Agency funding for the  development of proven oil
fields in Russia.  Teton has been successful in Russia producing oil,  exporting
oil for hard  currency,  and  developing  an oil field with proven and  probable
reserves  in excess of 107  million  barrels.  Previously  he was engaged in oil
projects in the former Soviet Union.

Stewart  Reich,  age 60, was Chief  Executive  Officer and  President  of Golden
Telecom Inc.,  Russia's largest  alternative  voice and data service provider as
well as its largest ISP, since 1997. In September 1992, Mr Reich was employed as
Chief Financial  Officer at UTEL (Ukraine  Telecommunications),  of which he was
appointed  President  in November  1992.  Prior to that Mr.  Reich held  various
positions  at a number  of  subsidiaries  of AT&T  Corp.  Mr.  Reich  has been a
director of the Company since 2002.

Hans Lipman,  age 44, is a Dutch Registered  Accountant and is financial manager
for Royal Dutch KPN's International  Participations department since March 2001.
He is a member of the supervisory board of Pantel Rt, Hungary.  From April 1994,
Mr. Lipman has been working as a financial  manager and IT  controller  with KPN
Telecom. Prior to that he was auditor with PriceWaterhouseCoopers' predecessors,
since 1978. Mr. Lipman  replaces Mr. Roelant Lyppens who resigned as director on
December 18, 2002.

Daniel  Kwantes,  age 43, has been  working  for 13 years  within KPN in various
financial  positions,  and since  the end of 1998  especially  focused  on KPN's
international  operations.  He  graduated  as a business  economist  at the Free
University of Amsterdam, and is currently managing director of various (holding)
companies owned by KPN. Since 2002, he is also Chairman of the Supervisory Board
of Pantel Rt. in Hungary.

                                       24
<PAGE>
Directors are elected annually and hold office until the next annual meeting of
the stockholders of the Company and until their successors are elected and
qualified. Officers are elected annually and serve at the discretion of the
Board of Directors.

ROLE OF THE BOARD

     Pursuant to Delaware  law, our  business,  property and affairs are managed
under the direction of our board of directors.  The board has responsibility for
establishing  broad  corporate  policies  and for the  overall  performance  and
direction of EuroWeb, but is not involved in day-to-day  operations.  Members of
the board keep informed of our business by  participating in board and committee
meetings, by reviewing analyses and reports sent to them regularly,  and through
discussions with our executive officers.

2003 BOARD MEETINGS

     In 2003, the board met 5 times.  No director  attended less than 80% of all
of the combined  total  meetings of the board and the  committees  on which they
served in 2003.

BOARD COMMITTEES

Audit Committee

     The  audit  committee  of the  board  of  directors  reviews  the  internal
accounting  procedures of the Company and consults with and reviews the services
provided  by our  independent  accountants.  During  2003,  the audit  committee
consisted  of  Messrs.  Stewart  Reich  and  Howard  Cooper,  both of  whom  are
considered to be  independent  The audit  committee held three meetings in 2003.
Mr. Reich serves as the financial  expert on the Audit  Committee.  Compensation
Committee  The  compensation  committee of the board of directors i) reviews and
recommends to the board the compensation and benefits of our executive officers;
ii)  administers  our stock option plans and employee  stock  purchase plan; and
iii)  establishes and reviews  general  policies  relating to  compensation  and
employee  benefits.  In 2003,  the  compensation  committee  consisted of Messrs
Cooper, Reich and Lipman. No interlocking  relationships exist between the board
of  directors  or   compensation   committee  and  the  board  of  directors  or
compensation  committee  of any other  company.  During the past fiscal year the
compensation committee had two meetings.

SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors  and executive  officers,  and persons who own more then 10 percent of
the  Company's  Common  Stock,  to file  with  the SEC the  initial  reports  of
ownership  and  reports of  changes  in  ownership  of common  stock.  Officers,
directors  and  greater  than  10  percent  stockholders  are  required  by  SEC
regulation  to furnish the Company  with copies of all Section  16(a) forms they
file.

                                       25
<PAGE>
Specific due dates for such reports have been  established by the Commission and
the Company is required to disclose in this Proxy  Statement any failure to file
reports by such dates  during  fiscal  2003.  Based  solely on its review of the
copies of such reports received by it, or written  representations  from certain
reporting  persons that no Forms 5 were required for such  persons,  the Company
believes  that  during the fiscal year ended  December  31,  2003,  there was no
failure to comply with  Section  16(a)  filing  requirements  applicable  to its
officers, directors and ten percent stockholders.

POLICY WITH RESPECT TO SECTION 162(m)

     Section  162(m) of the  Internal  Revenue  Code of 1986,  as  amended  (the
"Code"), provides that, unless an appropriate exemption applies, a tax deduction
for the Company for  compensation  of certain  executive  officers  named in the
Summary  Compensation  Table will not be allowed to the extent such compensation
in any taxable year exceeds $1 million.  As no executive  officer of the Company
received  compensation during 2003 approaching $1 million,  and the Company does
not believe that any  executive  officer's  compensation  is likely to exceed $1
million in 2003, the Company has not developed an executive  compensation policy
with  respect to  qualifying  compensation  paid to its  executive  officers for
deductibility under Section 162(m) of the Code.

CODE OF ETHICS

     The  Company  has  adopted  its Code of Ethics  and  Business  Conduct  for
Officers, Directors and Employees that applies to all of the officers, directors
and employees of the Company.



ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth  information  concerning the annual and long term
compensation of the Company's Chief Executive Officer. The Company does not have
any officer whose annual  salary and bonus  exceeds  $100,000 as of December 31,
2003:
<TABLE>
<CAPTION>


                                   ANNUAL COMPENSATION                LONG-TERM COMPENSATION

                                                                        Restricted       Number of
                                                                       Stock Award(s)    Securities
                                                     Bonus and                           Underlying
Name and                Year Ended                   Other Annual                                               All Other
Principal Position      December 31,    Salary ($)   Compensation ($)      ($)           Options/SARs       Compensation ($)
------------------      ------------    ----------               ----       ---         -------------       ----------------

<S>                        <C>            <C>           <C>                 <C>             <C>                  <C>
Csaba Toro                 2003           $96,000       --                  --                 --                   --

Chairman, CEO, and
Treasurer                  2002           $96,000       --                  --                 --                   --

                           2001           $96,000       --                  --                 --                   --

</TABLE>


OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

There were no grants of Stock Options/SAR made to the named Executive during the
fiscal year ended December 31, 2003.

                                       26
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION/SAR VALUES

------------------------ ---------------------- --------------------- ------------------------ -----------------------
<S>                              <C>                     <C>                  <C>                         <C>
                                                                       Number of securities         Value of the
                                                                      underlying unexercised     unexercised in the
                                                                      options/SARs at FY-end   money options/SARs atFY-end
                                                                                (#)                       ($)*


      Name                 Shares acquired on    Value realized ($)   Exercisable/Unexercisable Exercisable/Unexercisable
                             exercise (#)

------------------------ ---------------------- --------------------- ------------------------  -----------------------
Csaba Toro, Chairman             None                   None                  83,000                  $0.00
CEO, and Treasurer
------------------------ ---------------------- --------------------- ------------------------  -----------------------
</TABLE>
* Fair market value of underlying securities (calculated by subtracting the
exercise price of the options from the closing price of the Company's Common
Stock quoted on the Nasdaq as of December 31, 2003), which was $3.77 per share.
None of Mr. Toro's options are presently in the money.


EMPLOYMENT AND MANAGEMENT AGREEMENTS

     The Company  entered  into a six-year  agreement  with its Chief  Executive
Officer  and  Chairman  of the  Board,  Csaba Toro on October  18,  1999,  which
commenced  January 1, 2000, and provided for an annual  compensation of $96,000.
The agreement was amended in 2004. The amended agreement  provides for an annual
salary of $150,000 and a bonus of up to $100,000 (guaranteed minimum of $50,000)
in 2004, and an annual salary of $200,000 and a bonus of up to $150,000 in 2005.

     The agreement further provides that, if Mr. Toro's employment is terminated
other than for willful breach by the employee, for cause or in event of a change
in control of the Company,  then the  employee  has the right to  terminate  the
agreement.  In the event of any such termination,  the employee will be entitled
to receive the payment due on the balance of his employment agreement.

     The Company has no pension or profit sharing plan or other contingent forms
of remuneration  with any officer,  director,  employee or consultant,  although
bonuses are paid to some individuals.


DIRECTOR COMPENSATION

     Directors  who  are  also  officers  of  the  Company  are  not  separately
compensated  for their  services as a director.  Directors  who are not officers
receive cash compensation for their services:  $2,000 at the time of agreeing to
become a Director; $2,000 for each Board Meeting attended either in person or by
telephone; and $1,000 for each Audit Committee Meeting attended either in person
or by  telephone.  Non-employee  directors  are  reimbursed  for their  expenses
incurred in connection with attending  meetings of the Board or any committee on
which they serve and are  eligible to receive  awards under the  Company's  1993
Stock Option Plan (described below).


                                       27
<PAGE>
STOCK OPTION PLAN

     The  Company's  1993 Stock  Option Plan (the  "Plan")  permits the grant of
options to employees of the Company,  including officers and directors,  who are
serving in such  capacities.  An aggregate of 134,000 shares of Common Stock are
authorized for issuance under the Plan. At December 31, 2003, options for 46,000
Common Stock were outstanding and exercisable  under the Plan. The Plan provides
that qualified and non-qualified options may be granted to officers,  directors,
employees  and  consultants  to the  Company  for the  purpose of  providing  an
incentive to those persons to work for the Company.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth  information  with respect to the beneficial
ownership  of the Common  Stock as of March 22, 2004 by (i) each person known by
the Company to own  beneficially  more than 5% of the outstanding  Common Stock;
(ii) each  director of the  Company;  (iii) each officer of the Company and (iv)
all executive officers and directors as a group.  Except as otherwise  indicated
below,  each of the  entities or persons  named in the table has sole voting and
investment powers with respect to all shares of Common Stock  beneficially owned
by it or him as set forth  opposite  its or his name.
                              Shares
 Name and  Address           Beneficially Owned(1)   Percent  Owned    (1)
--------------------------------------------------- ----------------------------
KPN Telecom B.V. (4)              2 ,461,014                52.75%
Maanplein 5
The Hague, The Netherlands

Csaba Toro(5)(6)                      83,000(2)              1.86%
1122 Budapest
Varosmajor utca 13
Hungary

Hans Lipman (3)(6)                         0                    0
KPN Telecom B.V.
Maanplein 55
2516 CK The Hague, The Netherlands
                                      25,000(7)                 *
Howard Cooper (6)
2135 Burgess Creek Road, Ste. #7
Steamboat Springs, CO 80477


Daniel Kwantes (6)                         0                    0
KPN Telecom B.V.
Maanplein 55
2516 CK The Hague, The Netherlands

Stewart Reich (6)                     25,000(7)                 *
18 Dorset Lane,
Bedminister, NJ 07921

All Officers and Directors as a      137,000                 2.90%
Group (5 Persons)
* Less than one percent

                                       28
<PAGE>
----------------------------

(1)  Unless  otherwise  indicated,  each person has sole  investment  and voting
     power with respect to the shares  indicated.  For purposes of this table, a
     person or group of persons is deemed to have "beneficial  ownership" of any
     shares which such person has the right to acquire  within 60 days after May
     22, 2004. For purposes of computing the  percentage of  outstanding  shares
     held by each  person or group of persons  named  above on May 22,  2004 any
     security  which such  person or group of  persons  has the right to acquire
     within 60 days after such date is deemed to be outstanding  for the purpose
     of computing the  percentage  ownership for such person or persons,  but is
     not deemed to be  outstanding  for the purpose of computing the  percentage
     ownership of any other person.
(2)  Mr. Toro owns, directly or indirectly,  1.86% of the issued and outstanding
     shares of the Company represented by options to purchase 83,000 shares.

(3)  Does not include shares  reported to be  beneficially  owned by KPN Telecom
     B.V. Mr. Lipman is an employee of KPN Telecom B.V.

(4)  KPN Telecom  B.V. is a  subsidiary  of Royal KPN N.V.

(5)  An officer of the Company.

(6)  A director of the Company.

(7)  Includes an option to purchase 25,000 shares of common stock at an exercise
     price of $4.21 per share. The options vest on April 13, 2004.

The foregoing table is based upon 4,665,332 shares of common stock outstanding
as of March 30, 2004.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Significant related party transactions exist with Pantel Rt. Details of
these transactions can be found in the MD&A section of this form 10-KSB and in
Note 14 of the 2003 Consolidated Financial Statements.

         There are no other significant related party transactions.



                                    PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

A. Exhibits (numbers below reference Regulation S-B, Item 601)

     (2)  Subscription Agreement and Option Agreement with KPN(1)(2)

     (3)  (a) Certificate of Incorporation filed November 9, 1992(1)

          (b)  Amendment to Certificate of Incorporation filed July 9,1997(2)

          (c)  By-laws(2)

     (4)  (a) Form of Common Stock Certificate(1)

          (b) Form of Underwriters' Warrants to be sold to Underwriters(1)

          (c)  Placement  Agreement  between  Registrant and J.W. Barclay & Co.,
               Inc. and form of Placement  Agent  Warrants  issued in connection
               with private placement financing(1)

          (10) (a)  Shares  Purchase  Agreement  between  PanTel  Tavkozlesi  es
               Kommunikacios rt., a Hungarian company, and Euroweb International
               Corp., a Delaware corporation (3)

                                       29
<PAGE>

          (10) (b)  Guaranty  by  Euroweb   International   Corp.,   a  Delaware
               corporation,  in favor of PanTel Tavkozlesi es Kommunikacios rt.,
               a Hungarian company (3)

          (10) (c)  Shares  Purchase   Agreement  between  Vitonas   Investments
               Limited,  a  Hungarian  corporation,  Certus  Kft.,  a  Hungarian
               corporation, Rumed 2000 Kft., a Hungarian corporation and Euroweb
               International Corp., a Delaware corporation, dated as of February
               23, 2004. (4)


          (31) (a)  Certification  of the Chief  Executive  Officer  of  Euroweb
               International Corp. pursuant to Section 302 of the Sarbanes-Oxley
               Act of 2002.

          (31) (b)  Certification  of the Chief  Accounting  Officer  of Euroweb
               International Corp. pursuant to Section 302 of the Sarbanes-Oxley
               Act of 2002.


          (32) (a)  Certification  of the Chief  Executive  Officer  of  Euroweb
               International  Corp.  Pursuant  to 18  U.S.C.  Section  1350,  As
               Adopted  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
               2002.

          (32) (b)  Certification  of the Chief  Accounting  Officer  of Euroweb
               International  Corp.,  Pursuant  to 18 U.S.C.  Section  1350,  As
               Adopted  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
               2002.

          (99) (a) Code of Ethics and Business  Conduct of  Officers,  Directors
               and Euroweb International Corp.

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

(1)  Exhibits  are  incorporated  by  reference  to  Registrant's   Registration
Statement  on Form SB-2 dated May 12, 1993  (Registration  No.  33-62672-NY,  as
amended)
(2) Filed with Form 10-QSB for quarter ended June 30, 1998.
(3) Filed as an exhibit to Form 8-K on February 27, 2004. (4) Filed as an
exhibit to Form 8-K on March 9, 2004.

B. Reports on Form 8-K

On February 27, 2004, the Company filed a Form 8-K Current Report  reporting its
acquisition of Pantel Rt.'s interest in Euroweb Hungary Rt.

On March 9, 2004, the Company filed a Form 8-K Current Report reporting the
entering into of a Shares Purchase Agreement for the acquisition of Elender
Business Communications Ltd.

ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES

Audit Fees. The aggregate fees billed by our auditors, for professional services
rendered for the audit of the Company's annual financial statements for the
years ended December 31, 2003 and 2002, and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-QSB during the
fiscal years were $153,100 and $135,500, respectively.

 There were no audit related fees in 2003 and 2002.

                                       30
<PAGE>

All Other Fees. The aggregate  fees billed by auditors for services  rendered to
the Company,  other than the services covered in "Audit Fees" and for the fiscal
years ended December 31, 2003 and 2002 were $33,000 and $1,400.  - The 2003 fees
relate to  assistance  provide to Euroweb  Romania  in  connection  with the Tax
Authority  Review on VAT.  The 2002  fees  relate to  miscellaneous  tax  advise
provided during the course of 2002.

The Board of Directors has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this Report to
be signed on its behalf by the undersigned,  thereunto duly  authorized,  in the
City of New York, State of New York, on the 25th day of March 2003.


                                              EUROWEB INTERNATIONAL CORP.




                                              By  /s/Csaba Toro
                                                  -----------------------------
                                                    Csaba Toro
                                                  Chairman of the Board



     Pursuant  to the  requirements  of the  Securities  Exchange  of  1934,  as
amended,  this  Report has been  signed  below by the  following  persons in the
capacities and on the dates indicated:


<TABLE>
<CAPTION>

               SIGNATURE                                 TITLE                                  DATE

<S>                                                          <C>                            <C>
/s/Csaba Toro                                     Chairman of Board,                       March 25, 2004
------------------                                Chief Executive Officer (CEO)
Csaba Toro                                        Director,Treasurer


/s/ Daniel Kwantes                                                                         March 25, 2004
------------------
Daniel Kwantes                                         Director


/s/Hans Lipman                                         Director                            March 25, 2004
------------------
Hans Lipman


/s/ Stewart Reich                                      Director                            March 25, 2004
------------------
Stewart Reich

/s/Howard Cooper                                       Director                            March 25, 2004
------------------
Howard Cooper
</TABLE>



                                       31
<PAGE>
                           EUROWEB INTERNATIONAL CORP.


        Consolidated Balance Sheet as of December 31, 2003 and 2002, and
           Consolidated Statements of Operations & Comprehensive Loss,
                  Stockholders' Equity, and Cash Flows for the
                     Years ended December 31, 2003 and 2002




                                       34
<PAGE>


                           EUROWEB INTERNATIONAL CORP.

                        Consolidated Financial Statements

                           December 31, 2003 and 2002




                                TABLE OF CONTENTS




                                                                            Page

Independent Auditors' Report                                                 F-2


Consolidated Financial Statements:


         Consolidated Balance Sheet                                          F-3
         Consolidated Statements of Operations and Comprehensive Loss        F-4
         Consolidated Statements of Stockholders' Equity                     F-5
         Consolidated Statements of Cash Flows                               F-6
         Notes to Consolidated Financial Statements                          F-7

<PAGE>
                          Independent Auditors' Report



The Board of Directors and Stockholders
Euroweb International Corp.


We have audited the accompanying consolidated balance sheet of Euroweb
International Corp. and subsidiaries as of December 31, 2003 and 2002, and the
related consolidated statements of operations and comprehensive loss,
shareholders' equity and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Euroweb
International Corp. and subsidiaries as of December 31, 2003 and 2002, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.

As discussed in note 1(k) to the consolidated financial statements, the Company
changed its method of accounting for goodwill and other intangibles in 2002.



KPMG Hungaria Kft.
Budapest, Hungary
March 23, 2004

                                      F-2
<PAGE>
                           Euroweb International Corp.
                           Consolidated Balance Sheet
                           December 31, 2003 and 2002
<TABLE>
<CAPTION>
                                                                                           2003                        2002
ASSETS
<S>                                                                                    <C>                          <C>
  Current assets:
    Cash and cash equivalents (note 3)                                                $ 1,941,669                  $ 2,098,983
    Investment in securities (note 4)                                                  11,449,669                   12,104,104
    Trade accounts receivable, less allowance for doubtful accounts of                    455,990                      348,488
    $729,530 (2002: $634,484)
    Related party receivables                                                           1,074,861                      855,194
    Current portion of note receivable (note 5)                                           173,911                      190,105
    Prepaid and other current assets                                                      863,200                      851,100
         Total current assets                                                          15,959,300                   16,447,974

  Note receivable, less current portion (note 5)                                                -                      173,871
  Investment in affiliate (note 6)                                                              -                            -
  Property and equipment (note 7)                                                       1,902,854                    1,269,923
  Assets under construction (note 7)                                                       47,853                      430,000
  Goodwill (note 8)                                                                       566,000                    1,546,538
  Intangibles- customer lists (note 8)                                                          -                      167,273
                                                                                      -----------                  -----------
       Total assets                                                                   $18,476,007                  $20,035,579
                                                                                      ===========                  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Trade accounts payable                                                               $967,492                     $659,244
    Related party payables                                                                935,310                      345,110
    Acquisition indebtedness (note 10)                                                          -                      180,000
     Loan payable (note 11)                                                                     -                      129,945
    Other current liabilities                                                             302,160                      469,547
    Accrued expenses                                                                      466,502                      965,885
    Deferred IRU revenue (note 9)                                                          46,000                       30,667
    Deferred other revenues                                                               557,144                      145,392
                                                                                     ------------                   ----------
       Total current liabilities                                                        3,274,608                    2,925,790

    Non-current portion of deferred IRU revenue (note 9)                                  843,334                      889,333
    Non-current portion of lease obligations (note 9)                                      42,413                       67,100
                                                                                     ------------                   ----------
       Total liabilities                                                                4,160,355                    3,882,223

   Stockholders' equity
   Preferred stock, $.001 par value - Authorized 5,000,000 shares;
      no shares issued or outstanding                                                           -                            -
   Common stock, $.001 par value - Authorized 12,500,000 shares;
      issued and outstanding 4,665,332 shares                                              24,129                       24,129
   Additional paid-in capital                                                          48,227,764                   48,227,764
   Accumulated deficit
                                                                                      (32,795,327)                 (31,219,267)
   Accumulated other comprehensive (loss)/income                                          (25,502)                     236,142
   Treasury stock - 175,490 common shares, at cost
                                                                                       (1,115,412)                  (1,115,412)
                                                                                     ------------                   ----------
      Total stockholders' equity                                                       14,315,652                   16,153,356
                                                                                     ------------                   ----------
   Commitments and contingencies (note 14)

      Total liabilities and stockholders' equity                                      $18,476,007                  $20,035,579
                                                                                     ============                  ===========
</TABLE>

                                      F-3

          See accompanying notes to consolidated financial statements.

<PAGE>
                           Euroweb International Corp.
          Consolidated Statements of Operations and Comprehensive Loss
                     Years Ended December 31, 2003 and 2002
<TABLE>
<CAPTION>
                                                                                               2003             2002

<S>                                                                                         <C>                 <C>
Revenues
Third party revenues                                                                        $ 9,127,510         $ 8,067,290
Related party revenues                                                                        5,633,864           4,873,341
                                                                                           -------------         -----------
              Total Revenues                                                                 14,761,374          12,940,631

Cost of revenues
 Third party cost of revenues                                                                 7,474,071           6,584,806
 Related party cost of revenues                                                               2,675,538           2,028,390
                                                                                           -------------         -----------
              Total Cost of revenues                                                         10,149,609           8,613,196
                                                                                           -------------         -----------
   Gross profit                                                                               4,611,765           4,327,435

Operating expenses
   Compensation and related costs                                                             1,888,417           1,884,891
   Severance to officers                                                                              -           2,020,832

   Consulting, professional and directors fees                                                1,289,295           1,078,908
   Other selling, general and administrative expenses                                         1,336,613           1,439,912
   Goodwill impairment (Note 8)                                                                 980,538           2,016,000
   Impairment of intangibles (Note 8)                                                           100,364             448,500
   Depreciation and amortization                                                                886,698           1,038,166
                                                                                           -------------         -----------
               Total operating expenses                                                       6,481,925           9,927,209
                                                                                           -------------         -----------
Loss from operations                                                                         (1,870,160)         (5,599,774)

   Net interest income                                                                          355,690             385,177
   Equity in net loss of affiliate (Note 6)                                                           -            (679,637)


Loss before income taxes                                                                     (1,514,470)         (5,894,234)
Provision for income taxes                                                                       61,590                   -
                                                                                           -------------         -----------
Net loss                                                                                     (1,576,060)         (5,894,234)

Other comprehensive (loss) income                                                              (261,644)            379,465
                                                                                           --------------       -------------
Comprehensive loss                                                                          $(1,837,704)        $(5,514,769)
                                                                                           ==============       =============

Net loss per share, basic                                                                         (0.34)              (1.26)

Weighted average number of shares outstanding                                                 4,665,332           4,665,332

</TABLE>

           See accompanying notes to consolidated financial statements

                                      F-4
<PAGE>

                           EUROWEB INTERNATIONAL CORP.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2003 and 2002

<TABLE>
<CAPTION>


                                                                                          Accumulated
                                                               Additional                    Other                         TOTAL
                                   Common Stock          Paid-in         Accumulated     Comprehensive   Treasury      Stockholders'
                                 Shares*       Amount      Capital            Deficit     Gains(Losses)    Stock           Equity
                                ----------    ---------   ------------    -------------   -----------   ------------- --------------
<S>                             <C>             <C>            <C>        <C>            <C>             <C>              <C>
Balances, December 31, 2001      4,665,332      $24,129    $48,227,764    $(25,325,033)   $ (143,323)      (1,115,412)  $21,668,125
                                ==========    =========   ============    =============   ===========   ============= ==============
Foreign currency translation
 gain                                   -           -              -                 -       160,687                -       160,687


Unrealized gain on securities
available for sale                      -           -              -                 -       245,212                -       245,212
Reclassification of realized
gain included in net income             -           -              -                 -       (26,434)               -       (26,434)

Net loss for the period                 -           -              -        (5,894,234)             -               -    (5,894,234)
Treasury stock                          -           -              -                 -              -               -             -
                                ----------    ---------   ------------    -------------   -----------   ------------- --------------
Balances, December 31, 2002     4,665,332     $24,129    $48,227,764     $(31,219,267)       $236,142    $(1,115,412)   $16,153,356
                                ==========    =========   ============    =============   ===========   ============= ==============
Foreign currency translation
loss                                    -           -              -                 -       (45,237)               -       (45,237)

Unrealized loss on securities           -           -              -                 -      (216,407)               -      (216,407)
available for sale (Note 4)
Net loss for the period                 -           -              -        (1,576,060)            -                -    (1,576,060)
                                ----------    ---------   ------------    -------------   -----------   ------------- --------------
Balances, December 31, 2003     4,665,332     $24,129    $48,227,764     $(32,795,327)      $(25,502)     $(1,115,412)  $14,315,652
                                ==========    =========   ============    =============   ===========   ============= ==============
</TABLE>
* restated to reflect 1 for 5 reverse stock split

           See accompanying notes to consolidated financial statements

                                      F-5
<PAGE>
                           Euroweb International Corp.
                      Consolidated Statements of Cash Flows
                      Year Ended December 31, 2003 and 2002
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------- ------------------- -------------------
                                                                                                 2003                2002
<S>                                                                                            <C>                  <C>
Cash flows from operating activities
   Net loss                                                                                  $(1,576,060)        $(5,894,234)
   Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization                                                                 886,698           1,038,166
   Goodwill impairment                                                                           980,538           2,016,000
   Intangibles impairment - customer lists                                                       100,364             448,500
   Amortization of discount on acquisition indebtedness (note 10)                                  5,232              15,380
   Equity in net loss of affiliate                                                                     -             679,637
   Provision on doubtful accounts                                                                  3,639             176,763
   Foreign currency loss                                                                          53,784              35,041
   Realized gain on sale of investment securities                                                 (7,113)            (47,970)
   Unrealized interest income on investment securities                                          (360,539)           (357,046)

Changes in operating assets and liabilities net of effects of acquisitions:
   Accounts receivable                                                                          (620,357)           (579,009)
   Prepaid and other assets                                                                       (3,112)           (247,384)
   Accounts payable, other current liabilities and accrued expenses                              534,100             743,416
   Deferred revenue                                                                              310,486             788,265
                                                                                             -------------       ------------
           Net cash provided by (used in) operating activities                                   307,660          (1,184,475)
                                                                                             -------------       ------------

Cash flows from investing activities:
   Investment in securities                                                                            -         (13,506,666)
   Maturity of securities                                                                        798,567          16,654,820
   Payment of acquisition indebtedness                                                          (180,000)           (180,000)
   Collection on notes receivable                                                                190,065             194,296
   Repayment of loan receivable                                                                 (129,945)                  -
   Acquisition of property and equipment                                                        (757,863)           (966,545)
                                                                                             -------------       ------------
           Net cash (used in) provided by investing activities                                   (79,176)          2,195,905
                                                                                             -------------       ------------

Cash flows from financing activities:
   Principal payment under capital lease obligations                                            (329,726)           (400,987)
                                                                                             -------------       ------------
          Net cash used in financing activities                                                 (329,726)           (400,987)
                                                                                             -------------       ------------
Effect of foreign exchange rate changes on cash                                                  (56,072)            (23,763)
                                                                                             -------------       ------------

Net (decrease) increase in cash and cash equivalents                                            (157,314)            586,680
Cash and cash equivalents, beginning of year
                                                                                               2,098,983           1,512,303
                                                                                             -------------       ------------
Cash and cash equivalents, end of year                                                        $1,941,669          $2,098,983
                                                                                             =============       ============
Supplemental disclosure:
Interest paid                                                                                    $49,744             $77,247
Income taxes paid                                                                                $61,590                   -
New capital leases                                                                               $98,917            $155,713

</TABLE>


          See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>
1.   Organization and Business

EuroWeb International Corp. (the "Company") is a Delaware corporation which was
organized on November 9, 1992. The controlling owner of Euroweb International
Corp. is KPN Telecom BV, a Netherlands corporation.

The Company operates in the Czech Republic, Romania and Slovakia, through its
subsidiaries Euroweb Czech Republic spol. s.r.o. ("Euroweb Czech"), Euroweb
Slovakia a.s. ("Euroweb Slovakia") and Euroweb Romania S.A. ("Euroweb Romania").
The Company operates in one industry segment, providing Internet access and
additional value added services to business customers. The Company's
consolidated statements of operations also include its equity in the net income
or loss of Euroweb Hungary Rt., in which the Company has a 49% ownership
interest. The other 51% of Euroweb Hungary Rt. is held by Pantel
Telecommunication Rt., Hungary ("Pantel Rt."), of which KPN Telecom BV is also
the controlling owner.

The revenues come from the following four sources:

     (1)  Internet Service Provider (Internet access, Content and Web services,
          Other services)

     (2)  International/domestic leased line, Internet Protocol data services

     (3)  Voice over Internet Protocol services

     (4)  Facilities

For the services in points (2) and (3) above, the primary customer of the
Company in 2003 and 2002 was Pantel Rt. (See Note 15).

2. Summary of Significant Accounting Policies

     (a) Principles of consolidation and basis of presentation

         The consolidated financial statements comprise the accounts of the
         Company and its controlled subsidiaries. All material inter-company
         balances and transactions have been eliminated upon consolidation.

         The consolidated financial statements have been prepared in accordance
         with generally accepted accounting principles in the United States of
         America.

     (b) Use of estimates

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States of America, requires
         management to make estimates and assumptions that affect the reported
         amounts of assets and liabilities and the 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. Significant estimates
         made by the Company include the period of benefit and recoverability of
         goodwill and other intangible assets.

                                       F-7
<PAGE>
     (c) Fair value of financial instruments

         The carrying values of cash equivalents, investment in debt securities,
         notes and loans receivable, accounts payable, loans payable and accrued
         expenses approximate fair values.

     (d)  Revenue recognition

         Revenues from Internet services are recognized in the month in which
         the services are provided, either based on monthly traffic or on fixed
         monthly fees (leased lines). Revenue for other services, are recognized
         as the service is performed.

         In 2002, the Company entered into an agreement to provide transmission
         capacity to a customer pursuant to an indefeasible rights-of-use
         agreement ("IRU") that management believe qualifies as an operating
         lease under Financial Accounting Standards Board Interpretation No. 13,
         "Accounting for Leases" ("FAS 13"), since the IRU agreement provides
         rights to use a specific subject asset for a defined period. Revenue
         attributable to the lease is recognized on a straight-line basis over
         the term of the 20-year lease agreement.

         Under Financial Accounting Standards Board Interpretation No. 43, "Real
         Estate Sales, an interpretation of FASB Statement No. 66" ("FIN 43"),
         leases of fiber and capacity that are deemed integral equipment are
         required to be accounted for in the same manner as leases of real
         estate. If fiber and equipment are considered integral to the related
         real estate, a lease must include a provision transferring title of
         such integral equipment to the lessee in order for that lease to be
         accounted for as a sales-type lease. Failure to satisfy the title
         transfer requirements results in operating lease treatment, and
         recognition of the related lease income over the lease term. The
         Company's IRU does not involve a transfer of title.

         IRUs generally require the customer to make a down payment upon
         execution of the agreement, with the balance due upon delivery and
         acceptance of the fiber. This has resulted in a substantial amount of
         deferred revenue being recorded on the balance sheet. The Company is
         obligated under the fiber IRU to maintain its network in efficient
         working order and in accordance with industry standards. Customers are
         obligated for the term of the agreement to pay for their allocable
         share of the costs for operating and maintaining the network. The
         Company recognizes this revenue monthly as services are provided.

         Accounting practice and guidance with respect to the treatment of fiber
         sales and IRU agreements continues to evolve. Any changes in the
         accounting treatment could affect the way the Company accounts for
         revenue and expenses associated with these transactions in the future.

     (e) Cost of revenues

         Cost of revenues comprise principally of telecommunication network
         expenses, costs of content services and cost of leased lines.

     (f) Foreign currency translation

                                       F-8
<PAGE>
         The Company considers the United States Dollar ("US$") to be the
         functional currency of the Company and unless otherwise stated, the
         respective local currency to be the functional currency of its
         subsidiaries. The reporting currency of the Company is the US$ and
         accordingly, all amounts included in the consolidated financial
         statements have been translated into US$.

         The balance sheets of subsidiaries are translated into US$ using the
         year end exchange rates. Revenues and expenses are translated at
         average rates in effect for the periods presented. The cumulative
         translation adjustment is reflected as a separate component of
         shareholders' equity on the consolidated balance sheet.

         The Company conducts business and maintains its accounts for Euroweb
         Romania in the Romanian Lei ("ROL"). Romania is considered a highly
         inflationary economy and, therefore the U.S. dollar is used as the
         functional currency. The Company's financial statements presented in
         ROL are remeasured into U.S. dollars using the following policies:

          |X|  Monetary assets and liabilities are remeasured into the
               functional currency using the exchange rate at the balance sheet
               date.

          |X|  Non-monetary assets and liabilities are remeasured into the
               functional currency using historical exchange rates.

          |X|  Revenues, expenses, gains and losses are remeasured into the
               functional currency using the average exchange rate for the
               period except for revenues and expenses related to non-monetary
               items that are remeasured using historical exchange rates.

         The net effect of re-measurement from the local currency into the
         functional currency (US$) is included in the determination of net
         profit and loss, under `Other selling, general and administration
         expenses'.

         Foreign currency transaction gains and losses are included in the
         consolidated results of operations for the periods presented.

     (g) Cash and cash equivalents

         Cash and cash equivalents include cash at bank and short-term deposits
         of less than three months duration.

     (h) Investment in securities

         Investments in marketable debt securities are classified as
         available-for-sale and are recorded at fair value with any unrealized
         holding gains or losses included as a component of other comprehensive
         income until realized. Investments with remaining maturities of greater
         than one year are classified as long-term, while those with remaining
         maturities of less than one year are classified as short-term.

     (i) Investment in affiliate

         The Company holds a minority interest of 49% in Euroweb Hungary Rt.
         which is controlled by its 51% shareholder, Pantel Rt. As the Company
         exerts significant influence over Euroweb Hungary


                                       F-9
<PAGE>
         Rt., the investment is carried under the equity method of accounting,
         with the Company recording its share of the earnings or loss of
         Euroweb Hungary Rt. Dividends are credited against the investment
         account when received.

         As a result of continuing losses, the carrying value of the net
         investment in affiliate was written down to zero in 2002. Since the
         Company has no legal or commercial commitments to provide continuing
         financial support, no further losses were recognized. In February 2004,
         the Company purchased the remaining 51% of the shares of Euroweb
         Hungary Rt. Consideration consists of EUR 1,650,000 in cash, guarantees
         for amounts owed to Pantel Rt. by a subsidiary of Euroweb Hungary Rt.,
         and a guarantee that Euroweb Hungary Rt. will purchase at least HUF 600
         million (approximately $3 million) worth of services from Pantel Rt. in
         each of 2004-2006. (See Note 18: Subsequent Events).

     (j) Property and equipment

         Property and equipment are stated at cost, less accumulated
         depreciation. Equipment purchased under capital lease is stated at the
         present value of minimum lease payments at the inception of the lease,
         less accumulated depreciation. The Company provides for depreciation of
         equipment using the straight-line method over the shorter of estimated
         useful lives of up to four years or the lease term.

         Recurring maintenance on property and equipment is expensed as
         incurred.

         Any gain or loss on retirements and disposals are included in the
         results of operations.

     (k) Goodwill and Intangibles

         Goodwill results from business acquisitions and represents the excess
         of purchase price over the fair value of net assets acquired.
         Amortization was computed over the estimated future period of benefit
         (generally five years) on a straight-line basis until December 31,
         2001. On January 1, 2002 the Company adopted Statement of Financial
         Accounting Standard No. 142 ("SFAS 142"), "Goodwill and Other
         Intangible Assets," which establishes new accounting and reporting
         standards for acquired goodwill and other intangible assets and
         supersedes APB Opinion No. 17. Goodwill and intangible assets that have
         indefinite useful lives are no longer amortized but rather are tested
         at least annually for impairment. Intangible assets that have finite
         useful lives (whether or not acquired in a business combination) will
         continue to be amortized over their estimated useful lives, which are
         no longer limited to a maximum of 40 years. The adoption of SFAS 142
         has eliminated the goodwill charge in 2002. During 2002 and 2003, the
         Company performed the required SFAS No. 142 impairment test, with
         respect to goodwill. The first step of this test requires the Company
         to compare the carrying value of any reporting unit that has goodwill
         to the estimated fair value of the reporting unit. When the current
         fair value is less than the carrying value, the Company performs the
         second step of the impairment test. This second step requires the
         Company to measure the excess of the recorded goodwill over the current
         value of the goodwill by performing an exercise similar to a purchase
         price allocation, and to record any excess as an impairment.

         Intangibles consist of customer lists which were acquired as a result
         of a purchase of assets and are being amortized over the estimated
         future period of benefit of five years. The assessment of

                                      F-10
<PAGE>
         recoverability and possible impairment are determined using estimates
         of undiscounted future cash flows in accordance with the provisions of
         Statement of Financial Accounting Standards No. 144, "Accounting for
         the Impairment or Disposal of Long-Lived Assets," ("SFAS No. 144"),
         with a write-down recorded in the third quarter of 2002. The carrying
         value of customer lists is considered impaired when the projected
         undiscounted future cash flows related to the asset are less than its
         carrying value. The Company measures impairment based on the amount by
         which the carrying value of the customer lists exceeds its fair market
         value. Fair market value is determined primarily using the projected
         future cash flows discounted at a rate commensurate with the risk
         involved. In 2003, the remaining value of customer lists was written
         off.

     (l) Net loss per share

         The Company has adopted Statement of Financial Accounting Standards No.
         128, "Earnings per Share," ("SFAS No. 128"), which provides for the
         calculation of "basic" and "diluted" earnings per share. Basic
         earnings(loss) per share include no dilution and is computed by
         dividing income(loss) attributable to common stockholders by the
         weighted average number of common shares outstanding for the period.
         Diluted earnings(loss) per share reflects the potential effect of
         common shares issuable upon exercise of stock options and warrants in
         periods in which they have a dilutive effect. The Company had
         potentially dilutive common stock equivalents for the years ended
         December 31, 2003 and 2002, which were not included in the computation
         of diluted net loss per share because they were antidilutive.

     (m) Comprehensive income

         Comprehensive income includes all changes in equity except those
         resulting from investments by, and distributions to, owners. All items
         that are required to be recognized under current accounting standards
         as components of comprehensive income are required to be reported in a
         financial statement that is displayed with the same prominence as other
         financial statements. The Company has chosen to present a Combined
         Statement of Operations and Comprehensive Loss.

     (n) Business segment reporting

         Management has determined that the Company operates in one industry
         segment, providing Internet access and additional value added services
         to business customers. Substantially all of the Company's revenues are
         derived from the provision of such services.

     (o) Income taxes

         Income taxes are accounted for under the asset and liability method.
         Deferred tax assets and liabilities, net of appropriate valuation
         allowances, are recognized for the future tax consequences attributable
         to differences between the financial statement carrying amounts of
         existing assets and liabilities and their respective tax bases and
         operating loss and tax credit carry-forwards. Deferred tax assets and
         liabilities, if any, are measured using enacted tax rates expected to
         apply to taxable income in the years in which those temporary
         differences are expected to be recovered or settled. The effect on
         deferred tax assets and liabilities of a change in tax rates is
         recognized in income in the period that includes the enactment date.

                                      F-11
<PAGE>
     (p) Stock-Based compensation

         The Company applies the intrinsic value-based method of accounting
         prescribed by Accounting Principles Board ("APB") Opinion No. 25,
         "Accounting for Stock Issued to Employees," and related interpretations
         including FASB Interpretation No. 44, "Accounting for Certain
         Transactions involving Stock Compensation an interpretation of APB
         Opinion No. 25" issued in March 2000, to account for its fixed plan
         stock options. Under this method, compensation expense is recorded on
         the date of grant only if the current market price of the underlying
         stock exceeds the exercise price. SFAS No. 123, "Accounting for
         Stock-Based Compensation," ("SFAS No. 123") established accounting and
         disclosure requirements using a fair value-based method of accounting
         for stock-based employee compensation plans. As allowed by SFAS No.
         123, the Company has elected to continue to apply the intrinsic
         value-based method of accounting described above, and has adopted the
         disclosure requirements of SFAS No. 123.

         Under the accounting provisions of SFAS No. 123, the Company's 2003 net
         loss and net loss per share would have been reduced to the pro forma
         amounts indicated below:


                                                  2003                   2002
      Net loss:
       Net loss as reported                   $(1,576,060)          $(5,894,234)
       Compensation expense                       (22,826)                    -
       Pro forma net loss                      (1,598,886)           (5,894,234)

      Basic and diluted loss per share:
        As reported                          $      (0.34)         $      (1.26)
        Pro forma                                   (0.34)                (1.26)



         (q) Recent accounting pronouncements

                  At the January 23, 2003 meeting, the Emerging Issues Task
         Force (EITF) reached consensuses on EITF 02-18 Accounting for
         Subsequent Investments in an Investee after Suspension of Equity Method
         Loss Recognition. Issues 1 and 2 of EITF 02-18 which considered
         whether, (i) an investor should recognize any previously suspended
         losses when accounting for a subsequent investment in an investee that
         does not result in the ownership interest increasing from one of
         significant influence to one of control, and (ii), if the additional
         investment represents the funding of prior losses, whether all
         previously suspended losses should be recognized or whether only the
         previously suspended losses equal to the portion of the investment
         determined to be funding prior losses should be recognized. The EITF
         concluded that if the additional investment, represents, in substance,
         the funding of prior losses, the investor should recognize previously
         suspended losses only up to the amount of the additional investment
         determined to represent the funding of prior losses. At its February 5,
         2003 meeting, the FASB ratified the consensuses reached by the Task
         Force in this

                                       F-12
<PAGE>
         Issue. As discussed in notes 1 (i) and 6, the Company had
         previously discontinued recording losses on its equity method
         investment in Euroweb Hungary Rt. and purchased the remaining 51% owned
         by Pantel Rt. in February 2004.

                  On April 30, 2003, the FASB issued FASB Statement No. 149,
         Amendment of Statement 133 on Derivative Instruments and Hedging
         Activities, which amends FASB Statement No. 133, Accounting for
         Derivative Instruments and Hedging Activities, to address (1) decisions
         reached by the Derivatives Implementation Group, (2) developments in
         other Board projects that address financial instruments, and (3)
         implementation issues related to the definition of a derivative. The
         Company does not believe that FAS 149 will have any impact on its
         financial statements.

                  In May 2003, the FASB issued SFAS No. 150, "Accounting for
          Certain Financial Instruments with Characteristics of Both Liabilities
          and Equity". This statement establishes standards for how an issuer
          classifies and measures certain financial instruments with
          characteristics of both liabilities and equity. It requires that an
          issuer classify a financial instrument that is within its scope as a
          liability (or an asset in some circumstances). Many of those
          instruments were previously classified as equity. This statement is
          effective for contracts entered into or modified after May 31, 2003,
          and otherwise is effective at the beginning of the first interim
          period beginning after June 15, 2003, except for mandatorily
          redeemable financial instruments of non-public entities. The Company
          has adopted SFAS 150 and has concluded that there is no current impact
          on its consolidated financial statements.

                  In December 2003, the Securities and Exchanges Commission
         ("SEC") issued Staff Accounting Bulletin ("SAB") 104, "Revenue
         Recognition". SAB 104 revises or rescinds certain SAB guidance in order
         to make this interpretive guidance consistent with current
         authoritative accounting and auditing guidance and SEC rules and
         regulations relating to revenue recognition. This bulletin is effective
         immediately. The Company believes that it's current revenue recognition
         policies comply with SAB 104.

3.   Cash Concentration

At December 31, 2002, cash and cash equivalents included $312,343 on deposit
with a U.S. money market fund. All cash and cash equivalents are held in current
accounts as of December 31, 2003.

4.   Investment in Securities


The Company holds investments in United States Treasury Notes with a face value
of $11,464,000, (2002: $12,269,000) which mature on February 15, 2004.

On April 24, 2003, the Company sold United States Treasury Notes with a face
value of $505,000 for $499,632. On November 14, 2003 the Company sold additional
Notes with a face value of $300,000 for $298,935.

                                      F-13
<PAGE>
During 2003, the Company recorded net unrealized losses of $216,407 and the
accretion of interest and discount on the Notes of $360,539. In 2002, the
Company recorded a net unrealized gain of $245,212 and accreted interest of
$357,046.

5.  Notes Receivable

In December 1998, the Company sold its entire shareholding in a wholly-owned
Hungarian subsidiary, Teleconstruct Epitesi, for $1,500,000. The sale was
satisfied by a payment of $500,000 in January 1999 and the issuance of a
promissory note for $1,000,000 payable in sixty equal monthly installments,
including interest at approximately 7.3% per annum. The note is collateralized
by a building. The receivable is due to be fully repaid by the end of 2004.

6.  Investment in affiliate

The Company's consolidated statement of operations for the years ended December
31, 2003 and 2002 include the Company's equity interest in the net income of
Euroweb Hungary Rt. for each period. Summarized financial information about
Euroweb Hungary Rt.is as follows:

                                          2003                        2002
                                          ----                        ----

       Revenues                      $ 8,519,346                  $ 6,536,790

       Gross profit                    4,045,091                    3,432,494


       Net loss                         $(35,114)                $ (1,652,994)


The carrying value of the net investment in affiliate was $ 495,187 at the
beginning of 2002. However, as the Company's 49% share of the 2002 net loss
($809,967) was greater than the carrying value, the investment was written down
to zero, and since the Company had no legal or commercial commitments to provide
continuing financial support, no further losses are recognized.

The following information is a summary of selected items from Euroweb Hungary
Rt.'s consolidated balance sheet as at December 31, 2003 and 2002:



                                       2003                             2002
                                       ----                             ----

     Current Assets                 $ 2,762,648                    $ 2,254,179
     Total Assets                     3,644,882                      3,526,497

     Current Liabilities              2,240,765                      2,189,301
     Total Liabilities                3,963,219                      3,785,579

                                      F-14
<PAGE>
Pursuant to the non-compete provision in the shareholders' agreement, the
Company cannot: (i) engage in any business activity listed in the scope of
activities of Euroweb Hungary Rt.'s charter,which, among others, includes
telecommunications, data bank activity and information technology activity, (ii)
own or control any equity interest in any person or entity that engages in any
such business activity or (iii) permit any of its employees to act as a
director, officer, manager or consultant to any person or entity that engages in
any such business activity. If the Company breaches its obligation set forth
under this provision, the Company will be required to sell to PanTel Rt. all of
its shares at the time of such breach at a price equal to the nominal value of
such shares.

In February 2004, the Company purchased the remaining 51% of Euroweb Hungary Rt.
(Note 18: Subsequent Events).


7. Property and equipment -

     Property and equipment as at December 31, 2003 and 2002 were as follows:

                                 2003            2002          Useful Life
                                 ----            ----          -----------

Software                       $ 70,742       $ 60,424            3 years
Internet equipment            2,569,490      2,577,924            3 years
Fibre optic cables-Romania*   1,136,600              -           20 years
Vehicles                        549,798        474,791          4-5 years
Other                           510,865        248,930          3-5 years
                                -------     ----------
 Total                        4,837,495      3,362,069
 Less accumulated
 depreciation                (2,934,641)    (2,092,146)
                             ----------    -----------
                            $ 1,902,854    $ 1,269,923
                            ===========    ===========

Depreciation charged during 2003 and 2002 was $ 819,789 and $ 848,939
respectively.

*In October 2002, the Company started construction of a line consisting of 24
pairs of optical fibres between the Hungarian - Romanian border and Timisoara.
As at December 31, 2002, $430,000 of costs (separately disclosed as `Assets
under construction' on the balance sheet) were incurred. The project was
completed in 2003.

                                       F-15
<PAGE>
8. Goodwill and Other intangible assets

     Goodwill and other intangible assets as at December 31, 2003 and 2002
consist of the following:

                                                   2003                2002
                                                   ----                ----

Customer lists                                  $1,150,000       $ 1,150,000
Goodwill                                         8,863,455         8,863,455
                                                 ---------          ---------

  Total                                         10,013,455        10,013,455
  Less impairment writedown-Customer lists        (548,864)         (448,500)
  Less impairment writedown-Goodwill            (4,504,297)       (3,523,759)
  Less accumulated amortization-Customer lists    (601,136)         (534,227)
  Less accumulated amortization-Goodwill        (3,793,158)       (3,793,158)
                                               -----------       -----------
                                                  $566,000       $ 1,713,811
                                               ===========       ===========

Amortization charged during 2003 and 2002 was $66,909 and $189,227 respectively.
The customer lists were obtained during the course of the purchase of assets
from a Romanian company.

At the end of 2003 the Company performed an annual impairment test relating to
the goodwill recorded in its books. Euroweb Romania, Euroweb Czech, and Euroweb
Slovakia were identified as `Reporting Units' under SFAS 142. The Company
compared the fair value of the reporting units (determined using discounted cash
flow projections) to their carrying amounts, noting that the carrying amounts in
each case were higher than their fair values. The Company then compared the
implied fair value of each reporting unit's goodwill with their carrying amounts
and recorded an impairment charge of $980,538 (2002: $2,016,000). The impairment
relating to Euroweb Slovakia was $563,000 (2002: $442,000), Euroweb Czech was
$92,581 (2002: $746,000) and Euroweb Romania was $324,957 (2002: $828,000). The
remaining goodwill as of December 31, 2003 for Euroweb Romania is $566,000
(2002: $ 890,957). The Goodwill relating to Euroweb Czech and Euroweb Slovakia
have been fully impaired.

In 2002, an analysis of Euroweb Romania's customers and revenues generated by
the purchased customer list indicated that most of the customers on this
customer list were lost during the year. Therefore, the Company recorded an
impairment of $448,500, with the balance of $184,000 being amortized over the
remaining estimated period of benefit of 33 months. At the end of 2003, the
company again assessed the recoverability of the outstanding amount and wrote
down the remaining value ($100,364) to zero.

9. Leases

Capital leases
The Company is committed under various capital leases, which expire over the
next four years. The amount of assets held under capital leases included in
property and equipment is as follows:

                                                  2003            2002
                                                  ----            ----

  Internet equipment                          $ 706,227         $ 706,227

  Vehicles                                      327,167           203,796
                                                -------           -------

    Total                                     1,033,394           910,023
    Less accumulated depreciation              (826,077)         (499,594)
                                              ---------          ---------
                                               $207,317           410,429
                                              ==========         =========

                                      F-16
<PAGE>
The following is a schedule of future minimum capital lease payments (with
initial or remaining lease terms in excess of one year) as of December 31, 2003:


              2004                                                  $ 109,293
              2005                                                     36,801
              2006                                                      8,391
                                                                        -----
       Total minimum lease payments                                   154,486
       Less interest costs                                             (8,517)
                                                                       ------
       Present value of future mimimum lease payments                 145,969
       Less:   current installments                                  (103,556)
                                                                    ---------
                  Non-current portion of lease obligations            $42,413
                                                                      =======

The current portion of lease obligations are included in `Other current
liabilities' on the Balance Sheet.

Operating leases
The Company's subsidiaries in Slovakia and the Czech Republic each (as Lessee)
have five year non-cancelable lease agreements for office premises. The
Slovakian contract is denominated in local currency, while the Czech contract is
denominated in Euro's. Remaining minimal rental payments total approximately
$769,980; $168,264 in each of the years 2004-2006, and $96,924 in 2007.

The Company (as Lessor) has also entered into an Indefeasible Right of Use
agreement to provide transmission capacity (See note 2(d)), which is accounted
for as an operating lease. The entire amount of the consideration of $920,000
was prepaid by the customer in 2002, and the Company recognizes this revenue on
a straight line basis over the term of the agreement (monthly $3,833.33).

10.  Acquisition Indebtedness

In connection with the acquisition of Euroweb Romania S.A., the company assumed
indebtedness of $ 540,000 from a selling shareholder. The indebtedness is
payable in three yearly installments of $180,000, commencing June 1, 2001. The
last payment was made in June 2003.

11.  Loan payable

At the date of acquisition in April 2000, Isternet SR, s.r.o. had a loan from
one of its former shareholders amounting to SKK 4,600,000.The loan bore interest
at a rate of BRIBOR ("Bratislava Inter-Bank Overnight Rate")+ 5%. The loan,
including the 2002 interest, was settled in January 2003.

                                     F-17
<PAGE>
12.   Income taxes


The components of tax expense for the years ended 2003 and 2002 are as follows:


                                 2003                   2002
                                 ----                   ----

Current
   Federal                           --                    -
   State and Local                   --                    -
   Foreign                      $61,590                    -
Deferred
   Federal                            -                    -

   State and Local                   --                    -

   Foreign                      $61,590                    -
                                -------                -------
Total income tax expense        $61,590                    -
                                -------                -------


The difference between the total expected tax expense (benefit) and tax expense
for the years ended December 31, 2003 and 2002 is accounted for as follows:

<TABLE>
<CAPTION>
                                                    2003                                     2002
                                                    -----                                    ----
                                          Amount              %                      Amount        %
                                        ---------          ------                    --------        ------
<S>                                       <C>                <C>                       <C>            <C>
   Computed expected tax
     Benefit                            $(514,920)        (34.00)                 $(1,715,040)       (34.00)

   State Taxes Net of Federal Benefit                                                (299,627)        (5.94)

   Amount Attributable to Foreign
     Operations                           147,257           9.72                    1,220,982         24.21

   Other                                  333,383          22.01                         (400)        (0.01)

   Change in Valuation Allowance           95,870           6.33                      794,085         15.74
                                        ---------          -----                     --------         -----
   Total Expense (Benefit)                $61,590           4.07%                       $   -          0.00%
                                        =========           =====                    ========          =====

</TABLE>

The tax effects of temporary differences that give rise to significant portions
of deferred tax assets at December 31, 2003 and 2002 are as follows:
                                           2003                            2002
                                        ----------                   ----------
  Deferred Tax Assets:
    Net Operating Loss Carryovers       $3,797,840                   $3,560,191
    Capital Loss Carryovers                 63,801                    1,278,955
                                        ----------                   ----------
  Gross Tax Assets                       3,861,641                    4,839,146
  Valuation Allowance                   (3,861,641)                  (4,839,146)
                                        ----------                   ----------
  Net Deferred Tax Asset                   $    -                        $    -
                                        ==========                   ==========

For U.S. Federal income tax purposes, the Company has unused net operating loss
carryforwards at December 31, 2003 of approximately $9,591,000 available to
offset future taxable income. Such carryforwards expire in various years from
2008 through 2023. The Company has unused capital loss carryovers at December
31, 2003 of approximately $187,650. Capital loss carryforwards expire in 2004.

 A valuation allowance has been established due to uncertainty whether the
Company will generate sufficient taxable earnings and capital gains to utilize
the available carryovers. The Tax Acts of some jurisdictions contain provisions
which may limit the net operating loss carryforwards available to be used in any
given year if certain events occur, including significant changes in ownership
interests. The Company has not assessed the impact of these provisions on the
availability of Company loss carryovers.


13.  Related party transactions

General: The largest customer of the Company since early 2001 has been Pantel
Rt., a Hungary-based alternative telecommunications provider. Pantel operates
within the region and has become a significant trading partner for Euroweb
Romania through the provision of a direct fiber cable connection, which enables
companies to transmit data to a variety of destinations by utilizing the
international connections of Pantel.

Due to the increase in revenues from International/domestic leased line and VOIP
services provided in conjunction with Pantel, some of the representatives of the
Company have moved to the premises of Pantel in order to improve the
effectiveness of the co-operation on international projects and daily
operational issues. Csaba Toro, Chief Executive Officer of Euroweb International
Corp., was also the Chief Executive Officer of Pantel until February 2003.


                                      F-18
<PAGE>
Transactions:  Both Euroweb Slovakia and Euroweb Romania have engaged in
------------   transactions with Pantel:

(a)  Pantel provides the following services to the subsidiaries of the Company:

     -    Internet bandwidth

     -    International leased lines outside of Romania and Slovakia

     The total amount of these services purchased from Pantel was $2,675,538
during 2003 (2002: $2,028,390).

(b)  Euroweb International and its subsidiaries provided the following services
     to Pantel:

     -    International leased lines and local loops in Slovakia and Romania

     -    International IP and VOIP services

     -    Certain consultants are hired by the Company, but also work on
          projects for Pantel. In these cases, Pantel is recharged a portion of
          the consulting fees

The total value of these services sold was approximately $5,633,864 in 2003
(2002: $4,873,371).

Direct sales to Pantel were 38% of total consolidated revenue, but Euroweb's
dependency on Pantel is even greater than this figure suggests. Some third party
sales involve Pantel as the subcontractor/service provider for the
international/domestic lines, and some third party customers are also clients of
Pantel outside of Romania (i.e. their relationship with Pantel is stronger than
their relationship with Euroweb Romania).

Effective dependency on Pantel - taking into account direct and Pantel-related
sales - represents approximately 60% of total consolidated revenues of the
Company and approximately 88% of total sales of Euroweb Romania. There is no
such dependency in the case of Euroweb Czech or Euroweb Slovakia.

Pricing: Agreements are made at market prices or a split of the margin based on
the financial investment into the specific services by each of the parties. The
Company considers alternative suppliers for individual projects, when
appropriate.

The Company's Chief Executive, Csaba Toro, uses offices provided by Euroweb Rt.
No rent was charged in 2003.

There were no other significant related party transactions in 2003.

14.  Commitments and Contingencies

(a) Employment Agreements

An employment agreement with the Chief Executive Officer which provided for
aggregate annual compensation of $96,000 through December 31, 2005 was amended
in 2004. The amended agreement provides for an annual salary of $150,000 and a
bonus of up to $100,000 (guaranteed minimum of $50,000) in 2004, and an annual
salary of $200,000 and a bonus of up to $150,000 in 2005.



                                      F-19
<PAGE>
(b) Lease agreements

The Company's subsidiaries have entered into various capital leases for vehicles
and internet equipment, as well as non-cancelable agreements for office
premises. Refer to Note 9 (Leases). In the fourth quarter of 2003, the Company
entered into capital leases for vehicles in Romania, which were delivered in the
first quarter of 2004. Total future minimum lease payments under this agreement
($96,837) is not reflected in the financial statements as the vehicles were
delivered subsequent to year-end.

(c) 20 years' usage rights

In 2002, Euroweb Romania provided an Indefeasible Right of Use for transmission
capacity on 12 pairs of fiber (see Note 9) over a period of 20 years, commencing
in 2003. For the duration of the agreement, Euroweb Romania is obliged to use
all reasonable endeavours to ensure the Cable System is maintained in efficient
working order and in accordance with industry standards.

(d) Legal Proceedings

The Company is a member of ICANN (Internet Corporation for Assigned Names and
Numbers), which is the association of domain registrations worldwide. The
Company, as a representative of ICANN in Slovakia, started to provide
registration and administration of second level domains for organizations
located in the Slovak Republic in January 2003 (total revenues in 2003
approximately $250,000). Due to the fact that the Company is the only provider
of such services in Slovakia, the Association of Internet Providers in Slovakia
("API") and the Association of Webhosting Providers claim that the Company has a
monopoly and is abusing this dominant position and started legal proceedings
against the Company with the Slovak Antimonopoly Office. The Antimonopoly office
agreed that certain parts of the "General terms of domain registrations" can be
considered as abusing the dominant position and requested the Company to change
certain items in the registration system, and imposed two minor penalties. The
Association of Webhosting Providers filed an appeal against the decision, which
is still pending.

Based on advise from local legal counsel, management believe that the two minor
penalties the Antimonopoly Office imposed to date were symbolic as they related
only to minor breaches of the Act on the Protection of Competition, even though
penalties could potentially reach up to 10% of the Company's annual turnover.
Based on this, further penalties are not expected to be significant. Management
believes that the registration system is compliant with both local and ICANN
requirements and the Company has already corrected the minor discrepancies
highlighted by the Antimonopoly Office.

There are no other known significant legal procedures that have been filed and
are outstanding against the Company.

15.  Stock Option Plan and Employee Options

The outstanding options have been adjusted to reflect the reverse stock split of
one for five that became effective on August 30, 2001, and prior period amounts
have been restated.



                                       F-20
<PAGE>
a) Stock Option Plan

Under the Company's Stock Option Plan (the "Plan") which expired in 2003, an
aggregate of 134,000 shares of common stock were authorized for issuance. The
Plan provides that incentive and nonqualified options may be granted to
officers, directors and consultants of the Company for the purpose of providing
an incentive to those persons. The Plan may be administered by either the Board
of Directors or a committee of three directors appointed by the Board (the
"Committee"). The Board or Committee determines, among other things, the persons
to whom stock options are granted, the number of shares subject to each option,
the date or dates upon which each option may be exercised and the exercise price
per share.

Options granted under the Plan are generally exercisable for a period of up to
six years from the date of grant. Options terminate upon the option holder's
termination of employment or consulting arrangement with the Company, except
that, under certain circumstances, an option holder may exercise an option
within the three-month period after such termination of employment. An option
holder may not transfer any options although an option may be exercised by the
personal representative of a deceased option holder within the three-month
period following the option holder's death. Incentive options granted to any
employee who owns more than 10% of the Company's outstanding common stock
immediately before the grant must have an exercise price of not less than 110%
of the fair market value of the underlying stock on the date of the grant.
Moreover, the exercise term may not exceed five years. The aggregate fair market
value of common stock (determined at the date of grant) for which any employee
may exercise incentive options in any calendar year may not exceed $100,000. In
addition, the Company will not grant a nonqualified option with an exercise
price less than 85% of the fair market value of the underlying common stock on
the date of the grant.

As of December 31, 2003, the total number of shares for which options have been
issued and are exercisable pursuant to the Plan is 46,000 (2002: 61,500). No
options were granted under the plan in 2003 and 2002.

(b) Other Options

The Company has issued exercisable options pursuant to employment agreements. As
of December 31, 2003 fully vested options are outstanding and exercisable for
63,000 shares pursuant to the employment agreement with Mr. Csaba Toro, CEO. The
options were granted on April 2, 1999 and expire on April 2, 2005. The options
are exercisable at $ 10.00 per share.

On October 13 2003, the Company granted two Directors 100,000 options each, at
an exercise price (equal to the fair value on that day) of $4.21 per share, with
25,000 options being exercisable on April 13 of 2004-2007. However, the options
expire ninety days after the date the Director no longer serves on the Board.

(c) Accounting for stock-based options

Stock options and employment agreement options are all considered options which
come under the guidelines of stock-based compensation. For options granted to
employees at exercise prices equal to the fair market value of the underlying
common stock at the date of grant, no compensation cost is recognized. In 2003,
grants were made to two Directors where the exercise price was equal to the fair
market price at the date of grant and therefore no expense was recognized as the
Company has elected to continue to apply the intrinsic value-based method of
accounting described in APB 25 (See Note 2 (p)).

                                      F-21
<PAGE>
SFAS No. 123, "Accounting for Stock-Based Compensation," ("SFAS No. 123"),
requires the Company to provide pro forma information regarding net income and
earnings per share as if compensation cost for the Company's stock options had
been determined in accordance with the fair value-based method prescribed in
SFAS No. 123. The Company estimates the fair value of each stock option at the
grant date by using the Black-Scholes option-pricing model. No grants were made
in 2002 and consequently in 2002 the reported loss is the same as the pro forma
loss, as all previous grants vested prior to 2002.

The amount that should be recorded as total compensation expense under SFAS No.
123 is $632,766 (calculated at grant date using Black-Scholes valuation model
with volatility of 88%) for the options granted to the directors on October 13,
2003. Under the accounting provisions of SFAS No. 123, this compensation expense
can be recorded over the life of the options and the Company's 2003 net loss and
net loss per share would have been reduced to the pro forma amounts indicated
below:

                                          2003                         2002
                                          ----                         ----
     Net loss:
         Net loss as reported           $(1,576,060)               $(5,894,234)
         Compensation expense               (22,826)                         -
         Pro forma net loss              (1,598,886)                (5,894,234)

     Basic and diluted loss per share:
         As reported                   $      (0.34)              $      (1.26)
         Pro forma                            (0.34)                     (1.26)


The following table summarizes the total number of shares for which options have
been issued (Stock Option Plan, Employment Agreements and grants to Directors)
and are exercisable:

                                  2003                                    2002
                             -------------------            -------------------
                                          Weighted                     Weighted
                                          average                       average
                                          exercise                     exercise
                             Options        Price      Options           Price

  Outstanding, January 1,   124,500        $9.00         319,500          $8.99
  Granted*                  200,000         4.21               -              -
  Cancelled                       -            -        (185,000)          8.93
  Expired                   (15,500)        7.65         (10,000)         10.00
                           --------                     --------
  Outstanding and
exercisable, December 31,   309,000         5.95         124,500           9.00
                            =======                      =======
*50,000 exercisable on each April 14 of 2004, 2005, 2006, and 2007.
No options were exercised in 2003 and 2002.

16.  Stock Warrants

As at December 31, 2003 and 2002, the total number of shares for which warrants
have been issued and are exercisable (at $ 11 per share) is 10,000. The warrants
expire on May 2, 2004.

                                      F-22
<PAGE>
Warrants are generally granted in connection with private placement
transactions. In 2003, no warrants expired, nor were any granted or exercised.
In 2002, 1,076,731 warrants (each equivalent to one-fifth of a share of common
stock) expired, while none were granted or exercised.


17. Segment information


The following table summarizes financial information by geographic area
for the year ended December 31, 2003 after intercompany eliminations and
allocation of certain salaries and revenues/direct cost to the respective
countries for better analysis:
<TABLE>
<CAPTION>

   2003                                Slovakia        Czech        Romania       Corporate                Total

<C>                                      <C>            <C>            <C>           <C>                      <C>
3rd party revenues                    3,424,633      1,163,662      4,539,215               -               $9,127,510
Pantel related revenues                       -              -      5,633,864               -                5,633,864
Total revenues                        3,424,633      1,163,662     10,173,079               -               14,761,374

Gross profit                          1,999,728        491,985      2,120,052               -                4,611,765

EBITDA*                                 443,369       (220,740)       574,931        (700,120)                  97,440

Depreciation                            328,182         91,663        466,853               -                  886,698
Intangible impairment                         -              -        100,364               -                  100,364
Goodwill impairment                     563,000         92,581        324,957               -                  980,538

Interest income                          18,990            463          3,934         390,349                  413,736
Interest expense                         28,269            213         24,333           5,231                   58,046
Net interest (expense) income            (9,279)           250        (20,399)        385,118                  355,690

Income tax                                 -                -          61,590               -                   61,590

Net profit/(loss)                      (457,392)      (404,734)      (398,932)       (315,002)              (1,576,060)

Segment fixed assets, net               326,788         48,068      1,575,851               -                1,950,707
Fixed asset additions                    94,954          8,978        752,848               -                  856,780
Goodwill                                      -             -         566,000               -                  566,000

</TABLE>

*defined as net income/loss before interest, income taxes, depreciation and
amortization, impairment of goodwill and intangibles

Goodwill and related impairment amounts are recorded in the books of the
Corporate entity and allocated to segments.

                                      F-23
<PAGE>
The Company does not consider the revenue generated by the fibre optic cables in
Romania through an IRU agreement as a separate operating segment.


18.  Subsequent events

On February 12, 2004, Euroweb International Corp. entered into a Share Purchase
Agreement with a related party, PanTel Tavkozlesi es Kommunikacios Rt., Hungary
("Pantel"), to acquire Pantel's 51% interest in Euroweb Hungary Rt. (currently
49% owned by the Company). Consideration consists of EUR 1,650,000 in cash and a
guarantee that Euroweb Hungary Rt. will purchase at least HUF 600 million
(approximately $3 million) worth of services from Pantel in each of 2004-2006,
with a penalty of 25% of the amount by which purchases are less than the HUF 600
million in any year. The Company has also provided a guarantee for a loan
obtained from Pantel by a subsidiary of Euroweb Hungary Rt. (HUF 245 million
plus interest) as well as a guarantee relating to a trade payable by Euroweb
Hungary Rt. to Pantel of HUF 93 million plus VAT. The transaction was closed on
February 29, 2004.

On February 23, the Company signed a Share Purchase Agreement in connection with
its acquisition of all of the outstanding shares of Elender Business
Communications Ltd., a leading ISP in Hungary. The purchase price consisted of
USD 6,500,000 in cash and 677,201 of the Company's common shares. The closing of
this acquisition is subject to the approval of the Hungarian Competition Office,
which is still pending.

During 2003, the Romanian Tax Authorities conducted an audit relating to the
Company's accounting for VAT with respect to foreign invoices. Due to this
investigation, the Tax Authorities did not process VAT reclaims of $766,589
which were recorded in `prepaids and other current assets' as at December 31,
2003. The Tax Authorities have finalized their report and assessed penalties of
$ 168,154, which is recorded in other selling, general and administrative
expenses. In February 2004, the VAT receivable, net of the $168,154 penalty was
refunded by the Tax Authority.

                                      F-24