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, 1999

     [  ] Transition Report under Section 13 of 15(d) of the Securities Exchange
Act of 1934

For the transition period from ___________ to __________

                        Commission file number 001-14827

                      EDUCATIONAL VIDEO CONFERENCING, INC.

                 (Name of small business issuer in its charter)

                         Delaware                                 061488212
             (State or other jurisdiction of                 (I.R.S. Employer
              incorporation or organization)               Identification No.)

            35 East Grassy Sprain Road, Suite 200, Yonkers, New York 10710
                   (Address of principal executive offices) (Zip code)

             Issuer's telephone number, including area code: (914) 787-3500

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

            Title of each class       Name of each exchange on which registered
               Common Stock,                  Boston Stock Exchange
         $.0001 par value per share           Pacific Exchange, Inc.

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

                                  Common Stock,

                             $.0001 value per share

                             ----------------------
                                (Title of class)

     Check  whether the issuer:  (1) filed  all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the 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  requirements  for the past 90 days.  Yes X
No___

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  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.

<PAGE>

     The issuer's revenues for its most recent fiscal year were $1,190,422.

     As of March 1, 2000,  the  aggregate  market value of the  issuer's  common
equity held by  non-affiliates  was  $95,702,009,  based on the closing price of
$31.50  for its common  stock on the  Nasdaq  Small Cap Market on March 1, 2000.

     4,347,243  shares of the issuers common stock were  outstanding as of March
1, 2000.

Documents Incorporated by Reference:  None

Transitional Small Business Disclosure Formats (check one): Yes___  No_X_


<PAGE>




                                Table of Contents

PART I.......................................................................1

   Item 1. Description of Business...........................................1
   Item 2. Description of Property..........................................17
   Item 3. Legal Proceedings............... ................................17
   Item 4. Submission of Matters to a Vote of Security Holders..............17

PART II.....................................................................18

   Item 5. Market for Common Equity and Related Stockholder Matters.........18
   Item 6. Management's Discussion and Analysis of Financial Condition
              and Results of Operations.....................................18
   Item 7. Financial Statements.............................................23
   Item 8. Changes in and Disagreements With Accountants on Accounting and
           Financial Disclosures............................................23

PART III....................................................................23

   Item 9.  Directors, Executive Officers, Promoters and Control Persons;
               Compliance With Section 16(a) of the Exchange Act............23
   Item 10. Executive Compensation..........................................27
   Item 11. Security Ownership of Certain Beneficial Owners and Management..30
   Item 12. Certain Relationships and Related Transactions..................32
   Item 13. Exhibits and Reports on Form 8-K................................32

SIGNATURES..................................................................38

INDEX TO FINANCIAL STATEMENTS..............................................F-1


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                                     PART I

Item 1.  Description of Business

General

     Educational  Video   Conferencing,   Inc.  is  a  leading   aggregator  and
distributor,  via live interactive  video  conferencing  systems,  of accredited
college courses and degree programs, as well as corporate training, professional
development and continuing  education programs.  The instructor can see and hear
the students as the students see and hear the  instructor and  communicate  with
the instructor and other students at multiple locations.  Educational content is
currently being delivered by EVCI over high speed  point-to-point or multi-point
digital data lines (T-1 or ISDN).  EVCI is deploying its  proprietary  broadband
network design which, using Internet Protocol infrastructure technology, permits
EVCI to continue to provide two-way  multi-point,  multi-media  voice, video and
data transmissions,  including over the Internet,  but with controlled bandwidth
and throughput. Using its broadband network design, EVCI can deliver educational
content at 30 frames per second (broadcast quality) through DSL, ATM, T-1 lines,
cable modems or satellite.

     EVCI can  deliver  content to  conference  and  training  rooms and desktop
computers  equipped with video conferencing  capability.  EVCI believes that its
distance  learning  technology  and content  delivery  services comes closest to
replicating  the  classroom  experience.  EVCI also  provides the  consultative,
marketing and  administrative  services necessary to recruit and enroll students
and deliver courses and programs to them.

     EVCI  presently can offer more than 2,100  courses and 200 degree  programs
from education providers that include St. John's University, Adelphi University,
Clemson University,  Manhattan College, The College of Insurance, Mercy College,
Concordia  College,  Touro  University  International,  Interboro  Institute and
Kaplan Educational  Centers.  Commencing in the Fall 2000, EVCI expects to begin
offering  courses  and  programs  provided  by San  Francisco-based  Golden Gate
University and by Interboro Institute,  a two year college in New York City that
EVCI has owned and operated  since January 2000.  EVCI can also offer over 1,000
training,  professional  development,  and  continuing  education  courses  from
several  providers.  Since beginning to offer courses in February 1998, EVCI has
delivered 237 classes that have  resulted in 3,246  completed  courses.  EVCI is
currently  delivering  1,176 courses to 91 sites located in more than 15 cities.
This includes 51 asynchronous courses being delivered via the Internet.

         EVCI customers include:

         o  Major  Corporations,  including Citibank,  N.A.,  American
            International Group, Inc., Merrill Lynch & Co., Inc.,  Reliance
            National,  Travelers Indemnity Company, and Lockheed Martin Corp.

         o  Community  outreach  programs  in New York City and  Rochester  with
            economically   disadvantaged   constituents   who  can  qualify  for
            substantial tuition grants.

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         o  The City of Rochester  School District and the Board of Education of
            the City of New York School (school district 10).

     EVCI has co-marketing  agreements with Bell Atlantic and @Home Network that
will give EVCI  marketing  access to more  major  corporations  and more than 75
million U.S. households.  EVCI also has a co-marketing  agreement with We Media,
Inc. that gives EVCI marketing access to 54 million disabled Americans.

     EVCI was organized in March 1997.  EVCI completed an  underwritten  initial
public offering of its common stock in the first quarter of 1999. EVCI maintains
a world wide web site at www.evcinc.com. This reference to EVCI's world wide web
site address does not constitute  incorporation  by reference of the information
contained therein.

Forward Looking Information

     This  Form  10-KSB   contains   forward-looking   statements  that  involve
assumptions,  risks  and  uncertainties.  The  words  "anticipate,"  "estimate,"
"expect,"  "will," "could," "may," "is targeting" and similar words are intended
to identify  forward-looking  statements.  EVCI's  actual  results  could differ
materially  from those  anticipated  in these  forward-looking  statements  as a
result of certain factors,  including (i) insufficient demand for EVCI's content
and broadband services,  (ii) delays in rolling out co-marketing  programs or in
implementing  existing  customer  agreements,  (iii) delays in deploying  EVCI's
broadband  network,  (iv) an inability to satisfy  demand for EVCI's  content or
broadband  services,  (v) the need for  additional  capital to operate and grow,
(vi) competition,  and (vii) dependence on EVCI's chairman,  president and other
management.   Should  any  one  of  these  or  other  risks  and   uncertainties
materialize,  or should underlying  assumptions prove incorrect,  actual results
may vary materially from those anticipated by forward-looking  statements.  EVCI
undertakes no obligation to update forward-looking statements.

Distance Learning Industry Overview

     There  are two  main  categories  of  distance  learning:  synchronous  and
asynchronous.  In the synchronous  model,  students and instructors  interact in
real time via virtual classrooms,  using a combination of delivery methods.  The
asynchronous approach provides self-paced learning.  The student can choose from
a variety of media,  complete the coursework  according to the class syllabus or
outline, then submit the competed material to the instructor for evaluation.

     Online learning has opened many options,  including the ability to download
course content from a virtual  classroom using a Web browser;  interaction  with
instructors and fellow students via chat rooms,  e-mail or audio;  participation
in  videoconferencing-based  sessions; and access to online labs and simulations
and real-time  updates to course content.  In addition,  offline  computer based
training,  using  CD-roms and audio and video  cassettes  continue to be readily
available.

     A  number  of  national,  economic,   demographic  and  social  trends  are
contributing  to the growing  demand for career  oriented  education that can be
accessed remotely via high speed Internet and telecommunications lines.

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     Recognition of need for training and  professional  development  continuing
education.  EVCI  believes  that  employers  recognize  the need for  continuous
enhancement of employee education and skill levels and that employees  recognize
that  training,  professional  development  are  essential  to  maintaining  and
advancing their employment position and, consequently, their standard of living.
According to the October 1999 issue of Training magazine, corporations with over
100 employees budgeted approximately $62.5 billion for training in 1998 compared
to approximately $48.2 billion in 1992.

     Increasing demand for remote access to education and training.  Burdened by
the competing and stressful time demands of work and family, adults increasingly
want education and training that can be accessed  remotely from the workplace or
home.  According to a recent report published by International Data Corporation,
the number of college students  enrolled in distance learning courses will reach
2.2 million in 2002 as compared to 710,000 in 1998.

     Fastest growing  occupations.  EVCI believes that the continuing shift from
unskilled to skilled jobs in the U.S.  results  from,  among other  things,  the
transformation  of the U.S.  economy  from an  industrial  to a  knowledge-based
economy  and  increased  competition  for such  jobs.  The U.S.  Bureau of Labor
Statistics'  1998-99  Occupational  Outlook  Handbook  indicates  that of the 25
occupations  with the largest and fastest  employment  growth,  high pay and low
unemployment,  18 will require at least a bachelor's degree and are projected to
grow nearly twice as fast as the average for all occupations.

     Additional sources of revenue.  Education  providers are seeking additional
sources of revenue and recognize that increasing adult student enrollment, using
distance learning technologies, is an important opportunity for economic growth.

     Funding.  Corporate and federal and state tuition  assistance  programs are
available to pay training and tuition costs. In addition to budgets for employee
training,  many corporations  have budgets to pay for their employees'  elective
higher  education  through  tuition   reimbursement  or  direct  payment  plans.
Typically,  these plans reimburse employees or pay for courses at any accredited
academic  institution as long as the course has some relevance to the employee's
job and the employee  achieves a specified grade. The availability of grants for
qualified non-traditional students presents other important market opportunities
for distance learning via video conferencing.

Strategy

     EVCI's  primary  goal is to become the  leading  worldwide  aggregator  and
distributor  of  educational  content  via  broadband  high speed  networks  and
interactive video  conferencing  systems.  As a result of the positive reception
EVCI is receiving to its broadband  network  design,  EVCI  recently  decided to
apply its technology to create broadband networks that can be used, and licensed
to others, by EVCI. EVCI is pursuing its goals by:

o         Using the best and readily available technology. EVCI was conceived on
          the  principle of providing  access to quality  education and training
          with  locational  convenience.  User  demand  for  improvement  in the
          quality  and  consistency  of video  conferencing,  motivated  EVCI to
          design its  proprietary  broadband  network.  While EVCI  believes its
          network design is currently the only available technology that can

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          simultaneously  deliver broadcast  quality video,  audio and data over
          high speed connections (while controlling  bandwidth and throughput to
          the recipient), EVCI is not predisposed to any single technology. EVCI
          is focused on identifying and using the most  state-of-the-art  voice,
          data and image technology that is available to distribute  educational
          content.

o         Making alliances with  telecommunications,  cable and Internet service
          providers.  EVCI  seeks  alliances  with  telecommunications,   cable,
          Internet access providers and affinity groups that have large customer
          bases, can benefit from bundling EVCI's content and video conferencing
          services with their product or service offerings, and have large sales
          forces that EVCI can train to sell EVCI's services.

o         Growing through  selected  acquisitions,  joint ventures and strategic
          investments.  EVCI frequently evaluates potential acquisitions,  joint
          ventures and  strategic  investments  as a means to obtain  additional
          customers or education  providers,  improve the quality and efficiency
          of services,  and generally  accelerate  the growth of EVCI's  revenue
          base.  In  November   1999,   EVCI  became  a  founder  and  principal
          stockholder  of  Visiocom  USA  Incorporated,  which is a provider  to
          businesses,  via the Internet and video  conferencing,  of  one-on-one
          instruction on using business software and learning foreign languages.
          Seeking more content for EVCI's outreach  customers,  in January 2000,
          EVCI acquired Interboro  Institute,  a two-year college with a student
          body  consisting  mostly  of  non-traditional  students  who pay their
          tuition using federal and New York state tuition grants.

o         Targeting major  organizations for content delivery services.  EVCI is
          primarily  targeting  organizations with more than 5,000 employees and
          that have significant  budgets for employee  training and professional
          development and for employee  higher  education.  These  organizations
          should also reimburse or pay at least 80% of higher education  tuition
          costs,  have  policies to encourage  their  employees to pursue higher
          education  and agree to  actively  promote  EVCI's  programs  to their
          employees.

o         Targeting major  organizations  requiring  virtual  private  broadband
          networks.  Of  particular  interest to EVCI in marketing its broadband
          network  services are  companies in knowledge  based  industries  with
          multiple  locations and  significant  training,  data and  information
          exchange  requirements.  Large  corporations  typically require better
          visual, voice and data connections and have the resources to build out
          their  own  networks.   EVCI  believes  savings  achievable  from  the
          locational  convenience  of training  and personal  development  using
          video  conferencing  will facilitate the marketing of EVCI's broadband
          network services.

o         Targeting  more  outreach  programs.   Encouraged  by  enrollment  and
          retention  rates,  EVCI is dedicating more resources to accelerate the
          growth of its outreach  customer base.  EVCI expects to begin offering
          Interboro  Institute programs via video conferencing in the Fall 2000,
          after obtaining required regulatory approval.

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<PAGE>


o         Making  alliances  with  providers of higher  education,  training and
          continuing   education.   EVCI  seeks   alliances  with  colleges  and
          universities,   training   organizations   and  remediation  and  exam
          preparation   services  that  offer  courses  and  programs  and  have
          admissions policies fitting the needs, interests and qualifications of
          a broad  cross-section of employers and their employees.  EVCI is also
          targeting  geographically  dispersed  education  providers in order to
          gain greater  recognition in regional  markets and to be able to offer
          courses  during  more  hours  of each  day as a  result  of time  zone
          differences.

o         Increasing  emphasis on aggregating  training content.  EVCI's greater
          emphasis on aggregating training content is primarily motivated by the
          size of employer  budgets for training (in comparison to their budgets
          for higher  education),  the higher  priority  given by employers  for
          training than for higher  education and the fact that payments to EVCI
          for its  content  aggregation,  delivery  and  other  services  is not
          contingent upon a student's successfully completing the training.

o         Staging the rollout of courses and programs.  Increasing in stages the
          number of  employees  to whom  courses  are  offered and the number of
          sites to which course are delivered  enables EVCI to better  determine
          which courses,  programs and locations  will have the greatest  demand
          for enrollment. A staged rollout allows EVCI to use its resources more
          effectively to market to potential students and to seek contracts with
          a larger number of customers.

Services

         EVCI  differentiates  itself from other distance learning  companies by
functioning as a  telecommunications,  technology  and marketing  bridge between
EVCI's  customers  and  education  providers.   EVCI's  comprehensive   services
encompass the technical, marketing and administrative services necessary to:

         o  offer courses and degree programs from multiple education providers;

         o  determine course and degree program preferences;

         o  recruit and enroll students;

         o  provide  and  install  video   conferencing   equipment  at
            education
            providers;

         o  install or enhance the video  conferencing  systems of its customers
            when required;

         o  train  teachers how to teach  effectively  using  interactive  video
            conferencing systems (including by using charts,  graphs,  pictures,
            video  tapes  and  presentation   software)  so  as  to  maintain  a
            student-centered, active learning environment;

         o  arrange for high speed data lines for signal transmission;

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<PAGE>

         o  provide  the  multi-conferencing  units  required  to  permit  live,
            interactive multimedia communications between multiple parties; and

         o  coordinate  the delivery of courses from the education  providers to
            the students.

Broadband Network and Interactive Video Conferencing Systems

     EVCI network. EVCI has designed a proprietary broadband network that allows
it to offer high-speed Internet Protocol communication for video, audio and data
transmission,   in  several  different  formats,  between  numerous  parties  at
diversified   sites.   The  network  design   includes   proprietary   software,
communications and network infrastructure, and hardware. This combination allows
EVCI to transmit  video over the network at 30 frames per second  quality.  EVCI
expects its broadband network services will be available by the Fall 2000.

     The EVCI design uses broadband ATM  standards,  ATM core switches and lines
leased from major carriers.  EVCI transmits  signals using Internet  Protocol by
creating a virtual  circuit from the point of origin  directly to the customer's
premises while  controlling the bandwidth at 416Kb.  The network will allow EVCI
to connect with  end-users  whether they use DSL, ATM,  cable modem or Direct PC
via satellite.  The EVCI  broadband  network has universal  application  for all
digital information.

     EVCI spent  approximately  $1,150,000 in 1999 and approximately  $80,000 in
1998  in  developing  its  broadband  network  design,  including  approximately
$800,000 for equipment purchases.

     EVCI's Video conferencing system. The hardware for EVCI's interactive video
conferencing   systems   is   generally   off-the-shelf   equipment,   currently
manufactured  by Intel,  that is modified by EVCI's  proprietary  software.  The
basic end-user equipment  involves either video kits or teamstations,  depending
on the  requirements  of the user. Both are  functionally  identical on the EVCI
network. The Intel video kit is installed on any Pentium III, or better, desktop
computer,  loaded with the EVCI proprietary software. The Intel teamstations are
also  computer-based  and have a larger  monitor in order to  facilitate  use by
larger  groups.  While the  Intel  equipment  is  readily  available,  equipment
manufactured by others can be used with modified EVCI software.

     In addition to the standard  voice video and data  transmission,  auxiliary
equipment  connected to the EVCI video conferencing  equipment provides a number
of other features.  For example, the instructor can display visual presentations
to the  class  using a  separate  document  video  camera  or a VCR  unit can be
installed and used for pre-taped instructional material. A caller add-on feature
can also be used to invite a subject matter expert to interact verbally with the
class without  having to be physically  present.  EVCI has not  encountered  any
limitation on the types of subjects that can be taught by its interactive  video
conferencing systems.

     EVCI's proprietary  software  applications  dictate the manner in which the
video  conferencing  takes place.  The software is a user  friendly,  Windows NT
based,  program  developed  by EVCI.  The  software  varies  depending  upon the
application  and can be  modified  to

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address  any  foreseeable  use of the EVCI  network.  The  software is icon
activated. EVCI's software currently permits the following applications:

         o  Classroom.  The visual image available to the student and instructor
            differ and different functionality is provided to the instructor and
            the  student.  The  equipment is  configured  so that it can be used
            easily by instructors and students.

         o  The  instructor  controls the class through the use of various icons
            on  his/her  screen.  The  instructor  can  control  which  and when
            students may speak.  Students may be permitted to see, hear and talk
            to all attending  class or the  instructor  may break the class into
            smaller  sections  where only those in the section can hear and talk
            to each  other.  A  whiteboard  can  simultaneously  be used by each
            student and the  instructor.  The instructor can access the Internet
            with  the  class  and  lead  the  class   through  web  sites  while
            controlling the web sites that the students access.  Currently under
            development for EVCI, is software that will enable the instructor to
            test the students and assess the test results immediately.

            The student can see and hear the  instructor  and any other students
            called upon by the instructor.  By clicking an icon, the student may
            "raise  his or her hand" to get the  instructor's  attention  and be
            called upon to comment on the material  presented.  Each student can
            share information with all the other students.

            To  optimize  educational  attainment  effectiveness,  EVCI plans to
            limit delivery of courses using  video-enabled  desktop computers to
            approximately 24 students per class.

         o  Training  sessions.  In  the  one-on-one  or  small  group  training
            sessions, EVCI's software interfaces allow the participants to fully
            share information, data, voice and video.

         o  Seminars.  Using  the EVCI  network,  a seminar  application  allows
            several  tiers  of  participation  in  a  seminar.   One  group  can
            participate  live at the  seminar  while a second  group  can  fully
            participate with live two-way  interactive  audio and video. A third
            group  may  participate   with  one-way  video  and  audio  and  can
            simultaneously ask questions via e-mail while a fourth group may opt
            to receive only video or audio.

         o  Selectivity.  The caller can assign  different  rights to  different
            participants. Some participants may have full audio and video rights
            and others may be limited to audio only participation.  A stationary
            camera, focused on a specific target may also be included.

Customers

     EVCI is  offering  and  delivering  educational  and  training  content  to
corporate customers, outreach programs and school districts.

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     Corporations. EVCI currently delivers higher education courses to employees
of Citibank,  N.A.,  American  International  Group,  Inc., Merrill Lynch & Co.,
Inc.,  Travelers  Indemnity  Company,  Zurich Insurance  Company (U.S.  branch),
Reliance National, General Reinsurance Corporation and Lockheed Martin Corp.

     Substantially  all courses are being delivered to video  conferencing  room
systems  at the  corporate  customer's  facilities  at more  than 91 sites in 15
cities.  In the third quarter of 2000, EVCI expects to begin delivering  courses
to video  enabled  desktop  computers  located  at the  offices  or homes of the
employees of its corporate customers and the general public.

     Corporate  customer  agreements.  Generally,  EVCI's  agreements  with  its
corporate  customers have terms of three to five years, are subject to automatic
extensions and typically include the following provisions.

     o    EVCI delivers courses over its corporate customers' existing installed
          base of video conferencing room systems.  If surveys of the customer's
          employees indicate there is a sufficient demand for courses, EVCI will
          install or enhance equipment at the customer's site.

     o    The customer  reimburses  its eligible  employees or pays directly for
          the tuition cost of completed  courses for which a specified  grade is
          received.  EVCI  generally will not accept a corporation as a customer
          unless its policy is to  reimburse  or pay at least 80% of the tuition
          cost,  although  changes in the policy are within the customer's  sole
          discretion.  The student is ultimately  responsible for payment of the
          tuition.

      o   EVCI  and the  customer  jointly  market  the  available  courses  and
          programs to the customer's  employees using material prepared and paid
          for by EVCI.

     Outreach programs.  Economically disadvantaged students who can qualify for
substantial  federal and state  tuition  assistance  are  receiving  educational
content  delivered by EVCI to the facilities of churches,  community centers and
schools.  Courses are being  delivered to sites located in the New York City and
Rochester  metropolitan  areas.  EVCI has a multi-year  agreement,  made in July
1999, with the Atlantic District Lutheran Church Missouri Synod under which EVCI
will offer to deliver  courses  and  programs to at least ten  churches  located
primarily  in the New York City  metropolitan  area.  A similar  agreement  will
enable EVCI to deliver  courses and  programs  to National  Baptist  Churches in
California.

     School  districts.  Under  its  multi-year  agreements  with  the  City  of
Rochester School District,  made in December 1998, and the Board of Education of
the City of New York (school  district 10), made in July 1999,  EVCI is offering
area  residents,  district  employees and school  students access to educational
content that  includes  accredited  graduate and  undergraduate  college  degree
programs  and  non-degree  courses,   professional  development  programs,  test
preparation, advance placement courses and K-12 after school programs.

     Under co-marketing  agreements described below under "Marketing and Sales,"
EVCI is,  or will be,  offering  to  distribute  educational  and  training  and
professional development content to, among others, disabled Americans,  existing
and potential customers of Bell Atlantic and

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@Home Network and members of unions  participating  in the programs offered by
the Consortium for Worker Education.

Education Providers

     Higher education. Information about the principal colleges and universities
providing  courses and programs that are being,  or will be,  offered for remote
delivery by EVCI to its customers follows.

     St.  John's  University  College of Business  offers  courses  leading to a
Bachelor  of  Science  and  Master  of  Business  Administration  degrees,  with
specializations  in  finance,  international  business or  marketing  as well as
non-credit courses in business. EVCI expects to begin offering in September 2000
courses and  programs  from St.  John's  University,  College  for  Professional
Studies,  leading to a Bachelor of Science or Associate of Science degree,  with
specializations  in 24 areas that include computer  information  systems,  legal
studies, sports management, television and film and communication arts.

     Clemson   University's  Office  of  Off-Campus,   Distance  and  Continuing
Education  offers  continuing   education   courses  that  include   management,
engineering,  manufacturing,  textiles,  professional  development for women and
managing for diversity.

     Manhattan  College offers courses  leading to a Master of Science degree in
electrical, computer and mechanical engineering.

     Adelphi  University  offers  courses given by its School of Management  and
Business leading to a Bachelor of Business Administration, with a specialization
in  finance,   human   resources  or  marketing,   and  a  Masters  of  Business
Administration,  with specialization in, among other areas, accounting,  banking
and  financial  markets,   corporate  finance  and  investments,   international
business, human resource management and personnel administration.

     Mercy College offers  courses  leading to a Bachelor of Science in Business
with a specialization in banking, direct marketing,  finance,  general business,
international  business,  marketing  or  management.  Mercy  College also offers
courses  leading  to a Master of  Science  in direct  marketing  and a Master of
Business  Administration.  In  addition,  EVCI  recruits  students  who  want to
participate in Mercy College's Merlin program,  an Internet  asynchronous course
delivery  system.  EVCI  can in the  future  offer  all  of  the  Mercy  College
non-degree  and degree  courses in more than 75 areas  that  include  education,
health care, journalism,  medical technology,  veterinary technology and liberal
arts and sciences.

     Concordia College offers degree courses leading to a Bachelor of Science in
Business  Administration and Bachelor of Arts in Behavioral  Science.  Concordia
has an  accelerated  degree  program  that  permits  students  with two years of
college credit to obtain their degree within one year by attending  class for 52
consecutive weeks.

     The  College of  Insurance  offers  courses  leading to  undergraduate  and
graduate degrees in insurance and risk management, along with courses leading to
insurance  certification or designation,  with  specializations  in property and
casualty,  reinsurance,  ocean  marine,  life-health

                                       9

<PAGE>

and risk  management.  The College of  Insurance  also  offers  preparation
courses for insurance licensing exams. An executive M.B.A.  program is scheduled
for initial delivery by Spring 2001.

     Touro  University  International  offers  courses  leading to a Bachelor of
Science in Business  Administration,  with  specializations in finance,  general
management,  internal auditing,  health care management,  information technology
and tourism and hospitality.  Touro University  International also offers degree
courses leading to a Master of Business Administration,  and a Ph.D. in Business
Administration  or  Health  Sciences.  One  of  the  unique  features  of  Touro
University  International is its cyber-library,  which allows students to obtain
textbooks for courses and do research via the Internet. EVCI can offer all other
courses and degree programs provided by Touro University International.

     Touro  College  offers  both  non-degree  and degree  courses  in  business
management and  administration,  computer  science,  education,  human services,
liberal arts and sciences, social sciences and psychology.

     Golden Gate University.  Under a multi-year agreement,  made in March 2000,
EVCI can offer all of Golden Gate's undergraduate,  graduate and doctoral degree
programs and continuing  education  programs.  Golden Gate has advised EVCI that
approximately  70% of its  approximately  7,700  students work  full-time  while
attending  classes  and that,  accordingly,  its  programs  are career  focused,
contemporary,  practical and based on real marketplace needs. Golden Gate offers
courses  leading  to  degrees  which  include  concentrations  in law,  business
administration,  taxation, applied psychology, english, international relations,
public  administration,   hospitality   administration  and  tourism,   computer
information  systems,  e-commerce  software  engineering and  telecommunications
management. EVCI expects to begin offering Golden Gate courses in the Fall 2000.

     Interboro Institute.  Seeking additional sources of educational content for
its outreach programs,  EVCI acquired Interboro in January 2000.  Interboro is a
two-year  college  that  offers  degree  programs  leading to the  Associate  of
Occupational Studies Degree in Business Administration  (accounting and business
management),    ophthalmic   dispensing,   paralegal   studies,   administrative
secretarial arts (executive,  legal,  correspondence  or medical  secretary) and
security services and management.  Interboro Institute continues to operate as a
campus college and will apply for New York state approval to provide content for
remote delivery by EVCI beginning in the Fall 2000 semester.

     Interboro  presently  has  approximately  700  students.  Most of Interboro
Institute's  student  body  consist of  non-traditional  students  who pay their
tuition using Federal (Pell) and New York State (TAP) tuition grants.

     Training  and  professional   development.   Information   about  training,
     ------------------------------------------
professional developments and other content being offered by EVCI follows.

     Computer  Generated  Solutions,  Inc. Under a multi-year  co-marketing  and
education  provider  agreement,  made in February  2000,  CGS will market EVCI's
services and EVCI will market CGS's information  technology  corporate  training
programs.  Marketing  is expected to begin in the second  quarter of 2000.  As a
premier IBM business partner, and Microsoft solutions

                                       10

<PAGE>

provider,  CGS  offers  over 250  instructor-led  courses,  Web-based  training,
multi-media computer based training and custom-developed applications courses.

     Kaplan  Educational  Centers,  Inc. Under a multi-year  agreement,  made in
March 1999,  EVCI is offering  Kaplan's SAT and GMAT test  preparation  and K-12
after-school programs.

     Dearborn  Institute.  Under its agreement with Kaplan Educational  Centers,
Inc., EVCI is offering Dearborn securities and insurance licensing  preparation,
training and professional development courses.

     Visiocom  USA  Incorporated.  EVCI and  Visiocom  USA will each  market the
other's  services.  Visiocom USA provides  one-on-one  individual and customized
live software training directly to employees at their workplace. Courses include
instruction on using Microsoft Office,  Lotus Smart Suite,  WordPerfect  Office,
Lotus Notes, the Internet, Java and the employer's proprietary software. EVCI is
a founder and  principal  stockholder  of Visiocom  USA together  with  Visiocom
Worldwide, S.A. under an agreement effective in November 1999.

     Corporate Scenes,  Inc. Under a multi-year  agreement,  made in March 2000,
EVCI will be  offering  professional  development  courses  designed  to enhance
leadership skills.  Course subjects include cultural  diversity,  team building,
leadership training and handling conflict.

     Education  provider   agreements.   EVCI's  education  provider  agreements
generally  have  terms of three  to five  years  and are  subject  to  automatic
extensions and, in addition to the services provided by EVCI,  typically include
the following terms:

     o    The   education   provider   obtains  the   necessary   licenses   and
          accreditation  for course and  program  offerings.

      o   Generally,  the  education  provider is  required to schedule  courses
          between 8:00 A.M. and 11:00 P.M.  Monday  through Friday and 9:00 A.M.
          to 3:00 P.M. on  Saturdays.  The courses to be  delivered  by EVCI and
          their  time  slots  are  determined  each  semester  by  EVCI  and the
          education  provider.  By  adding  Golden  Gate  University  and  other
          geographically  dispersed  education  providers,  EVCI can offer  more
          course hours per day to students in other time zones.

      o   For its  services,  EVCI  receives  a fee  based on  tuition  payments
          actually received by the education provider.

      o   Most of EVCI's  education  providers  have agreed not to offer courses
          via  competing   interactive  video  conferencing  systems  to  EVCI's
          corporate  customers  and  their  employees  during  the  term  of the
          education  provider's  agreement  with EVCI and for one year after its
          termination.

       o  All of EVCI's  education  provider  agreements  were made since EVCI's
          IPO,  except  those with  Adelphi  University,  Mercy  College and The
          College of Insurance.

                                       11

<PAGE>


Marketing and Sales

     EVCI's chairman and president  oversee the development of EVCI's  marketing
strategies  and the conduct of sales  activities.  EVCI's sales force  currently
consists of 20 full-time employees and four independent sales representatives.

     Long-term   relationships   with   customers,   education   providers   and
co-marketing  partners are pursued by means of referrals  and  introductions  by
co-marketing partners and independent consultants,  direct mail,  telemarketing,
and demonstrations of EVCI's video conferencing delivery method.

     Co-marketing   agreements.    Obtaining   and   implementing   co-marketing
agreements,  such as those described below, are significant components of EVCI's
strategy.

     Bell Atlantic. Under a multi-year co-marketing agreement, made in September
1999, EVCI will provide  accredited  college courses,  degree programs and other
training programs through synchronous, multi-point video conferencing technology
while Bell  Atlantic  will  market  EVCI's  services  to both its  existing  and
potential users of Bell Atlantic's  digital  subscriber lines (DSL). On February
14, 2000,  Bell Atlantic and EVCI announced the  introduction of Remote Learning
Solutions, the distance learning solution that facilitates a "virtual" classroom
using the video  conferencing room systems or desk top computers.  EVCI has been
advised by Bell Atlantic that the Remote  Learning  Solutions  campaign has been
selected as one of Bell Atlantic's most  significant  marketing  initiatives for
the year  2000.  Approximately  900 Bell  Atlantic  account  executives  will be
trained to sell the Bell Atlantic/EVCI Remote Learning Solutions.

     Exite @Home Network. Under two multi-year co-marketing agreements,  made in
August and  September  1999,  Excite @Home and EVCI will market and promote EVCI
throughout the @Home broadband  Internet  portal and Excite.com.  EVCI's initial
co-marketing  initiative  with @Home will be with the Excite  @Work  division of
Excite @Home.  EVCI and @Work will  co-market EVCI education and training to the
approximately  5,000 customers that have signed up for @Work broadband services.
Additionally,  EVCI and @Work will develop joint promotional brochures and joint
sales  initiative  by bundling  EVCI's  content  together  with @Work  broadband
services.  Excite  @Home has  advised  EVCI that it has  access,  through  cable
television lines, to approximately 65 million households.

     We Media, Inc. Under a multi-year  co-marketing  agreement,  made in August
1999, We Media committed $7.5 million over five years,  ($1.5 million per year),
to promote  EVCI  educational  content to a market of  approximately  54 million
Americans with disabilities,  their families and friends.  We Media is promoting
EVCI through its publications and web site and radio and television advertising.
Under  another  multi-year  agreement,  made in  September  1999,  We  Media  is
marketing EVCI services to not-for-profit  organizations servicing the disabled,
and their families and friends.

     Consortium for Worker Education. Under a multi-year co-marketing agreement,
made in May 1999,  EVCI can offer  courses  and  programs  to union  members and
dislocated workers.  CWE has advised EVCI that,  annually,  over 32,000 employed
and

                                       12

<PAGE>

unemployed workers receive  educational,  skills training and re-employment
services  from CWE. EVCI is working with CWE on securing  contracts  with unions
and corporations using CWE's services.

     edcor  Data  Services.   EVCI  is  marketing  edcor's  tuition   assistance
processing services to EVCI's current and potential customers.  edcor's services
in educational and training  administration include processing  applications and
registrations;  identifying  appropriate  accredited colleges,  universities and
technical  schools for students;  preparing  checks and  reimbursing  employees;
making  training  site  arrangements; and  determining  that  employees  receive
training that contributes to the employer's goals.  edcor plans to market EVCI's
content and delivery services to edcor's current and potential customers.  edcor
currently  provides  its  services  primarily  to  approximately  70 Fortune 500
companies.

     AT&T Corp.  The AT&T  co-marketing  agreement,  made in September  1998, is
being  renegotiated as a result of AT&T's and EVCI's shift in focus from ISDN to
broadband services.

     Marketing to students.  EVCI assumes primary  responsibility  for marketing
its  education  providers'  courses and  programs to  potential  students.  EVCI
produces promotional brochures and videotapes that may include or be accompanied
by  endorsements  by management of its customers.  Other marketing tools include
using demand analysis surveys to collect  demographic and preference data from a
corporate  customer's  employees  to  determine  the courses and  programs to be
offered.  EVCI recently  began  outsourcing  student  admission  counseling  and
enrollment under its agreement made in October 1999 with Learningforce, Inc.

Government Regulation

     Distance  learning.  Federal,  state  and  local  authorities,  as  well as
independent educational  accreditation  organizations,  have taken an increasing
interest in distance learning in recent years.  Federal departments and agencies
are seeking to balance  governmental  interests in encouraging new  technologies
against other  interests  such as protecting  the integrity of  federally-funded
educational  programs and ensuring that the benefits of new technologies will be
available  to all  Americans.  State  and  local  authorities  are  reevaluating
licensing  requirements  and  are  joining  multi-jurisdictional   collaborative
efforts to address complex issues that are unique to distance learning.

     Much of this activity reflects general  governmental  support for the needs
and goals of distance learning providers. Several federal departments, including
the Departments of Agriculture,  Defense,  Labor and Education,  have authorized
pilot programs that utilize or promote distance learning.  These  authorizations
may provide  additional  sources of funding for EVCI and other distance learning
companies.

     Other  governmental  and regulatory  activities could have a less-favorable
impact on EVCI's  business.  For  example,  the  Higher  Education  Act  imposes
numerous  restrictions  on students and  institutions  participating  in federal
student financial aid programs. Lawmakers are reevaluating these restrictions in
response to rapid advances in distance learning  programs and technologies,  but
there can be no guarantee  that the  restrictions  will be relaxed,  or that the
Department of Education, Congress or other state or local regulatory entity will
not impose

                                       13

<PAGE>

stricter or additional  requirements on distance learning  providers.  Increased
federal  regulations,  continued uneven  licensing or approval  processes by and
among state  governments  or  accreditation  organizations,  or changes to other
laws, such as copyright or telecommunications  laws, could increase EVCI's costs
or make it harder for EVCI to attract and retain the educational  providers upon
which EVCI's  business  depends.  All of these  issues are in various  stages of
review  throughout  all levels of  government.  EVCI  cannot  predict the scope,
outcome or impact on EVCI of these reviews, or the extent to which these reviews
will be favorable or adverse to EVCI.

     Interboro Institute.  EVCI has owned and operated Interboro Institute since
January 14, 2000.

     Accreditation.   The  New  York  Board  of  Regents  accredits   Interboro.
Accreditation  provides  the basis for (i) the  recognition  and  acceptance  by
employers,  other higher education institutions and governmental entities of the
degrees and credits earned by students and (ii)  qualification to participate in
Title IV of the Higher Education Act.

     Following  the  acquisition  of  Interboro  by EVCI,  the Board of  Regents
approved the registration of Interboro's degree granting programs for a two-year
period  ending on or about  December 31, 2002.  Pursuant to Regents  regulations
governing  a change of  ownership,  the  Regents  will issue  degrees  earned by
Interboro  students  during this period.  At a time yet to be  determined by the
Regents during this two-year  period,  it will review  Interboro for purposes of
reaccreditation  and the return of degree granting authority to Interboro.  As a
result of Interboro's  financial  difficulties prior to its acquisition by EVCI,
the Regents is requiring Interboro to continue to submit quarterly financial and
related progress reports.

     Interboro's   Associate  of  Occupational  Sciences  degree  in  Ophthalmic
Dispensing is also  accredited  by the  Commission  of  Opticianry.  This degree
program accreditation was last issued in March 1999 for a six year period.

     Pell grants. Interboro Institute's  participation in the Pell Grant program
subjects  it to  substantial  regulatory  oversight  by the U.S.  Department  of
Education  under Title IV. For the period July 1, 1999 through January 13, 2000,
approximately  38.3% of  Interboro's  revenue was derived from Title IV funding.
During its fiscal year ended June 30, 1999, the percentage of funds derived from
Title IV funding by Interboro was 42.5%.

     Aid under the Pell  Grant and other  Title IV  programs  is  awarded on the
basis of financial need, generally defined as the difference between the cost of
attendance and the amount a student can reasonably contribute to that cost.

     Under the Pell  program,  Interboro  is subject  to  frequent  reviews  and
detailed  oversight  and  must  comply  with a  complex  framework  of laws  and
regulations.  Periodic revisions of regulations and changes in interpretation of
existing laws and regulations could affect Interboro's continuing eligibility to
participate in the Pell Grant program.

                                       14
<PAGE>


    Factors  that  could  affect  Interboro's  participation  in  the Pell Grant
program include:

     o    Interboro  must satisfy  minimum  standards  established to assess its
          financial  condition  at  the  end  of  its  fiscal  year.   Interboro
          anticipates it will be able to satisfy the minimum standard at the end
          of its current fiscal year.

     o    Interboro  could lose its eligibility to participate in Title IV if it
          receives  in excess of 90% of its cash  basis  revenue  from  Title IV
          programs  for tuition,  fees and  institutional  charges.  Interboro's
          percentage of Title IV funds continues to be less than 45%.

     o    Interboro cannot pay any commission, bonus, or other incentive payment
          based  directly or  indirectly on success in securing  enrollments  or
          financial  aid  to  any  person  or  entity  engaged  in  any  student
          recruitment,  admission or financial aid awarding activity.  Interboro
          believes that its current method of compensating enrollment counselors
          complies with Title IV.

     o   Interboro's participation in Title IV is based, in part, on satisfying
          administrative capability requirements.

     o    Interboro's administration of Title IV funds is audited annually by an
          independent   accounting  firm  and  the  resulting  audit  report  is
          submitted  to  the  Department  of  Education  for  review.  If  it is
          determined  that  Interboro  improperly  disbursed  Title  IV funds or
          violated a provision of the Higher Education Act, it could be required
          to repay  such funds and might be  assessed  an  administrative  fine.
          Interboro  could also  become  subject  to  heightened  monitoring  or
          transfer  from the  advance  system of  payment  to the  reimbursement
          system,  under which it must  disburse  its own funds to students  and
          document the student's eligibility for Title IV funds before receiving
          funds from Department of Education.

     o    Violations of Title IV  requirements  could also subject  Interboro to
          other civil and criminal penalties.

     TAP grants. Interboro is subject to extensive regulation in New York
State  in  connection  with its  participation  in the New  York  State  Tuition
Assistance Program.  TAP is a tuition grant program in which many of Interboro's
students participate.

     Upon audit, TAP program administrators  disallowed approximately $4,800,000
of grants previously disbursed to Interboro for academic years 1989/1990 through
1991/1992.  After  protracted  litigation,   Interboro  was  required  to  repay
approximately  $5,850,000,  including  $1,050,000  of interest,  to the New York
State Higher Education Services Corporation.

     The financial and administrative problems incurred by Interboro as a result
of this TAP  disallowance  and ensuing  litigation,  created the opportunity for
EVCI to acquire  Interboro.  Interboro is now receiving TAP disbursements in the
ordinary course.

                                       15

<PAGE>


     Funds  disbursed to Interboro  subsequent  to academic  year 1992 are still
subject to audit as are future  disbursements.  Interboro  cannot predict if any
future disallowances might occur as a result of additional TAP audits. Interboro
does believe,  however, that the problems identified in the prior TAP audit have
been  corrected  and that it is  operating  in  compliance  with TAP rules.  The
purchase  price payable by EVCI for Interboro  would be reduced to the extent of
any disallowance  under TAP or Pell with respect to periods prior to January 14,
2000.

Competition

     Distance  Learning.  The distance  learning  market is  fragmented,  highly
competitive  and  encompasses  a broad variety of learning  formats.  EVCI faces
substantial competition from distance learning companies,  using asynchronous or
synchronous  delivery  methods,  and other  providers  of  educational  content.
Traditional  live classroom  instruction by two and four year colleges is EVCI's
most  significant   competition.   Some  colleges  and  universities  are  using
interactive video conferencing systems to deliver their courses.  Many education
providers have extension centers that attempt to address the issue of locational
and scheduling convenience.

     In addition,  EVCI is facing  increasing  competition  from other  distance
learning  companies  that offer,  among other  products  and  services,  one-way
satellite video conferencing, self-paced correspondence courses, video and audio
cassettes, CD-roms and Internet-based instruction. Distance learning competitors
include Apollo Group,  Inc.'s  University of Phoenix,  Caliber Learning Network,
Inc., eCollege.com, SkillSoft, Inc. and Career Education Corporation.

     EVCI's  primary focus has been to use  interactive  video  conferencing  to
enable students to experience an actual classroom  environment more closely than
any other distance learning system currently available. However, EVCI recognizes
that not everyone can afford the high quality  delivery method preferred by EVCI
for its  customers or can make the time to attend  regularly  scheduled  classes
using video conferencing enabled room systems or desktop computers. Accordingly,
EVCI is adding one-way video,  two-way audio and text capabilities,  offers text
only  programs,  and has the ability to archive and store  content from its live
classes for retrieval by the user as he or she sees fit. EVCI's archived content
will be accessed  either  from  narrowband  regular  Internet or from high speed
broadband Internet.

     There are no  significant  barriers  to entry  into the  distance  learning
market.  EVCI  believes   competition  is  primarily  based  on  locational  and
scheduling convenience,  cost, relevance and quality of course content,  quality
and reliability of content delivery and customer support.

     EVCI believes its principal competitive strengths are:

     o   its business strategy;

     o   the relevance, range and sources of training, professional development
         and higher education courses EVCI can deliver;

     o   its management;

     o   the breadth of its services;

     o   its co-marketing partners;

                                       16

<PAGE>


      o   the  similarity of the learning  experience  using  interactive  video
          conferencing  systems to the traditional  classroom  experience,  as a
          result of the level of interactivity; and

      o   its proprietary broadband network design.

     Interboro Institute.  Interboro competes with four-year and two-year degree
granting public and private  colleges and universities as well as with a variety
of business providers, primarily in the proprietary training sector.

Intellectual Property

     EVCI currently  intends to protect its broadband  network design as a trade
secret.

Employees

     As of March  1,  2000,  EVCI  had 135  full-time  employees,  including  69
Interboro Institute employees.  In addition,  Interboro Institute had 18 adjunct
professors.  None of EVCI's  employees  is  covered by a  collective  bargaining
agreement.   EVCI  believes  that  its   relationship   with  its  employees  is
satisfactory.

Item 2.  Description of Property.

     EVCI  currently  utilizes  approximately  6,442  square  feet of  space  in
Yonkers, New York for its corporate and administrative  offices,  under a lease,
expiring  in  August  2002,   that   provides  for  monthly  rent   payments  of
approximately   $13,000  subject  to  annual   increases.   EVCI's   multi-point
conferencing  units are located and  serviced  in  Bohemia,  New York,  under an
agreement  which  expires in  December  2000 and  requires  monthly  payments of
approximately  $11,000,  subject to increase as equipment and digital data lines
are added. Video  conferencing  equipment is delivered to the installation sites
by the  manufacturers.  EVCI is looking for additional  space for its operations
department in Westchester County, New York.

     Interboro Institute occupies  approximately  28,000 square feet at 450 West
56th Street,  New York,  New York,  pursuant to a lease expiring on January 2004
and requiring monthly rent payments of approximately $40,000.

Item 3.  Legal Proceedings.

     On March 3,  2000,  EVCI  commenced  an action in Supreme  Court,  New York
County, seeking, among other things, an injunction enjoining 444 Realty Company,
L.L.C.,  the landlord of the  premises  occupied by  Interboro  Institute,  from
unlawfully  terminating,  effective  March 6, 2000,  the lease for such premises
based upon its contention,  which EVCI believes is not meritorious,  that EVCI's
purchase  of all of the  stock  of  Interboro  Institute,  Inc.  constitutes  an
improper assignment of the lease.

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

         None.

                                       17

<PAGE>


                                     PART II

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

     EVCI's  common  stock is quoted on The  Nasdaq  SmallCap  Market  under the
symbol  "EVCI," and on the Pacific  Exchange and the Boston Stock Exchange under
the symbol "EVI." The  following  table sets forth the high and low sales prices
of the common stock for each quarter of 1999, since the commencement of trading,
as reported by Nasdaq.

                                                       High            Low
                                                     ---------      ---------
         First Quarter (from February 23, 1999)      $18.000        $13.875
         Second Quarter                               16.125          7.844
         Third Quarter                                15.750          6.000
         Fourth Quarter                               21.000         13.250


     As of March 9, 2000 the number of  stockholders of record of EVCI 's common
stock was 47, which excludes the number of stockholders whose shares are held in
street name.

     EVCI has never  declared or paid any cash dividends on its common stock and
does not expect to pay any cash dividends in the foreseeable future.

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

     The following  discussion  should be read in conjunction with the financial
statements of EVCI and the notes thereto appearing elsewhere in this report.

Operational Overview

     General. Since its IPO, EVCI has been engaged primarily in implementing its
business strategies by activities that include:

     o    completing  the  proprietary  design  and  testing  of its high  speed
          broadband  network  and  determining  that  the  network  should  be a
          separate product offering to major corporations and others.

     o    making  co-marketing  alliances  with  Bell  Atlantic,   Excite  @Home
          Network, We Media, edcor and the Consortium for Worker Education.

     o    placing  significantly  greater  emphasis on the marketing of training
          and professional development content to corporations because they have
          significantly  larger budgets and demand for this kind of content than
          higher education content and payments to EVCI for delivering  training
          and professional development content are more predictable and timely.

                                       18

<PAGE>


     o    obtaining access to training and professional  content user agreements
          from,  among others,  Dearborn  Institute (under EVCI's agreement with
          Kaplan  Educational  Centers),   Computer  Generated  Solutions,   and
          Corporate Scenes, and by co-founding Visiocom USA.

     o    obtaining  education  provider  agreements with St. John's  University
          College of Business and St. John's University  College of Professional
          Studies,  Clemson  University's  Office of  Off-Campus,  Distance  and
          Continuing    Education,    Concordia   College,    Touro   University
          International, Touro College and Golden Gate University.

     o    acquiring  Interboro  Institute with  expectations  of increasing EVCI
          revenues from existing  on-campus  programs and the remote delivery of
          Interboro's  educational  content after  obtaining  requisite New York
          State approvals.

     o    recruiting,  hiring or retaining, training and redeploying management,
          marketing, sales, technical and administrative personnel.

     o    allocating  more time,  personnel and other  resources to accelerating
          the implementation of agreements with corporate customers.

     Revenue  and  accounts  receivable.  EVCI's  distance  learning  revenue is
derived from sharing tuition payments received by education providers based on a
contractually  agreed upon formula.  The percentage of tuition  payments that an
education  provider pays to EVCI for its services is  determined by  negotiation
between the  education  provider and EVCI,  and, to an extent,  depends upon the
reputation and academic  standing of, and the tuition  charged by, the education
provider.  Revenue  attributable  to a course  is  recognized  ratably  over the
duration of the course and, as this occurs,  EVCI establishes a related accounts
receivable.  EVCI's education  providers generally permit tuition payments to be
deferred  until  after a course is  completed  and they  control the billing and
collection process.  The practices of the education provider to collect tuition,
and the timing of such  collection,  is subject to the billing  practices of the
education  provider  and the  tuition  reimbursement  and payment  policies  and
practices of the student's  employer.  To the extent  tuition is not paid by the
employer,   the   ability  to  collect   tuition  is  subject  to  the  risk  of
non-collection from the student, who is ultimately responsible for payment. If a
student does not successfully complete a course, the employer will generally not
pay the tuition.

     In most  cases,  EVCI has been  receiving  its share of  distance  learning
tuition  payments more than 90 days after  completion  of courses,  and, in some
cases, more than nine months after completion of courses. Frustrated by attempts
to expedite billing practices by education providers and reimbursement practices
by  corporations,  and by  students'  failure  to pay  tuition  after  receiving
reimbursement,  commencing after completion of the current  semester,  EVCI will
require at least 50% of tuition to be paid in advance  or,  alternatively,  that
deferred payments be guaranteed by the corporate employer.

     EVCI  cannot  predict  whether its new  policies  regarding  collection  of
tuition will adversely impact its student  enrollment and,  therefore,  its cash
flow. Accordingly, the continuation and further implementation of these policies
will depend upon their acceptance by students and their employers.

                                       19

<PAGE>


     A key  component  of EVCI's  increasing  emphasis  on  providing  corporate
training  and  development  content  is its  co-marketing  agreement  with  Bell
Atlantic.  EVCI and Bell  Atlantic  believe the cost  savings  for  corporations
receiving EVCI content and the  convenience to their  employees,  resulting from
the reduction of travel time, will justify the cost of Bell Atlantic's  building
out the  broadband  networks of their  corporate  customers.  EVCI is  currently
targeting the fourth quarter of 2000 for positive cash flow based on the rate at
which EVCI's  co-marketing  partners (such as Bell Atlantic and WeMedia) believe
they can roll out their  co-marketing  programs with EVCI and the cash flow EVCI
anticipates receiving from the operations of Interboro Institute.

     EVCI intends to license its broadband  network  design and service based on
factors that  include  usage,  number of  simultaneous  sites,  number of ports,
scheduling,  monitoring,  training, required bandwidth, equipment, and broadband
line changes.

     Operation  expenses.  Cost of sales consists primarily of costs relating to
operating EVCI's video conferencing equipment and to certain  telecommunications
costs.  These  costs  will  increase  as  EVCI  delivers  more  courses  to more
locations. EVCI has an agreement with AT&T that substantially lowers EVCI's long
distance usage costs.

     Generally,  marketing  costs are  expensed as incurred.  However,  costs of
courses and related  materials  are expensed  over the duration of the course to
which they relate.

     Seasonability.  EVCI  expects that  revenues for its third  quarter will be
substantially  lower than other quarters  because it  anticipates  substantially
lower student enrollment during June, July and August.

Fiscal 1999 Compared to Fiscal 1998

     Net revenue increased by 114% to $752,777 in 1999 from $351,598 in 1998 due
primarily  to a 126 % increase in student  course  completions  to 1,436 in 1999
from 634  completed  courses in 1998. To increase the rate and amount of student
enrollment  by  employees  of  EVCI's  corporate   customers,   in  addition  to
emphasizing  training and professional  development  content delivery,  EVCI has
been:

     o    working  more  closely  with  education  providers  and  customers  to
          implement and administer their agreements with the Company.

     o    increasing  the number of student  recruiters  (by eight during fiscal
          year 1999).

     o    focusing  on  obtaining   education   providers   with   national  and
          international  reputations  or with  regional  appeal  outside  of the
          Northeast.

     o    training   employees  of  co-marketing   partners   regarding  student
          recruitment.

     Tuition  payments  received  or  receivable  from  Adelphi,  The College of
Insurance and Mercy College constituted 60%, 27% and 11%,  respectively,  of net
revenue in 1999 and 64%, 19% and 17%, respectively,  of net revenue in 1998. Net
revenue   relates  to  tuition   payments  and  accounts   receivable  that  are
attributable to employees of EVCI's customers in 1999 and 1998 as

                                       20

<PAGE>

follows: AIG, 16% and 41%; Citibank, 13% and 37%; and Merrill Lynch, 9% and 13%.
EVCI did not deliver any courses or generate revenue in 1997.

     Interest  income  increased to $437,645 in 1999 from $56,369 in 1998 due to
the investment of the proceeds from the IPO.

     Cost of sales  increased by 41% to $295,640 in 1999, or 39% of net revenue,
from  $210,326,  or 60% of net  revenue  in  1998  due  primarily  to  increased
communication  costs for operating  EVCI's  multipoint  conferencing  units. The
improvement in gross margin results  primarily  from volume  discounts  given to
EVCI under its agreement with AT&T.

     Selling,  general and  administrative  expense  increased by  $3,771,211 to
$6,591,609 in 1999 as compared to $2,820,398 in 1998. The components and reasons
for the increase:

     o    Salaries and benefits  increased  by 121% to  $3,167,196  in 1999 from
          $1,435,525  in 1998  primarily  due to the  increase  in EVCI's  staff
          during the year by 38 to 62 full-time  employees.  The  increase  also
          includes bonuses of $412,185 in 1999 as compared to $120,000 in 1998.

     o    Marketing,  brochures and student  registration costs increased by 98%
          to  $1,170,755 in 1999 from $591,827 in 1998 due primarily to costs of
          marketing  EVCI's  services  to  an  increasing  number  of  potential
          students,  attending  trade shows,  and  utilizing  independent  sales
          representatives.

     o    Depreciation  and  amortization  increased  to  $458,410  in 1999 from
          $234,984  in  1998  as a  result  of  purchases  of  videoconferencing
          equipment and other equipment required to test the delivery of classes
          using the Company's proprietary broadband network design.

     o    Other selling and general  administrative  expenses  increased 212% to
          $1,740,623 in 1999 from $558,062 in 1998 primarily due to increases in
          rent,  professional fees, maintenance fees, office telephone expenses,
          postage,  insurance,  computer  expenses,  travel costs,  and investor
          relations costs that were incurred to support EVCI's growth.

      o   Interest and financing  costs of $5,519 in 1999 relates to interest on
          capital lease obligations  compared to $105,681 in 1998, which related
          to private placements in 1997 of debt that was retired in 1998.

     EVCI also  incurred  $425,533 in non cash  expenses in 1999 relating to the
issuance of options and warrants to outside consultants for services
performed. These options and warrants are valued at their fair value at the date
of issuance using the Black-Scholes option pricing model.

     In addition,  EVCI incurred a loss of $54,715 on its investment in Visiocom
USA.

                                       21

<PAGE>


Liquidity and Capital Resources

     In its initial  public  offering,  completed in the first  quarter of 1999,
EVCI  received  net  proceeds  of  approximately  $13,399,000  from  the sale of
1,338,334  shares of its common stock,  at $12 per share.  This includes  EVCI's
sale of 138,334  shares,  for net proceeds of  $1,494,000,  upon exercise of the
underwriters over allotment option. Three EVCI officers also participated in the
over allotment option sales by selling a total of 41, 666 shares, for which they
received net proceeds of $449,992.

     Through  December 31,  1999,  the net proceeds of the IPO have been used as
follows:

     Cash and investment grade obligations                        $6,926,000*
     Purchasing and installing video conferencing equipment        1,896,000
     Marketing                                                       917,000
     Net payment for equity & other investments                      296,000
     Hiring and training additional personnel                        420,000
     Other working capital and operating expenses                  2,944,000
                                                                 -----------
                                                                 $13,399,000
                                                                 ===========



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

          *   Cash in non-interest bearing accounts was approximately $38,000.

     On February 3, 2000, EVCI received net proceeds of approximately
$3,740,000  from the sale to The Shaar Fund Ltd.  of  400,000  shares of a newly
designated  Series A, 7.5% convertible  preferred stock having a stated value of
$10.00 per share and three year  warrants  to purchase  40,000  shares of EVCI's
common stock.

     Capital  expenditures  for  twelve  months  ended  December  31,  1999 were
$1,969,351  compared to $449,883 for the twelve months ended  December 31, 1998.
The  additional  purchases  were  directly  attributable  to  purchases of video
conferencing  equipment  required at EVCI's  education  providers  and corporate
customers' sites where the EVCI's video conferenced programs are offered and for
the purchase of equipment to test EVCI's  proprietary  broadband network design.
EVCI will continue to use its cash  resources as needed to implement the plan of
operations described in its IPO prospectus.

     On January 14, 2000, EVCI's newly formed wholly-owned subsidiary, Interboro
Holding,  Inc.,  acquired all of the outstanding  stock of Interboro  Institute,
Inc.

     The purchase  price for the  outstanding  stock of Interboro is  contingent
upon  Interboro  having  earnings  before  interest,  taxes,  depreciation,  and
amortization,  as  determined  by EVCI's  auditors,  over the three fiscal years
commencing July 1, 2000 (or January 1, 2001 if EVCI changes  Interboro's  fiscal
year to a calendar  year).  The purchase price has two  components:  (i) a fixed
portion of $672,500,  and (ii) a percentage  portion equal to 50% of EBITA.  The
purchase price is payable out of between 20% and 50% of EBITDA that is allocated
first to the fixed and then to the percentage portion of the purchase price. Any
earned but  deferred  percentage  portion


                                       22

<PAGE>

becomes payable in eight quarterly installments after the fixed portion has
been fully paid.  Unless Interboro has sufficient  EBITDA,  the fixed portion is
not payable.

     In addition,  EVCI has agreed to issue to Mr. Kalisch  warrants to purchase
up to 25,000  shares of EVCI's  common  stock at the rate of 5,000  warrants per
year  provided  Interboro  has at least  $500,000  of EBITDA for the  applicable
fiscal year during the five year period  commencing  July 1, 2001 (or January 1,
2002 if registrant charges Interboro's fiscal year to a calendar year).

     EVCI has infused  $1,000,000  into  Interboro  for  working  capital and to
satisfy certain net worth and other financial requirements.

     See Note 3 of Notes  to  Financial  Statements  for  information  regarding
EVCI's agreement with Learningforce, Inc.

     EVCI  anticipates,  based on current plans and assumptions  relating to its
operations,  that cash flow from  operations  and the proceeds  from its IPO and
recent  preferred  stock  offering  will  be  sufficient  to  satisfy  its  cash
requirements  for at least until  December  31,  2000.  EVCI  expects to require
additional  funding  in order to  operate  and grow and is  considering  various
available  financing  options.  If, however,  EVCI is  underestimating  its cash
requirements,  it will require additional debt or equity financing sooner. There
can be no assurance  that any such  required  debt or equity  financing  will be
available on acceptable terms.

Item 7.  Financial Statements.

     The financial  information  required by this item is set forth beginning on
page F-1.

Item 8. Changes in and  Disagreements  With  Accountants  on Accounting and
        Financial Disclosures.

         None.

                                    PART III

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

     Information  about  the  current  directors,  executive  officers  and  key
employees of EVCI and their respective positions is set forth below:

Name                        Age                Positions Held
----                        ---                --------------
Dr. Arol I. Buntzman        56   Chairman of the board and chief executive
                                 officer
Dr. John J  McGrath         46   President and director
Richard Goldenberg          54   Chief financial officer, secretary and director
James H. Mollitor           54   Chief technical officer
Frederick H. Zolla          49   Vice president - corporate development
Royce N. Flippin Jr.        65   Director
Arthur H. Goldberg          57   Director
Philip M. Getter            63   Director

                                       23

<PAGE>


     Dr.  Arol I.  Buntzman  has  served  as  chairman  of the  board  and chief
executive  officer of EVCI since it's inception in March 1997 and as a member of
the  compensation  committee  since  February  1999.  From October 1996 until he
founded EVCI with Dr. John  McGrath,  Dr.  Buntzman  worked with Dr.  McGrath on
EVCI's  business  plan.  From August 1995 to October 1996 he was chairman of the
board and chief  executive  officer and a principal  stockholder  of Educational
Televideo  Communications,  Inc. a provider of distance learning services.  From
July 1995  through  June  1996,  he  served as  director  of  interactive  video
conferencing  distance  learning  of Fordham  University.  From  September  1992
through  July 1995 he was an adjunct  professor  and the director of the weekend
program,  a college program for working adults,  at Mercy College,  Dobbs Ferry,
New York.

     Dr.  Buntzman  received a doctorate  in  education  through  the  executive
leadership  program of Fordham  University  Graduate  School of Education in May
1995,  a  professional  diploma  in  educational   administration  from  Fordham
University  Graduate  School of  Education in May 1993 and a Masters of Business
Administration  from  Arizona  State  University  in finance and  management  in
September  1970.  His  doctoral  dissertation  focused  on  the  usage  of  live
interactive video conferencing as an educational delivery method and its use for
graduate education programs.

     Dr. John J.  McGrath has served as  president  and a director of EVCI since
it's  inception in March 1997.  From October 1996 until he founded EVCI with Dr.
Buntzman,  he worked with Dr. Buntzman on EVCI's business plan. From August 1995
to October 1996, he was  president,  a director and a principal  stockholder  of
Educational Televideo Communications, Inc.

         From  January  1995 to February  1997,  Dr.  McGrath  served as special
assistant to the president of the Mercy College,  Dobbs Ferry, New York. Through
December 1994, he served as assistant  vice-president  for extension  Centers of
Mercy College  where he was  responsible  for  establishing  and managing  seven
college extension centers in New York City and Westchester  County, New York. He
also served as the dean of the White  Plains  Campus of Mercy  College from 1990
through 1993.

     Dr. McGrath holds a Ph.D.  from the Fordham  University  Graduate School of
Arts and Sciences, with a specialization in law and criminal justice.

     Richard Goldenberg has served as chief financial  officer,  secretary and a
director of EVCI since its inception.  From October 1996 until October 1997, Mr.
Goldenberg  served as chief  financial  officer,  treasurer and secretary of RDX
Acquisition Corp., a company that provides proprietary  electronic messaging and
automation   software.   From  1986  through   September   1996,  he  served  as
vice-president,  treasurer  and  secretary  of Celadon  Group,  Inc., a publicly
traded  transportation  company.  He has a  B.B.A.  in  accounting  from  Baruch
College, CUNY.

     James H. Mollitor joined EVCI in July 1998 as vice president of operations.
He became EVCI's chief technical  officer in December 1999. From May 1997 to May
1998 he served as director of the Manhattan  Data Center of Lockheed  Martin,  a
defense contractor. From June 1976 to March 1997, he served as chief information
officer of Loral Electronics Systems, Inc., a military electronics manufacturer.

                                       24

<PAGE>


     Frederick  H.  Zolla  joined  EVCI in July  1999 as  director  of  business
development.  He  became  EVCI's  vice-president  of  corporate  development  in
November  1999.  From May 1997  through  June 1999,  Mr.  Zolla was a consultant
(d/b/a as Professional Consultants) to The Hispanic  Telecommunication  Network,
The New York City Board of  Education,  PBS  -Channel  13,  The JASON  Classroom
Network  and Claire  Transportation  Services,  where he utilized  his  distance
learning expertise and knowledge of education sales and marketing.

     From  November1992 to May 1997 he was the sole stockholder and director and
president and Chief Executive Officer of Distance Learning Associates,  Inc. DLA
was the first marketing  company to organize  distance  learning programs from a
variety  of  providers  into a package  that made it  possible  for K-12  school
districts to utilize distance learning resources.  Under Mr. Zolla's leadership,
DLA  established  distance  learning  programs  in over 1,800  school  districts
throughout  the  country.  During  this time,  Mr.Zolla  also  served as a guest
lecturer at the University of Southern Connecticut.  Through a program initiated
from the State  Department  of Education in Georgia,  Mr. Zolla  lectured on the
integration  of distance  learning  resources in the  classroom and workplace at
Georgia Tech, Valdosda  University and the regional  educational service centers
throughout  Georgia.  DLA ceased  operations in May 1997 as the education market
changed from satellite delivered resources to Internet delivered resources.  Mr.
Zolla declared and was discharged  from personal  bankruptcy in 1997 as a result
of having personally guaranteed  approximately  $800,000 in DLA liabilities.  To
his knowledge, DLA did not file for bankruptcy protection.

     In  1996,  Mr.Zolla  served  on the  White  House  advisory  committee  for
educational technology and in 1995 was appointed to the National  Infrastructure
Awards committee, headed by Vice President Al Gore.

     Royce N.  Flippin,  Jr.  has been a director  and a member of EVCI's  audit
committee  since  February  1999.  He has served,  since 1992,  as  president of
Flippin Associates,  a consulting firm focusing on the development of resources,
programs  and new markets and human  resource  management  for career  planning,
communication  and leadership  skills.  After serving as a tenured professor and
director  of  athletics  at MIT from  1980 to 1992,  he has been a  director  of
program  advancement  at MIT from 1992 to 1999,  in which  capacity  he provided
consulting services to the MIT Office of Individual Giving -Resource Development
regarding projects that include technology  transfers,  individual gift bequests
and the planned MIT athletic center. Mr. Flippin is a trustee or board member of
several profit and non-profit organizations,  including Ariel Capital Management
Funds   (trustee   since  1986),   Radkowsky   Thorium  Power   Corporation,   a
privately-held  company  that  is  developing  non-proliferative  nuclear  fuels
(director since 1994 and chairman from 1995-1997),  Kinematic, Inc., a privately
held company that is developing a virtual  environment  training  system for the
improvement of motor skills under an exclusive  license from MIT (director since
1994),  Newark Boys Chorus School  (trustee  since 1993) and Asphalt Green Acqua
Center,  New York, NY (director  since 1993).  Mr. Flippin holds an A.B.  degree
from Princeton  University and an M.B.A. degree from Harvard University Graduate
School of Business Administration.

     Arthur H.  Goldberg  has been a  director  and  member of EVCI's  audit and
compensation  committees  since  February  1999.  He has served as  president of
Manhattan  Associates,  L.L.C., an investment and merchant banking firms,  since
1994.  From 1990 through  1993, he served as

                                       25

<PAGE>

chairman  of Reich & Co.,  a New  York  Stock  Exchange  member  firm  that
specialized in investment banking and corporate finance for small-cap companies.
Mr.  Goldberg  holds a B.S.  degree  from New York  University  Stern  School of
Business and a J.D. degree from New York University School of Law.

     Philip M. Getter has been a director  since May 1999.  Since March 1996, he
has served as a managing director and head of corporate finance of Prime Charter
Ltd.,  the lead  underwriter  of EVCI's IPO.  From 1992 to March 1996,  he was a
senior vice president, investment banking, at Josephthal Lyon & Ross. Mr. Getter
has more than 30 years of experience in the  securities  industry.  From 1975 to
1981 he was  chairman and chief  executive  officer of Generics  Corporation  of
America,  a public company that was one of the largest generic drug companies in
the U.S. He is a member of the League of American Theatres and Producers, serves
on the Board of the  American  Theatre  Wing and is a Trustee  of the Kurt Weill
Foundation  for Music.  Mr. Getter has produced  events for  Broadway,  film and
television.  Mr. Getter  received his B.S. in industrial  relations from Cornell
University.

     Executive  officers of EVCI are  appointed  by the board of  directors  and
serve as the discretion of the Board.  There are no family  relationships  among
any of the directors or executive officers of EVCI.

     As set forth  above,  each of Drs.  Buntzman  and McGrath was an  executive
officer,  director and principal  stockholder  of  Educational  Televideo.  From
February 1995 through July 1996,  Educational Televideo had delivered courses to
one customer,  using video  conferencing  equipment  and dedicated  phone lines.
Educational  Televideo  ceased  business  operations  in  September  1996.  Drs.
Buntzman and McGrath terminated their affiliation with Educational  Televideo in
October 1996 when it became apparent to them that  anticipated  financing needed
to resume Educational  Televideo's business would not be provided. Drs. Buntzman
and McGrath believe that, when they resigned,  Educational Televideo's remaining
liabilities  consisted solely of  approximately  $300,000 of accounts payable to
vendors, primarily for equipment and supplies. To the knowledge of Drs. Buntzman
and McGrath,  bankruptcy proceedings have not been commenced or threatened by or
against Educational Televideo.

Classified Board

     In December 1998 EVCI adopted a classified  board of directors  pursuant to
which the directors are divided into three  classes.  The term of office of each
class of directors will expire as follows:

     o    Class 1, at the first annual  meeting of  stockholders  following  the
          date of this report.

     o    Class 2, at the second annual  meeting of  stockholders  following the
          date of this report.

     o    Class 3, at the third annual  meeting of  stockholders  following  the
          date of this report.

     Thereafter,  the term of office of each  director  will expire at the third
annual meeting of stockholders  following his or her election.  The directors in
each class are: Class 1: Arol I.

                                       26

<PAGE>

Buntzman  and  Philip  M.  Getter;  Class 2, John J.  McGrath  and Royce N.
Flippin, Jr.; and Class 3, Richard Goldenberg and Arthur H. Goldberg.

Section 16(a) Beneficial Ownership Reporting Compliance

     A review of Forms 3 and 4  furnished  to EVCI  during its fiscal year ended
December  31,  1999,  Forms 5 furnished  to EVCI with respect to its fiscal year
ended December 31, 1999 and the written representations, if any, of the relevant
reporting persons,  indicates that Philip M. Getter did not file his Form 3 in a
timely manner.

Item 10. Executive Compensation.

     The following  table shows  compensation  paid for the years ended December
31, 1999, 1998 and 1997 to EVCI's chief executive  officer and its other highest
paid executive offices who earned more than $100,000 in 1999.

<TABLE>
<CAPTION>
                                                        Summary Compensation Table                                    Long Term
                                                           Annual Compensation                                      Compensation
                      --------------------------------------------------------------------------------------   ---------------------




                                                                                                                      Awards
                                                                                                                    Securities
                                                                                            Other Annual            Underlying
                                                     Salary                  Bonus          Compensation             Options
Name and Principal Position           Year            ($)                      ($)               ($)                   (#)
------------------------------------------------------------------------------------------------------------   --------------------
<S>                                  <C>            <C>                    <C>                  <C>                <C>
Dr. Arol I. Buntzman                  1999           270,000                293,333 (1)          ---                 120,000
     Chairman of the                  1998           210,000                 70,000              ---                   ---
     board and chief                  1997           136,000                 35,600              ---                   ---
     executive officer

Dr. John J. McGrath                   1999           158,666                 91,667 (2)          ---                  40,000
     President                        1998           126,500                  5,750              ---                   ---
                                      1997            50,000                   ---               ---                   ---

Richard Goldenberg                    1999           117,666                 55,000 (3)          ---                  15,000
     Chief financial officer          1998           102,000                  4,750            13,200 (4)              ---
                                      1997            18,750                   ---             11,100 (4)              ---

James H. Mollitor                     1999           120,000                  5,000              ---                   ---
     Chief technical officer          1998            57,500                  2,000              ---                  50,000
                                      1997              ---                    ---               ---
                                                        ---
----------------------
</TABLE>

(1) Includes $43,333 of bonus earned in 1998,  payment of which was deferred at
    the election of Dr. Buntzman.

(2) Includes $21,667 of bonus earned in 1998, payment of which was deferred
    at the election of Dr. McGrath.

(3) Includes $15,000 of bonus earned in 1998, payment of which was deferred
    at the election of Mr. Goldenberg.

(4) Consulting  fees earned prior to Mr.  Goldenberg's  full-time  employment by
    EVCI, the payment of which was deferred at the election of Mr. Goldenberg.

(5) Was not employed by EVCI prior to July 1998.

                                       27

<PAGE>

Options Grants in Last Fiscal Year

     The following table sets forth information regarding options granted during
the year ended December 31, 1999,  under EVCI's  Incentive stock option plan, to
the executive officers named in the immediately preceding table.
<TABLE>
<CAPTION>

                                    Number of
                                   Securities
                                    Underlying       Percent of Total
                                 Options Granted    Options Granted to     Excercise Price
Name                                   (#)           Employees in 1999          ($/sh)              Expiration Date
----                             ---------------     -----------------     ---------------          ---------------

<S>                               <C>                     <C>                <C>                         <C> <C>
Arol I. Buntzman                   120,000                 47.1%              10.375                  May 06, 2004
John J. McGrath                     40,000                 15.7%              10.375                  May 06, 2004
Richard Goldenberg                  15,000                  5.9%              10.375                  May 06, 2004

Aggregate Option Exercises in 1999 and Year-End Option Values
</TABLE>

<TABLE>
<CAPTION>

                                              Number of Securities
                                        Underlying Unexercised options at   Value of Unexercised In-The-Money
                                              December 31, 1999 (#)          Options at December 31, 1999 ($)
Name                                        Exercisable/Unexercisable           Exercisable/Unexercisable
----                                    ---------------------------------   ---------------------------------

<S>                                                  <C>                                <C>
Dr. Arol I. Buntzman                                  0/120,000                          0/1,185,000

Dr. John J. McGrath                                    0/40,000                            0/395,000

Dr. Richard Goldenberg                                 0/15,000                            0/148,125

James H. Mollitor                                 10,000/40,000                              2,500/0

</TABLE>

Compensation of Directors

     Directors  who are not  officers or  employees  of EVCI are paid $1,000 for
attendance at each meeting of the board of directors or any committee thereof
and travel  expenses.  In addition,  EVC1's  Amended and Restated 1998 Incentive
Plan  authorizes  the automatic  grant of an option to purchase  5,000 shares of
common  stock to  non-employee  directors on the date on which such person first
becomes a non-employee  director.  Each  non-employee  director is automatically
granted an option to purchase  5,000 of common  stock  shares on March 1 of each
year,  provided he or she is then a non-employee  director and, as of such date,
he or she has served on the board of directors  for at least the  preceding  six
months.   Options  granted  to  non-employee  directors  vest  in  three  annual
installments commencing on the first anniversary of the date of grant and have a
term of ten  years.  The  exercise  price of  options  granted  to  non-employee
directors is 100% of the fair market value per share of common stock on the date
of grant. A non-employee  director who has been granted stock or options by EVCI
under a consulting or other  arrangement is ineligible to receive any subsequent
automatic grants unless the compensation committee determines otherwise.

                                       28

<PAGE>

Employment Agreements

     Each of Dr. Buntzman,  Dr. McGrath,  Mr. Goldenberg and Mr. Mollitor has an
employment agreement with EVCI.

     The employment  agreement with Dr. Buntzman  provides for his employment as
chairman  and chief  executive  officer at an annual  salary of  $330,000  since
September 1, 1999.

     The employment  agreement  with Dr. McGrath  provides for his employment as
president at an annual salary of $200,000 since September 1, 1999.

     The employment agreement with Mr. Goldenberg provides for his employment as
chief financial officer at an annual salary of $125,000 since September 1, 1999.

     The employment  agreement with Mr. Mollitor  provides for his employment as
chief technical officer at an annual salary of $120,000.

     Each of the employment agreements expires December 31, 2001. Dr. Buntzman's
and Dr. McGrath's  agreements  expressly permit increases in salary as the Board
determines. The employment agreements entitle the officers to participate in the
health,  insurance,  pension and other benefits,  if any,  generally provided to
employees of EVCI and Dr. Buntzman's and Dr. McGrath's  agreements  entitle them
to additional life insurance equal to three times their respective salaries. The
employment  agreements  also provide  that,  with certain  exceptions,  until 18
months after the termination of employment with EVCI, the officer may not induce
employees  to leave the employ of EVCI or  participate  in any  capacity  in any
business  activities that compete with the business conducted by EVCI during the
term of the employment agreement.

     EVCI may  terminate  the  employment of the officers upon death or extended
disability or for cause (as defined in each respective  agreement),  except that
Mr. Mollitor's agreement can be terminated by EVCI at any time. If employment is
terminated by EVCI without cause, the agreements generally provide EVCI must pay
the officer's  salary and health and insurance  benefits  until the earlier of a
specified date or the scheduled termination date of the employment agreement or,
in the case of each of Drs.  Buntzman  and Dr.  McGrath,  until 36 months  after
termination of his employment.

     EVCI  entered has an  agreement  with Dr. Arol I.  Buntzman  providing  for
payments to him, in the event his  employment  with EVCI is  terminated  after a
change in control of EVCI during the time of the agreement.  A change of control
means any of the following:

     o    any  person  becomes  the  beneficial  owner of 25% or more of  EVCI's
          voting securities; or

     o    during any consecutive three years,  EVCI's directors at the beginning
          of such three year  period and any new  director  whose  election  was
          approved by at least 662/3% of the  directors,  cease to  constitute a
          majority of the board; or

                                       29
<PAGE>

     o   EVCI's  stockholders  approve a merger or consolidation other than one
          where EVCI's  outstanding  voting  securities  before the  transaction
          constitute  50% or more of the  outstanding  securities  of the entity
          surviving the transaction or where a  recapitalization  is effected in
          which no person acquires 25% or more of EVCI's voting securities; or

     o    EVCI's stockholders approve a total liquidation of EVCI or sale of all
          or substantially all of EVCI's assets.

     The  agreement  expires  September  30,  2001,  but is subject to automatic
extension to December 31, 2001, and, thereafter,  for successive one-year terms,
unless otherwise  terminated by either party. The agreement  requires  severance
payments  to Dr.  Buntzman  of 2.99  times  the sum of his base  salary  and the
highest  annual bonus,  if any, paid to him during the three  previous years and
the  continuation of his medical and dental  insurance  benefits.  The agreement
requires these payments to be made in equal  installments over a 36 month period
and for the insurance benefits to continue for 36 months.

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

     The  following  table  sets  forth,  as of March 1,  2000,  the  beneficial
ownership of common stock by each person (or group of affiliated  persons) known
by EVCI to own  beneficially  more than 5% of the  outstanding  shares of common
stock,  each  director and  executive  officer of EVCI,  and all  directors  and
executive  officers as a group.  Except as  indicated  in the  footnotes  to the
table, the persons named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them.

                           [Intentionally left blank]


                                       30

<PAGE>


<TABLE>
<CAPTION>

                                                                            Shares of
                                                                          Common Stock            Percentage of
Name of Beneficial Owner(1)                                            Beneficially Owned         Total Shares
---------------------------                                            ------------------         ------------

<S>                                                                    <C>                           <C>
Dr. Arol I. Buntzman                                                    1,276,834(2)                  29.4%
Dr. John J. McGrath                                                       420,146                      9.7
Richard Goldenberg (3)                                                     84,127                      1.9
James H. Mollitor                                                          16,250(4)                   0.4
Frederick H. Zolla                                                            -                         -
Tayside Trading Ltd. (5)                                                  417,705(6)                   9.3
125/5 Sanhedria Murchevet, Jerusalem, Israel
DEWI Investments Limited (7)                                              533,334                     12.3
37 Bar Ilan Street, Jerusalem, Israel
B&H Investments Ltd (8)                                                   268,409 (9)                  6.1
50 Town Range, Gibraltar
Royce N. Flippin, Jr.                                                       3,333 (10)                  -
Arthur H. Goldberg                                                        114,000 (11)                 2.6
Philip Getter                                                              29,417 (12)                  .7
All directors and executive officers as a group                         1,439,834 (13)                32.2
(8 persons)

</TABLE>

(1)       Unless  otherwise  indicated,  the address for each stockholder is c/o
          Educational  Video  Conferencing,  Inc.,  35 East Grassy  Sprain Road,
          Suite 200,  Yonkers,  New York 10710.

(2)       Includes   the  420,146   and  84,127   shares   beneficially   owned,
          respectively, by Dr. McGrath and Mr. and Mrs. Goldenberg. An agreement
          between  Drs.  Buntzman  and McGrath  gives Dr.  Buntzman the right to
          direct the vote of the shares of common stock owned by Dr.  McGrath as
          Dr.  Buntzman  directs  until  December  31, 2001.  Additionally,  Dr.
          Buntzman  has the right to direct the vote of the shares  owned by Mr.
          and Mrs.  Goldenberg  until December 31, 2001 pursuant to an agreement
          with  them.

(3)       Owned  jointly  by Mr.  Goldenberg  and his wife and  excludes  15,000
          shares of common stock owned by Mr. Goldenberg's adult children, as to
          which Mr.  and Mrs.  Goldenberg  disclaim  beneficial  ownership.

(4)       Includes currently  exercisable options to purchase 10,000 shares.
(5)       The  ultimate  beneficial  owner is Mr.  Esriel  Pines.
(6)       Includes 167,705 shares underlying currently exercisable warrants.
(7)       The  ultimate  beneficial  owner is Mr.  Aron  Gee.
(8)       The  ultimate  beneficial  owns are Mr.  Chaim  Segal  and Mr.  Simcha
          Senerovitch.
(9)       Includes 46,545 shares underlying currently exercisable warrants.
(10)      Comprised of shares underlying  currently  exercisable  options.
(11)      Includes currently exercisable options and warrants to purchase 79,000
          shares.
(12)      Includes  3,750 shares  owned by Mr.  Getter's  wife,  as to which Mr.
          Getter  disclaims  beneficial   ownership,   1,667  shares  underlying
          currently  exercisable options and 24,000 shares underlying  currently
          exercisable warrants.
(13)      Includes 118,000 shares underlying  currently  exercisable options and
          warrants.

                                       31

<PAGE>

Item 12. Certain Relationships and Related Transactions.

     In January and  February  1998,  EVCI  issued to Tayside  Trading  Ltd.,  a
principal  stockholder  of EVCI,  warrants to purchase  17, 705 shares of common
stock at $6.00 per share as a finder's fee in connection  with EVCI's receipt of
a portion of the gross  proceeds to  $1,072,500  from the  issuance in a private
placement of 195,000 shares of common and warrants to purchase  78,000 shares of
common  stock at $6.00 per share.  Tayside  and B&H  acquired  their  other EVCI
securities  disclosed  in  Item  11  of  this  report  prior  to  the  foregoing
transactions  and at a time  when  they  had no  relationship  with  EVCI or any
officer or director of EVCI.

     In March 1998,  EVCI entered into a three year  consulting  agreement  with
Arthur H. Goldberg, a director of EVCI. The agreement provides that Mr. Goldberg
will help EVCI to obtain  financing and agreements with corporate  customers and
education  providers and in strategic  planning and corporate  development.  The
agreement  entitles  Mr.  Goldberg  to 5% of  revenues  received  by  EVCI  from
activities,  if any,  with one  education  provider  with  which  EVCI  does not
currently have an agreement.  The agreement also grants Mr.  Goldberg seven year
options to purchase  100,000 shares of common stock at $7.00 per share, of which
options to purchase  75,000 shares have vested  overtime and options to purchase
25,000 shares vested on March 4, 2001 if the agreement remains in effect.

     The transactions  described above between EVCI and each of Tayside, B&H and
Mr.  Goldberg were  consummated  when such  companies and  individuals  were not
affiliates of EVCI. EVCI believes the terms of such transactions were negotiated
at  arms  length  and  were  as  favorable  to  EVCI  as it  could  obtain  from
unaffiliated third parties.

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

(a) The following exhibits are filed as part of this Report:

Exhibit No.*            Description of Exhibit
------------            ----------------------

       3.1[1]     --    Certificate of Incorporation of the Registrant.

       3.1.(a)[6] --    Certificate of Amendment to Certificate of
                        Incorporation.

       3.2[6]     --    Amended and Restated By-Laws of the Registrant.

       3.3[1]     --    Certificate of Merger of Educational Video Conferencing,
                        Inc. (a New York Corporation) into the Registrant
                        (a Delaware Corporation).

       3.4[1]     --    Certificate of Correction of the Certificate of
                        Incorporation of the Registrant.

       3.5[10]    --    Second Amended Certificate of Designation of Series A
                        7.5% Convertible Preferred Stock of the Registrant.

                                       32

<PAGE>


       3.5(a)[11] --    Certificate of Correction of Second Amended Certificate
                        of Designation of Series A 7.5% Convertible Preferred
                        Stock of the Registrant.

       4.1[1]     --    Form of Common Stock  Purchase  Warrant  issued to
                        investors  in  private  placements  and for  services
                        provided in connection with such private placements.

       4.2[1]     --    Tayside Common Stock Purchase Warrant.

       4.3[5]     --    Adelphi Common Stock Purchase Warrant.

       4.4[5]     --    Form of Representative's Warrant Agreement (including
                        Form of Representative's Warrant).

       4.5[5]     --    Form of Common Stock certificate.

       4.6[5]     --    Amended and Restated 1998 Incentive Stock Option Plan of
                        the Registrant.

       4.7[9]     --    Warrant Agreement, dated as of January 14, 2000, between
                        Educational Video Conferencing, Inc. and Bruce R.
                        Kalisch.

       4.8[10]    --    Common Stock Purchase Warrant, dated as of February 3,
                        2000, issued to The Shaar Fund Ltd.

       4.9(10]    --    Form of  Finder's  Warrant  (relating  to  the  issuance
                        of   warrants   to   purchase   3,870   shares   of  the
                        Registrant's common stock).

     +10.1[3]     --    Agreement between the Registrant and Adelphi University
                        for the Offering of Interactive Televideo Courses,
                        dated May 13, 1997.

     +10.2[2]     --    Agreement  between the  Registrant and The College  of
                        Insurance   for  the   Offering  of   Interactive
                        Televideo Courses, dated September 16, 1997.

     +10.3[2]     --    Agreement between the Registrant and Mercy College
                        for the Offering of Interactive Video Conferenced and
                        Computer Courses, dated March 10, 1998. Agreement
                        between the  Registrant  and  Reliance National  for the
                        Offering of  Interactive  Televideo Courses and Distance
                        Learning Programs, dated October 7, 1998.

      10.4[1]     --    Agreement between the Registrant and Reliance National
                        for the Offering of Interactive Televideo Courses and
                        Distance Learning Programs, dated October 7, 1998

      10.5[1]     --    Agreement between the Registrant and Citibank, dated May
                        20, 1997.

      10.6[1]     --    Agreement between the Registrant and American
                        International Group, dated May 21, 1997.

      10.7[1]     --    Agreement between the Registrant and Merrill Lynch
                        for the Offering of Interactive Televideo Courses and
                        Distance Learning Programs, dated June 3, 1998.

                                       33

<PAGE>

      10.7(a)[8]  --    Agreement  between  the  Registrant  and  Merrill
                        Lynch,  Pierce,  Fenner & Smith  Incorporated for the
                        Offering  of   Interactive   Televideo   Courses  and
                        Distance Learning Programs, dated June 30, 1999.

      10.8[5]     --    Agreement for Interactive Televideo Courses and Distance
                        Learning Programs between the Registrant and Travelers
                        Indemnity Company, dated July 24, 1998.

      10.9[1]     --    Agreement between the Registrant and Zurich Insurance
                        Company, U.S. Branch for the Offering of Interactive
                        Televideo Courses and Distance Learning Programs, dated
                        August 12, 1998.

      10.11[6]    --    Lease Agreement between the Registrant and Realty Co.
                        (doing business as Royal Realty), dated as of December
                         15, 1998.

      10.12[1]    --    Employment Agreement between the Registrant and Dr. Arol
                        I. Buntzman, dated October 1, 1998.

      10.13[1]    --    Employment Agreement between the Registrant and Dr. John
                        J. McGrath, dated October 1, 1998.

      10.14[1]    --    Employment Agreement between the Registrant and Richard
                        Goldenberg, dated October 1, 1998.

      10.15       --    Intentionally omitted.

      10.16[1]    --    Employment Agreement between the Registrant and James H.
                         Mollitor, dated October 1, 1998.

      10.17[1]    --    Consulting Agreement between the Registrant and Arthur
                        H. Goldenberg, dated March 4, 1998.

      10.18[4]    --    Consulting Agreement between the Registrant and William
                        R. Coda, dated May 10, 1998.

      10.19       --    Intentionally omitted.

      10.20[1]    --    Chief Executive Officer Change in Control Agreement
                        between the Registrant and Dr. Arol I. Buntzman, dated
                        October 1, 1998.

      10.21[1]    --    Form of Indemnification Agreement.

      10.22[5]    --    Intentionally omitted.

      10.23[4]    --    ICS  Network  Systems  Equipment  Collocation  and
                        Services  Agreement, dated November 20, 1997.

                                       34

<PAGE>


      10.24[4]    --    Agreement  between  the  Registrant  and  General
                        Reinsurance   Corporation   for   the   Offering   of
                        Interactive  Televideo  Courses and Distance Learning
                        Programs, dated November 6, 1998.

     +10.25[4]    --    Agreement  between the  Registrant  and  Manhattan
                        College  for  the  Offering  of   Interactive   Video
                        Conferenced Courses, dated November 23, 1998.

      10.26[4]    --    Comarketing Agreements between AT&T Corp. and the
                        Registrant.

      10.27[4]    --    Tariff agreement between the Registrant and AT&T Corp.
                        dated in June 1998.

      10.28       --    Agreement between Arol I. Buntzman and Richard and
                        Bonnie Goldenberg, dated March 1, 2000.

      10.29       --    Agreement between Arol I. Buntzman and John J. McGrath,
                        dated March1, 2000.

      10.30       --    Intentionally omitted.

      10.31[6]    --    Agreement between the Rochester City School District and
                        the Registrant, dated December 22, 1998.

      10.32[6]    --    National Agreement between Lockheed Martin Corporation
                        and the Registrant dated as of February 17, 1999.

     +10.33[6]    --    Educational Provider Agreement between Kaplan
                        Educational Centers, Inc. and Educational Video
                        Conferencing, Inc. dated March 23, 1999.

      10.34[7]    --    EVC and CWE Co-Marketing Agreement, dated May 21, 1999,
                        between the Registrant and the Consortium for Workers
                        Education.

      10.35[8]    --    Video Conferencing and Telecommunications Services
                        Agreement,  dated  as of July 1,  1999,  between  the
                        Board of Education of the City School District of the
                        City  of New  York  on  behalf  of  Community  School
                        District No. 10 and the Registrant.

      10.36[8]    --    Agreement  between the  Registrant  and  Atlantic
                        District  Lutheran  Church  Missouri  Synod  for  the
                        Offering of Interactive Televideo Courses, dated July
                        21, 1999.

      10.37[8]    --    Letter  Agreement  between  Excite  @Home  Network  and
                        the Registrant, dated July 26, 1999.

     +10.38[8]    --    Agreement  between the  Registrant  and  Concordia
                        College  for  the  Offering  of   Interactive   Video
                        Conferenced Courses, dated August 19, 1999.

                                       35

<PAGE>


     +10.39(a)[8] --    Agreement, dated August 26, 1999, between We Media,
                        Inc. and the Registrant.

     +10.39(b)[8] --    Agreement, dated September 22, 1999, between We Media,
                        Inc. and the Registrant.

     +10.40[8]    --    Co-Marketing Agreement, dated September 1, 1999, between
                        the Registrant and Bell Atlantic Network Services,  Inc.

     +10.41[8]    --    Agreement, dated September 1, 1999, between the
                        Registrant and Touro College and Touro University
                        College and Touro University International.

     +10.42[8]    --    Agreement,  between the  Registrant and St. John's
                        University  for the  Offering  of  Interactive  Video
                        Conferenced   and   Internet-Based   Courses,   dated
                        September 24, 1999.

      10.43[9]    --    Stock Purchase Agreement, dated as of January 14, 2000,
                        among Bruce R. Kalisch, Interboro Holding, Inc. and
                        Interboro Institute, Inc.

      10.44[9]    --    Escrow Agreement, dated January 14, 2000, among Bruce R.
                        Kalisch, Interboro Holding, Inc. and Fischbein Badillo
                        Wagner Harding.

     10.45[10]    --    Securities Purchase Agreement, dated as of February 3,
                        2000, between Educational Video Conferencing, Inc.
                        and The Shaar Fund Ltd.

      10.46[10]   --    Registration Rights Agreement, dated as of February 3,
                        2000, between Educational Video Conferencing, Inc.
                        and The Shaar Fund Ltd.

     ++10.50      --    Agreement between Educational Video Conferencing, Inc.
                        and Golden Gate University for the Offering of
                        Interactive video conference courses, dated March 3,
                        2000.

      10.51       --    License and services agreement between Educational Vide
                        Conferencing, Inc. and Learningforce Inc. dated as
                        of October 18, 1999.

      10.52       --    Educational Provider/Co-Marketing Agreement between
                        Educational Video Conferencing, Inc. and Computer
                        Generated Solutions, Inc. dated as of January 13, 2000.

      10.53       --    Stock Subscription and Stockholders' Agreement, dated as
                        of November 29, 1999 among Educational Video
                        Conferencing, Inc., Visiocom Worldwide, S.A., the
                        individuals set forth in Exhibit A to such agreement,
                        and Visiocom USA Incorporated ("VUSA"), including
                        Exhibits.

      27          --    Financial Data Schedule

                                       36

<PAGE>


      99.1[9]     --    Press Release of Educational Video Conferencing, Inc.,
                        dated January 20, 2000.

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

[1]       Incorporated by reference to the Registrant's  Registration  Statement
          on Form SB-2, dated October 23, 1998, registration no. 333-66085.

[2]       Incorporated by reference to Amendment No. 1, dated November 12, 1998,
          to the Registrant's Form SB-2, Registration no. 333-66085.

[3]       Incorporated by reference to Amendment No. 2, dated November 20, 1998,
          to the Registrant's Form SB-2, Registration No. 333-66085.

[4]       Incorporated by reference to Amendment No. 3, dated December 23, 1998,
          to the Registrant's Form SB-2, Registration No. 333-66085.

[5]       Incorporated by reference to Amendment No. 4, dated February 10, 1999,
          to the Registrant's Form SB-2, Registration No. 333-66085.

[6]       Incorporated by reference to Registrant's Form 10-QSB, for the quarter
          ended March 31, 1999.

[7]       Incorporated by reference to Registrant's Form 10-QSB, for the quarter
          ended June 30, 1999.

[8]       Incorporated by reference to Registrant's  Form 10-QSB for the quarter
          ended September 30, 1999.

[9]       Incorporated by reference to the  Registrant's  Form 8-K dated January
          14, 2000.

[10]      Incorporated by reference to the Registrant's  Form 8-K dated February
          3, 2000.

[11]      Incorporated by reference to the  Registrant's  Form 8-K/A dated March
          3, 2000.

*         Numbers inside  brackets  indicate  documents from which exhibits have
          been incorporated by reference.

+         Confidential  treatment  has been granted with respect to the redacted
          portions of this exhibit.

++        Confidential treatment has been requested with respect to the redacted
          portions of this exhibit.

(b) EVCI did not file any reports on Form 8-K during the fourth quarter of 1999.

                                       37

<PAGE>
                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
has duly  caused  this  report to be signed  on its  behalf by the  undersigned,
thereunto duly authorized.

                                        EDUCATIONAL VIDEO CONFERENCING, INC.


Date: March 29, 2000                    By:  /s/  Dr. Arol I. Buntzman
                                           -------------------------------------
                                            Dr. Arol I. Buntzman
                                            Chairman and Chief Executive Officer

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.

Signature                                                            Date
---------                                                            ----


/s/  Dr. Arol I. Buntzman                                         March 29, 2000
-------------------------------------------------------
Dr. Arol I. Buntzman
Chairman and Chief Executive Officer


/s/  Dr. John J. McGrath                                          March 29, 2000
-------------------------------------------------------
Dr. John J. McGrath
President and Director


/s/  Richard Goldenberg                                           March 29, 2000
-------------------------------------------------------
Richard Goldenberg
Chief Financial Officer, Secretary and Director (Principal
Financial and Accounting Officer)


/s/  Royce N. Flippin, Jr.                                        March 29, 2000
-------------------------------------------------------
Royce N. Flippin, Jr.
Director


/s/  Philip M. Getter                                             March 29, 2000
-------------------------------------------------------
Philip M. Getter
Director

                                                                  March 29, 2000
-------------------------------------------------------
Arthur H. Goldberg
Director

                                       38

<PAGE>

EDUCATIONAL VIDEO CONFERENCING, INC.

INDEX TO FINANCIAL STATEMENTS

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


<TABLE>
<CAPTION>
<S>                                                                                         <C>


Independent Auditor's Report                                                                    F-2


Financial Statements:

   Balance Sheet as of December 31, 1999 and 1998                                               F-3

   Statement of Operations for the Years Ended December 31, 1999 and 1998                       F-4

   Statement of Stockholders' Equity for the Years Ended December 31, 1999 and 1998             F-5

   Statement of Cash Flows for the Years Ended December 31, 1999 and 1998                       F-6

   Notes to Financial Statements                                                             F-7 - F-17
</TABLE>

                                       F-1

<PAGE>



INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Educational Video Conferencing, Inc.


We  have  audited  the   accompanying   balance  sheets  of  Educational   Video
Conferencing,  Inc.  ("EVC") as of December  31, 1999 and 1998,  and the related
statements of  operations,  stockholders'  equity,  and cash flows for the years
then  ended.  These  financial   statements  are  the  responsibility  of  EVC's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  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 financial  statements  referred to above present fairly, in
all material respects, the financial position of Educational Video Conferencing,
Inc. as of December 31, 1999 and 1998, and the results of its operations and its
cash  flows for the years  then  ended in  conformity  with  generally  accepted
accounting principles.


/s/ Goldstein Golub Kessler LLP

GOLDSTEIN GOLUB KESSLER LLP



New York, New York

January 28, 2000, except for Note 12 as
to which the date is February 3, 2000


                                       F-2


<PAGE>
                      EDUCATIONAL VIDEO CONFERENCING, INC.



                                  BALANCE SHEET
<TABLE>
<CAPTION>

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

December 31,                                                                                  1999                1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                 <C>
ASSETS

Current Assets:
  Cash and cash equivalents                                                          $  6,925,823         $    914,700
  Accounts receivable, net of allowance for doubtful accounts of
   $75,000 and $35,000, respectively                                                      461,234              226,776
  Prepaid expenses and other current assets                                               138,583               80,846

----------------------------------------------------------------------------------------------------------------------
      Total current assets                                                              7,525,640            1,222,322

Property and Equipment, net                                                             2,916,091            1,405,150

License Agreement                                                                         200,000             -

Deferred Income Tax Asset, net of valuation allowance of $856,000 and
 $520,000, respectively                                                                  -                    -

Equity and Other Investments                                                              240,533             -

Other Assets                                                                               15,246                7,832

Deferred Offering Costs                                                                  -                     900,000

----------------------------------------------------------------------------------------------------------------------
      Total Assets                                                                    $10,897,510          $ 3,535,304
======================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable and accrued expenses                                             $     524,539         $    920,643
  Current portion of capital lease obligation                                              15,717            -

----------------------------------------------------------------------------------------------------------------------
      Total current liabilities                                                           540,256              920,643

Capital Lease Obligation, net of current portion                                           46,034            -

----------------------------------------------------------------------------------------------------------------------
      Total liabilities                                                                   586,290              920,643
----------------------------------------------------------------------------------------------------------------------

Commitments

Stockholders' Equity:
  Preferred stock - $.0001 par value; authorized 1,000,000 shares, none issued           -                   -
  Common stock - $.0001 par value; authorized 20,000,000 shares,
   issued and outstanding 4,347,243 shares and 3,008,909 shares, respectively                 435                  301
  Additional paid-in capital                                                           19,889,224            6,064,920
  Accumulated deficit                                                                  (9,578,439)          (3,450,560)

----------------------------------------------------------------------------------------------------------------------
      Stockholders' equity                                                             10,311,220            2,614,661

----------------------------------------------------------------------------------------------------------------------
      Total Liabilities and Stockholders' Equity                                      $10,897,510          $ 3,535,304
======================================================================================================================
</TABLE>


                        See Notes to Financial Statements

                                       F-3


<PAGE>

                      EDUCATIONAL VIDEO CONFERENCING, INC.

                             STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------

Year ended December 31,                                                               1999                        1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                         <C>

Net revenue                                                                   $    752,777                $    351,598

Interest income                                                                    437,645                      56,369

----------------------------------------------------------------------------------------------------------------------
Total revenue                                                                    1,190,422                     407,967
----------------------------------------------------------------------------------------------------------------------

Operating expenses:
  Cost of sales                                                                    295,640                     210,326
  Selling, general and administrative                                            6,591,609                   2,820,398
  Noncash consulting services                                                      425,533                   -
  Interest and financing costs                                                       5,519                     105,681

----------------------------------------------------------------------------------------------------------------------
Operating expenses                                                               7,318,301                   3,136,405
----------------------------------------------------------------------------------------------------------------------

Net loss                                                                       $(6,127,879)                $(2,728,438)
======================================================================================================================

Basic loss per common share                                                $         (1.48)             $        (1.03)
======================================================================================================================

Weighted-average number of common shares outstanding                             4,147,604                   2,641,636
======================================================================================================================
</TABLE>

                        See Notes to Financial Statements

                                       F-4
<PAGE>

<TABLE>
<CAPTION>


                      EDUCATIONAL VIDEO CONFERENCING, INC.


                        STATEMENT OF STOCKHOLDERS' EQUITY

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

                                                   Common Stock            Additional
                                              Number                        Paid-in        Accumulated        Stockholders'
                                             of Shares         Amount       Capital          Deficit              Equity
----------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>       <C>              <C>                  <C>
Balance at December 31, 1997                  2,329,279         $233      $  1,857,027     $   (722,122)        $  1,135,138

Issuance of common stock for cash               533,334           53         3,599,954            -                3,600,007

Issuance of common stock in connection
 with private placement                          69,546            7           349,130            -                  349,137

Issuance of common stock upon conversion
 of notes payable                                66,250            7           248,310            -                  248,317

Issuance of common stock for services
 relating to raising equity                       7,000            1                (1)           -               -

Issuance of common stock for services             3,500          -              10,500            -                   10,500

Net loss                                          -              -                -          (2,728,438)          (2,728,438)
----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998                  3,008,909          301         6,064,920       (3,450,560)           2,614,661

Issuance of common stock in connection with
 initial public offering                      1,338,334          134        13,398,771            -               13,398,905

Issuance of common stock purchase warrants
 and stock options for services                   -              -             425,533            -                  425,533

Net loss                                          -              -                -          (6,127,879)          (6,127,879)
----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999                  4,347,243         $435       $19,889,224      $(9,578,439)         $10,311,220
============================================================================================================================
</TABLE>

                        See Notes to Financial Statements

                                       F-5


<PAGE>






                      EDUCATIONAL VIDEO CONFERENCING, INC.


                             STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------

Year ended December 31,                                                                      1999                 1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                   <C>
Cash flows from operating activities:

  Net loss                                                                           $ (6,127,879)         $(2,728,438)
  Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation                                                                          458,410              234,984
    Amortization of debt issue costs                                                                            81,903
    Allowance for doubtful accounts                                                        40,000               35,000
    Common stock options and warrants issued for services                                 425,533               10,500
    Loss from equity method investment                                                     54,717                -
    Changes in operating assets and liabilities:
      Increase in accounts receivable                                                    (274,458)            (261,776)
      Increase in prepaid expenses and other current assets                               (57,737)             (69,608)
      Increase in licensing agreements                                                   (200,000)               -
      (Increase) decrease in other assets                                                  (7,414)               6,460
      (Decrease) increase in accounts payable and accrued expenses                       (396,104)             385,995
----------------------------------------------------------------------------------------------------------------------
          Net cash used in operating activities                                        (6,084,932)          (2,304,980)
----------------------------------------------------------------------------------------------------------------------

Cash flows used in investing activities:

  Purchase of property and equipment                                                   (1,896,013)            (449,883)
  Net payments for equity and other investments                                          (295,250)               -
----------------------------------------------------------------------------------------------------------------------
          Cash used in investing activities                                            (2,191,263)            (449,883)
----------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:

  Net proceeds from issuance of common stock                                           13,398,905            4,639,144
  Deferred offering costs                                                                 900,000             (900,000)
  Principal payments on capital lease obligation                                          (11,587)               -
  Repayment of notes payable                                                                -                 (160,177)
  Expenses incurred in the conversion of notes payable to common stock                      -                  (36,683)
----------------------------------------------------------------------------------------------------------------------
          Net cash provided by financing activities                                    14,287,318            3,542,284
----------------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                               6,011,123              787,421

Cash and cash equivalents at beginning of year                                            914,700              127,279
----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                             $  6,925,823          $   914,700
======================================================================================================================

Supplemental disclosure of cash flow information:

  Cash paid during the year for interest                                             $      5,519          $    47,979
======================================================================================================================

Supplemental schedule of noncash investing and
 financing activities:

  Conversion of notes payable to common stock                                      $      - 0 -            $   285,000
======================================================================================================================
  Capital lease obligation incurred                                                $       73,338          $   - 0 -
======================================================================================================================
</TABLE>

                        See Notes to Financial Statements

                                       F-6

<PAGE>
                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. PRINCIPAL                  Educational Video  Conferencing,  Inc. ("EVC") was
   BUSINESS                   formed on March 4, 1997. EVC delivers  educational
   ACTIVITY AND               courses  and   programs  to   employees  of  major
   SUMMARY OF                 corporations  via interactive  video  conferencing
   SIGNIFICANT                systems. Interactive video conferencing allows the
   ACCOUNTING                 instructor to see, hear and interact with students
   POLICIES:                  as the students  see, hear and interact with their
                              instructor   and  other   students   at   multiple
                              locations.  EVC provides its  corporate  customers
                              with access to a number of  educational  providers
                              and  the  marketing  and  administrative  services
                              necessary to recruit,  enroll and deliver  courses
                              and programs to the corporation's  employees.  EVC
                              serves  as  a  marketing  and  technology   bridge
                              between  accredited  colleges,   universities  and
                              training   organizations  that  want  to  increase
                              enrollment   and  tuition   revenue  from  student
                              populations  they otherwise  could not serve,  and
                              corporations  that want to raise the education and
                              skill levels of their employees.

                              EVC commenced its planned principal operations in
                              February 1998.

                              In April 1998, pursuant to an agreement  and plan
                              of  merger  (reincorporation),  Educational  Video
                              Conferencing,   Inc.   ("EVC-NY"),   a  New   York
                              corporation,  merged  into  and  with  Educational
                              Video  Conferencing,   Inc.  ("EVC-DE"),  a  newly
                              formed, inactive Delaware corporation owned by the
                              stockholders  of EVC-NY.  EVC-DE is the  surviving
                              corporation  and EVC-NY  has ceased to exist.  The
                              merger was accounted  for at historical  cost in a
                              manner similar to a pooling of interests.

                              EVC  considers   all  highly  liquid   instruments
                              purchased  with a maturity of three months or less
                              to be cash equivalents.

                              EVC  maintains  its cash in bank deposit  accounts
                              which,  at times,  may  exceed  federally  insured
                              limits.  It has not experienced any losses in such
                              accounts.

                              EVC  reviews   long-lived  assets  and  identified
                              intangibles  for  impairment  whenever  events  or
                              changes  in   circumstances   indicate   that  the
                              carrying  value  of an  asset  may  not  be  fully
                              recoverable.  EVC performs nondiscounted cash flow
                              analyses to determine if an impairment exists.

                              EVC recognizes income ratably over the semester in
                              which  courses  are  given.   EVC  began  offering
                              courses in February  1998.  The courses range from
                              8-week to 16-week  periods  meeting 1 or 2 times a
                              week.

                              During the year ended  December  31,  1999,  three
                              education  providers  accounted for 98% (60%,  27%
                              and 11%) of EVC's  net  revenue.  During  the year
                              ended December 31, 1998, three education providers
                              accounted  for  100%  (64%,  19% and 17%) of EVC's
                              revenue.

                              Property  and   equipment  is  recorded  at  cost.
                              Depreciation is provided for by the  straight-line
                              method  over  the  estimated  useful  lives of the
                              property and equipment.  Amortization of leasehold
                              improvements is provided for by the  straight-line
                              method over the term of the lease.

                              The   preparation   of  financial   statements  in
                              accordance  with  generally  accepted   accounting
                              principles   requires  the  use  of  estimates  by
                              management. Actual results could differ from these
                              estimates.

                              Deferred    offering   costs    represent    costs
                              attributable   to  the  initial  public   offering

                                                F-7
<PAGE>


                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                              ("IPO") (see Note 2) which were offset against the
                              proceeds from this transaction.

                              Advertising  costs are expensed as  incurred.  The
                              cost of brochures  are  capitalized  and amortized
                              over the  semester to which the  specific  courses
                              relate. Advertising expenses approximated $635,000
                              and $483,000 for the years ended December 31, 1999
                              and 1998, respectively.

                              EVC employs the liability method of accounting for
                              income taxes pursuant to SFAS No. 109, under which
                              method recorded  deferred income taxes reflect the
                              tax  consequences  on  future  years of  temporary
                              differences  (differences between the tax basis of
                              assets and liabilities and their financial amounts
                              at year-end).  EVC provides a valuation  allowance
                              that  reduces  deferred  tax  assets  to their net
                              realizable value.

                              SFAS No. 128,  Earnings per Share,  requires  dual
                              presentation  of basic  earnings per share ("EPS")
                              and diluted EPS on the face of all  statements for
                              all  entities  with  complex  capital  structures.
                              Basic EPS is computed as net  earnings  divided by
                              the  weighted-average   number  of  common  shares
                              outstanding  for the period.  Diluted EPS reflects
                              the  potential  dilution  that  could  occur  from
                              common   shares   issuable   through   stock-based
                              compensation  including stock options,  restricted
                              stock  awards,   warrants  and  other  convertible
                              securities. Diluted EPS is not presented since the
                              effect would be antidilutive.

                              In  December   1998,   EVC's  board  of  directors
                              approved a 1-for-2  reverse  stock split which was
                              effective  on  the  date  of  the  initial  public
                              offering.  All  references to the number of common
                              shares  and per  share  amounts  elsewhere  in the
                              financial  statements  and related  footnotes have
                              been restated as appropriate to reflect the effect
                              of the reverse split for all periods presented.

                              EVC  accounts  for  employee   stock   options  in
                              accordance   with  Accounting   Principles   Board
                              ("APB")  Opinion  No.  25,  Accounting  for  Stock
                              Issued to Employees. Under APB No. 25, EVC applies
                              the  intrinsic  value  method  of  accounting  and
                              therefore does not recognize  compensation expense
                              for  options  granted,  because  options  are only
                              granted at a price  equal to the  market  price on
                              the day of grant.  SFAS No.  123,  Accounting  for
                              STOCK-BASED    Compensation,     prescribes    the
                              recognition of  compensation  expense based on the
                              fair value of options as  determined  on the grant
                              date.  However,  SFAS No. 123 allows  companies to
                              continue  applying APB No. 25 if certain pro forma
                              disclosures  are made assuming  hypothetical  fair
                              value method application (see Note 10).

 2. INITIAL PUBLIC            In  February   1999,   EVC  completed  an  IPO  of
    OFFERING:                 1,200,000 shares of its common stock at $12.00 per
                              share.  The net  proceeds  to the  Company,  after
                              deducting underwriting commissions and expenses of
                              the  offering of  approximately  $2,500,000,  were
                              approximately   $11,900,000.   Additionally,   the
                              Company  received  net  proceeds of  approximately
                              $1,500,000  from the issuance of 138,334 shares of
                              common  stock  and the  underwriters'  warrant  to
                              purchase an aggregate of 120,000  shares of common
                              stock pursuant to an over-allotment option.

                                                        F-8
<PAGE>

                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                              During  October 1999, EVC entered into a five-year
3. LICENSE                    exclusive  limited license and services  agreement
   AGREEMENT:                 with an entity (the "Licensor") to utilize any and
                              all   educational   data  management  and  college
                              advising-related   software   developed   by   the
                              Licensor,  including  any  and all  software  code
                              developed for use on the Internet. The license fee
                              under the  agreement  is $50,000 per year of which
                              EVC has prepaid the Licensor $200,000 and will pay
                              an additional $50,000 upon the delivery of certain
                              software,  as  defined.  In  addition,  under  the
                              agreement,  EVC shall  reimburse  the  Licensor an
                              amount  not  to  exceed  $59,000  a  month  with a
                              minimum  payment of  $700,000  during the first 12
                              months  from  the  effective   date,  as  defined.
                              Additionally, EVC shall be entitled to receive 30%
                              of all revenue  generated  by the Licensor for the
                              Licensor's   fee-based  advising  and  remediation
                              services.

4. EQUITY AND                 Equity  and  other  investments
   OTHER                      consist of the following:
   INVESTMENTS:
                              Investment in Visiocom (a)                $195,533
                              Advance to Interboro Institute
                              (see Note 11)                               45,000

--------------------------------------------------------------------------------
                                                                        $240,533
================================================================================

                              (a)  On November 29, 1999,  EVC invested  $250,000
                                   for a 50% interest (33-1/3% of voting rights)
                                   in Visiocom USA Incorporated ("Visiocom"),  a
                                   newly formed Delaware  corporation.  Visiocom
                                   provides business employees with "one-on-one"
                                   training,     via    the     Internet     and
                                   video-conferencing,  on how  to use  business
                                   software   programs   and,   using  the  same
                                   teaching  methods,   also  provides  business
                                   employees   with   language   courses.    The
                                   investment in Visiocom is accounted for under
                                   the  equity  method  of  accounting   whereby
                                   earnings  or losses from the  investment  are
                                   reflected  in EVC's  earnings  based on EVC's
                                   pro  rata  ownership  interest.  The net loss
                                   from  this  investment  for  the  year  ended
                                   December  31, 1999  aggregated  approximately
                                   $55,000.


                                                        F-9
<PAGE>

                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
5.  PROPERTY  AND            Property and  equipment,  at cost,  consists of the
    EQUIPMENT:               following:

<TABLE>
<CAPTION>
                                                                                                           Estimated
                              December 31,                                  1999                1998      Useful Life
                              ----------------------------------------------------------------------------------------
<S>                           <C>                                  <C>                <C>               <C>
                              Furniture and fixtures                $     71,034       $     58,187            7 years
                              Office computers                           506,250            182,865            5 years
                              Video teaching equipment                 2,774,201          1,292,813            5 years
                              Computer software                          102,565             83,946            5 years
                              Automobile                                  22,233             22,233            5 years
                              Leasehold improvements                      59,774              -          Term of lease
                              Equipment acquired under
                               capital lease                              73,338              -                5 years

----------------------------------------------------------------------------------------------------------------------
                                                                       3,609,395          1,640,044
----------------------------------------------------------------------------------------------------------------------

                              Less accumulated depreciation and amortization:

                                Equipment acquired under
                                 capital lease                             7,334              -
                                Other                                    685,970            234,894
----------------------------------------------------------------------------------------------------------------------

                                                                         693,304            234,894

----------------------------------------------------------------------------------------------------------------------
                                                                      $2,916,091         $1,405,150
======================================================================================================================
</TABLE>


  6.  ACCOUNTS PAYABLE AND    Accounts payable and  accrued expenses consist  of
      ACCRUED EXPENSES:       the following:
<TABLE>
<CAPTION>

                              December 31,                                                  1999                1998
                              ---------------------------------------------------------------------------------------
<S>                          <C>                                                       <C>                   <C>
                              Accounts payable                                          $212,635              $101,652
                              Accrued bonuses                                              -                    77,445
                              Accrued professional fees                                   25,586               586,285
                              Accrued marketing brochures                                 31,617                74,405
                              Computer and video equipment payable                        61,025                80,856
                              Accrued telephone                                          122,456                 -
                              Accrued other                                               71,220                 -
----------------------------------------------------------------------------------------------------------------------
                                                                                        $524,539              $920,643
======================================================================================================================
</TABLE>


7. OBLIGATIONS                The  Company  leases  office   equipment  under  a
   UNDER CAPITAL              capital lease expiring in 2003. The lease requires
   LEASE:                     monthly   payments  of  principal   and  interest,
                              imputed at 14.2% per annum.

                                                        F-10

<PAGE>
                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                              Minimum future obligations under this lease are as
                              follows:
<TABLE>
<CAPTION>

                              Year ending December 31,
<S>                                      <C>                                                                  <C>

                                          2000                                                                 $24,155
                                          2001                                                                  24,155
                                          2002                                                                  24,155
                                          2003                                                                   8,053
----------------------------------------------------------------------------------------------------------------------

                                                                                                                80,518
                              Less amount representing interest                                                 18,767
----------------------------------------------------------------------------------------------------------------------

                                                                                                                61,751
                              Less current portion                                                              15,717
----------------------------------------------------------------------------------------------------------------------
                                                                                                               $46,034
======================================================================================================================

</TABLE>


 8. INCOME TAXES:             The  tax  effects  of loss  carryforwards  and the
                              valuation allowance that give rise to deferred tax
                              assets are as follows:
<TABLE>
<CAPTION>
                              December 31,                                                   1999                 1998
----------------------------------------------------------------------------------------------------------------------
<S>                          <C>                                                    <C>                     <C>

                              Net operating losses                                      $ 856,000            $ 520,000
                              Less valuation allowance                                   (856,000)            (520,000)
----------------------------------------------------------------------------------------------------------------------
                                      Deferred tax assets                               $ - 0 -              $ - 0 -
======================================================================================================================


                              The  provision  (benefit) for income taxes differs from  the  amount computed using  the
                              federal statutory rate of 34% as a result of the following:

                              Year ended December 31,                                        1999                 1998
----------------------------------------------------------------------------------------------------------------------

                              Federal statutory rate                                          (34)%              (34)%
                              Increase in valuation allowance                                  34                 34
----------------------------------------------------------------------------------------------------------------------
                                      Deferred tax assets                                    - 0 -%             - 0 -%
======================================================================================================================
</TABLE>


                              As of December  31,  1999,  EVC had net  operating
                              loss  carryforwards  available  to  offset  future
                              taxable income of  approximately  $9,084,000 which
                              expire in  various  years  through  2019.  Between
                              October  1997  and  August  1998,   EVC  completed
                              private offerings of securities. In February 1999,
                              EVC had an IPO of its  securities.  Under  Section
                              382 of the Internal Revenue Code, these activities
                              effect an  ownership  change and thus may severely
                              limit,  on  an  annual  basis,  EVC's  ability  to
                              utilize its net operating loss carryforwards.  EVC
                              uses the lowest marginal U.S. corporate tax of 15%
                              to determine  deferred tax amounts and the related
                              valuation  allowance  because  EVC had no  taxable
                              earnings through December 31, 1999.

                                                        F-11
<PAGE>

                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
 9. COMMITMENTS:              EVC  leases   office  space  under   noncancelable
                              operating  leases which expire in August 2002. EVC
                              also  leases  space  and  other  services  for its
                              multiport  control units that expires in 2000. The
                              leases are subject to escalations for increases in
                              EVC's share of  increases in real estate taxes and
                              other expenses.

                              Minimum future  obligations under these leases are
                              as follows:
<TABLE>
<CAPTION>
                              Year ending December 31,

<S>                                      <C>                                                                 <C>
                                          2000                                                                $278,410
                                          2001                                                                 168,002
                                          2002                                                                 117,353
----------------------------------------------------------------------------------------------------------------------
                                                                                                              $563,765
======================================================================================================================
</TABLE>
                              Rent expense  charged to operations  for the years
                              ended  December  31,  1999  and 1998  amounted  to
                              approximately $267,000 and $160,000, respectively.

                              EVC has entered into  employment  agreements  with
                              executive   officers  of  EVC  which  provide  for
                              compensation  and other benefits as defined in the
                              agreements.

                              Aggregate  compensation under the agreements is as
                              follows:
<TABLE>
<CAPTION>
                              Year ending December 31,
<S>                                      <C>                                                              <C>

                                          2000                                                             $   845,000
                                          2001                                                                 845,000
----------------------------------------------------------------------------------------------------------------------
                                                                                                            $1,690,000
======================================================================================================================
</TABLE>
                              In 1998,  EVC entered into a consulting  agreement
                              with an individual  which  entitles the consultant
                              to 2.5% of payments actually  collected by EVC for
                              services  provided  by it to  corporate  customers
                              with  which  EVC  contracts  as a  result  of  the
                              consultant's  direct  involvement.  The  agreement
                              also  provides  for payment of $5,000 per month to
                              the consultant. The agreement expires in May 2003,
                              unless earlier terminated,  including upon 30 days
                              notice to the consultant.

                              In  1998,  EVC  also  entered  into  a  consulting
                              agreement  with  another  individual  who became a
                              director of EVC upon the  commencement of the IPO.
                              The  agreement  entitles the  consultant  to 5% of
                              revenue received by EVC from  activities,  if any,
                              with an education provider with which EVC does not
                              currently have an agreement.  The agreement grants
                              the consultant  seven-year  options to purchase up
                              to  100,000  shares of  common  stock at $7.00 per
                              share,  of which options to purchase 25,000 shares
                              are vested and options to  purchase an  additional
                              25,000  shares of common  stock vest each March of
                              the years 1999 through 2001.

10. STOCKHOLDERS'             In  December   1998,   EVC's  board  of  directors
    EQUITY:                   approved a 1-for-2  reverse  stock split which was
                              effective  on  the  date  of  the  initial  public
                              offering.  All  references to the number of common
                              shares  and per  share  amounts  elsewhere  in the
                              financial  statements  and related  footnotes have
                              been restated as appropriate to reflect the effect
                              of the reverse split for all periods presented.

                                                        F-12
<PAGE>

                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                              Between  January 1998 and April 1998, EVC received
                              gross proceeds of $1,072,500  from the issuance of
                              195,000  shares  of  common  stock  and  warrants,
                              expiring  in 2003,  to purchase  78,000  shares of
                              common  stock at $6.00 per share.  As of  December
                              31, 1997,  EVC had received  subscriptions  for an
                              aggregate of $690,000 to purchase  125,000  shares
                              of common stock and warrants, expiring in 2003, to
                              purchase  50,200  shares  of  common  stock.   The
                              $690,000  was received by EVC by January 13, 1998.
                              Transaction costs incurred in connection with this
                              private  placement  were  approximately   $99,000.
                              Additionally,  warrants to purchase  51,752 shares
                              of common stock for $6.00 per share were issued as
                              a   finder's   fee  in   connection   with   these
                              transactions.

                              In March 1998, in connection  with the  employment
                              of  its  chief  technology  officer,   EVC  issued
                              options to purchase 50,000 shares of common stock.
                              The  options  vest  ratably  over  10  years  with
                              exercise  prices  ranging from $20.00 per share to
                              $40.00 per share.

                              Between May and August 1998,  EVC  received  gross
                              proceeds of $4,000,000 for the issuance of 533,334
                              shares  of common  stock.  The  transaction  costs
                              incurred in connection with this private placement
                              were approximately  $400,000 and the issuance to a
                              finder of warrants,  expiring in 2003, to purchase
                              25,000 shares of common stock at $12.00 per share.

                              In  May   1999,   EVC   issued   warrants   to  an
                              unaffiliated  entity  to  purchase  up  to  50,000
                              shares of common  stock  for  $12.00  per share as
                              additional   consideration   under  a   consulting
                              agreement.   The  warrants  are  exercisable  upon
                              issuance and expire after seven years.

                              In September 1999, in connection with a consulting
                              agreement, EVC issued warrants to an individual to
                              purchase  5,000  shares of common  stock at $17.50
                              per share.  Warrants are exercisable upon issuance
                              and expire on February 22,  2004.  Pursuant to the
                              terms  of  the   agreement,   EVC  will  issue  an
                              additional  7,500  warrants at $22.50 per share in
                              January  2000,  and another 7,500 shares at $25.00
                              per share in May 2000.

                              In October  1998,  the board of  directors  of EVC
                              adopted an  incentive  stock  option plan in which
                              356,000  shares of common stock have been reserved
                              for future  issuance  through  September 30, 2008.
                              The plan  provides for grants of  incentive  stock
                              options,  nonqualified stock options and shares of
                              common stock to employees,  nonemployee  directors
                              and others.  The option  price cannot be less than
                              the  fair  market  value  of  the  shares  of  the
                              incentive  stock  options  at the  date of  grant.
                              Vesting of options  and stock  awards and  certain
                              other conditions are determined by, or a committee
                              appointed by, the board of  directors.  During the
                              year ended December 31, 1999, 255,000 options were
                              granted under this plan.

                                                        F-13
<PAGE>


                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS




--------------------------------------------------------------------------------
The following table represents the warrants  outstanding as of December 31, 1999
and 1998:
<TABLE>
<CAPTION>
                                                                        Exercise           Warrants Outstanding
                                                                       Price Per               December 31,
                              Expiration Date                           Warrant            1999              1998
----------------------------------------------------------------------------------------------------------------------
<S>                          <C>                                       <C>               <C>                  <C>

                              June 2002                                 $  2.00            11,500               11,500
                              August 2002                                  4.00             5,500                5,500
                              October 2002                                 4.00           100,000              100,000
                              October 2002                                20.00            50,000               50,000
                              December 2002                                4.00            18,000               18,000
                              January 2003                                 6.00            88,252               88,252
                              February 2003                                6.00            37,500               37,500
                              April 2003                                   6.00            12,000               12,000
                              August 2003                                 12.00            25,000               25,000
                              February 2004                               17.50             5,000                -
                              February 2004                               19.80           120,000                -
                              February 2004                               20.00            10,000                -
                              February 2005                                5.44            37,500               37,500
                              May 2006                                    12.00            50,000                -
----------------------------------------------------------------------------------------------------------------------
                                                                                          570,252              385,252
======================================================================================================================
</TABLE>


Presented  below is a summary  of stock  option  activity  for the  periods
shown:

<TABLE>
<CAPTION>
                                                                                 Wtd.-Avg.                    Wtd.-Avg.
                                 Exercise                                        Exercise       Options       Exercise
                              Price Range                            Options       Price      Exercisable       Price
----------------------------------------------------------------------------------------------------------------------
<S>                          <C>                                    <C>           <C>            <C>           <C>

                              Granted                                165,000
----------------------------------------------------------------------------------------------------------------------

                              Balance at December 31, 1998           165,000       $13.76         12,500         $7.00

                              Granted                                255,000

----------------------------------------------------------------------------------------------------------------------
                              Balance at December 31, 1999           420,000       $11.84         55,000         $9.09
======================================================================================================================
</TABLE>

                                                        F-14
<PAGE>

                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS



--------------------------------------------------------------------------------
The following table summarizes information for options currently outstanding and
exercisable at December 31, 1999:

<TABLE>
<CAPTION>
                                                                 Options Outstanding               Options Exercisable
                                                          ----------------------------------       -------------------
                                                                         Wtd.-       Wtd.-                      Wtd.-
                                                                         Avg.        Avg.                       Avg.
                                 Exercise                              Remaining   Exercise                   Exercise
                              Price Range                  Number        Life        Price        Number        Price
----------------------------------------------------------------------------------------------------------------------
<S>                          <C>                          <C>          <C>       <C>               <C>        <C>

                              $  4.80                       15,000      10 yrs.   $  4.80            -             -
                              $  7.00                      100,000       7 yrs.   $  7.00           50,000     $  7.00
                              $10.00 - $20.00              255,000       4 yrs.    $10.60            -             -
                              $20.00 - $40.00               50,000      10 yrs.    $30.00            5,000         -
----------------------------------------------------------------------------------------------------------------------
                              $  4.80 - $40.00             420,000       6 yrs.    $11.84           55,000     $  9.09
======================================================================================================================
</TABLE>


                              EVC has elected, in accordance with the provisions
                              of SFAS No. 123,  to apply the current  accounting
                              rules   under  APB  Opinion  No.  25  and  related
                              interpretations  in  accounting  for stock options
                              and,     accordingly,     is    presenting     the
                              disclosure-only  information  as  required by SFAS
                              No.  123.   If  EVC  had   elected  to   recognize
                              compensation  cost  based on the fair value of the
                              options granted at the grant date as prescribed by
                              SFAS  No.  123,  EVC's  net  loss and net loss per
                              common  share  would  approximate  the  pro  forma
                              amounts shown in the following table.
<TABLE>
<CAPTION>

                              Year ended December 31,                                        1999                  1998
-----------------------------------------------------------------------------------------------------------------------
<S>                          <C>                                                     <C>                  <C>

                              Reported net loss                                       $(6,127,879)         $(2,728,438)
=======================================================================================================================

                              Pro forma net loss                                      $(6,498,459)         $(2,791,468)
=======================================================================================================================

                              Reported net loss per common share                  $         (1.48)     $         (1.03)
=======================================================================================================================

                              Pro forma net loss per common share                 $         (1.57)     $         (1.03)
=======================================================================================================================
</TABLE>

                              The  fair  value  of  options  granted  (which  is
                              amortized  to  expense  over  the  option  vesting
                              period in  determining  the pro forma  impact)  is
                              estimated   on  the  date  of  grant   using   the
                              Black-Scholes   option-pricing   model   with  the
                              following   assumptions:    no   dividend   yield,
                              volatility   of  78%  in  1999  and  0%  in  1998,
                              risk-free  interest  rates  ranging  from 5.18% to
                              6.7% and an  expected  life of 2 to 10 years  from
                              the date of vesting.

                                                        F-15
<PAGE>
                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                              The weighted-average fair value of options granted
                              is as follows:
<TABLE>
<CAPTION>

                              Year ended December 31,                                        1999                  1998
-----------------------------------------------------------------------------------------------------------------------
<S>                          <C>                                                      <C>                 <C>
                              Fair value of each option granted                        $    1.274          $      1.54

                              Total number of options granted                             260,000              150,000

----------------------------------------------------------------------------------------------------------------------
                                   Total fair value of all options granted               $331,240             $231,089
======================================================================================================================
</TABLE>


                              In    accordance    with   SFAS   No.   123,   the
                              weighted-average   fair  value  of  stock  options
                              granted is required  to be based on a  theoretical
                              statistical     model    using    the    preceding
                              Black-Scholes assumptions.  In actuality,  because
                              EVC's  incentive  stock  options do not trade on a
                              secondary exchange, employees can receive no value
                              or derive any benefit from holding  stock  options
                              under  these  plans  without  an  increase  in the
                              market  price of EVC.  Such an  increase  in stock
                              price    would     benefit    all     stockholders
                              commensurately.

11. ACQUISITION OF            On January 14, 2000, EVC acquired the  outstanding
    INTERBORO                 shares of Interboro  Institute  for $672,500  plus
    INSTITUTE:                50% of earning before  interest,  taxes,  debt and
                              amortization ("EBITDA") for the three fiscal years
                              ending June 30,  2001,  2002 and 2003.  Payment of
                              Interboro's  purchase  price  is  contingent  upon
                              there being EBITDA.  The acquisition was accounted
                              for under the purchase  method of accounting  and,
                              accordingly,  the  results of  operations  will be
                              included  in the  financial  statements  as of the
                              date  of  the  acquisition,  and  the  assets  and
                              liabilities will be recorded based upon their fair
                              values  at  the  date  of  the  acquisition.   EVC
                              acquired assets with a fair value of approximately
                              $900,000 and assumed  liabilities of approximately
                              $1,500,000.

                              In connection  with the  acquisition  of Interboro
                              Institute,  EVC recorded approximately $750,000 in
                              goodwill,   which   will   be   amortized   on   a
                              straight-line basis over a period of 10 years.

                              The following  summarized  pro forma  consolidated
                              statement  of  income   (unaudited)   assumes  the
                              acquisition of the business of Interboro Institute
                              as if it  had  occurred  at the  beginning  of the
                              period:
<TABLE>
<CAPTION>
<S>                          <C>                                                                          <C>
                              Net revenue                                                                  $ 7,181,825
======================================================================================================================

                              Net loss                                                                     $(9,009,179)
======================================================================================================================

                              Basic loss per common share                                              $         (2.17)
======================================================================================================================
</TABLE>

                              This pro forma financial  information is presented
                              for   informational   purposes  only  and  is  not
                              necessarily  indicative of the  operating  results
                              that would have occurred had the acquisition  been
                              consummated  as of  the  assumed  date,  nor is it
                              necessarily   indicative   of   future   operating
                              results.

                                                        F-16
<PAGE>


                       EDUCATIONAL VIDEO CONFERENCING INC.

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
12. PREFERRED STOCK:          On February 3, 2000,  EVC received  gross proceeds
                              of $4,000,000  for the issuance of 400,000  shares
                              of 7.5%  convertible  preferred stock and warrants
                              to  purchase   40,000   shares  of  common  stock.
                              Transaction costs incurred in connection with this
                              placement were approximately $260,000.



                                                        F-17
<PAGE>

                                 EXHIBIT INDEX

Exhibit 10.28

Exhibit 10.29

Exhibit 10.50

Exhibit 10.51

Exhibit 10.52

Exhibit 10.53