<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB

(Mark One)

/X/      Quarterly report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934 For the quarterly period ended: September 30, 1999

/ /      Transition report under Section 13 or 15(d) of the Exchange Act For
         the transition period from _____________ to _____________

         Commission file number:            333-7841



                          FIBERNET TELECOM GROUP, INC.

        (Exact Name of Small Business Issuer as Specified in Its Charter)


            Nevada                                          13-3859938
(State or Other Jurisdiction of                          (I.R.S. Employer
Incorporation or Organization)                          Identification No.)


                 570 Lexington Avenue, New York, New York 10022
                    (Address of Principal Executive Offices)

                                  212-405-6200
                (Issuer's Telephone Number, Including Area Code)


              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)


         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 ___


                      APPLICABLE ONLY TO CORPORATE ISSUERS

         The number of shares outstanding of each of issuer's classes of common
equity, as of November 12, 1999, was 16,351,529 shares of Common Stock, $.001
par value.

         Transitional Small Business Disclosure Format (check one):


Yes ___  No _X_





<PAGE>



                         PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         See attached.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

OVERVIEW

         FiberNet Telecom Group, Inc. (the "Company" and together with its
subsidiaries, "FiberNet") is a facilities-based, fiber optic
telecommunications carrier dedicated to delivering integrated
telecommunications products and services in certain Tier 1 major metropolitan
service areas ("MSAs") throughout the United States. The Company intends
initially to focus its operations in the New York City greater metropolitan
area and pursue a "carriers' carrier" marketing strategy, selling primarily
to telecommunications carriers, Internet service providers and other
communication service providers. Management believes there is the need for
greater broadband capacity due to the growth of the Internet and data
communications and the favorable regulatory environment created by the
Telecommunications Act of 1996. The Company is dedicated to solving the
bottleneck of the true commercial last mile to the customer premise by
providing end-to-end network connectivity from the telephone closet on the
customer premise in commercial office properties to the carrier
interconnection point. The Company is also pursuing a strategy to extend this
interconnectivity between major carrier hotels and other points-of-presence
within metropolitan areas, for its carrier customers.

         The Company operates through its two subsidiaries, FiberNet Equal
Access, LLC ("Equal Access") and Local Fiber, LLC ("Local Fiber").

         Equal Access specializes in designing, building and operating fiber
optic in-building transmission networks ("FINs") in Class A, multi-tenant
commercial office buildings generally with a minimum of 500,000 square feet
("On-Net Buildings") through licensing agreements with building owners. Equal
Access leases digital circuits on its FINs to other telecommunications
providers.

         Local Fiber intends to provide carrier-class connectivity between Equal
Access' On-Net Buildings and "Carrier Points" and between multiple Carrier
Points. Carrier Points include any location (excluding On-Net Buildings) where
carriers would terminate broadband traffic, such as carrier hotels, central
offices and other points-of-presence ("POPs"). Local Fiber also has the
exclusive right of use for up to eight strands (four of which are presently
usable) of Metromedia Fiber Network Inc.'s fiber backbone in New York City at no
cost to FiberNet for an initial term of 12 years, with a 15 year renewal at no
cost at the Company's request. This exclusive right of use expires in 2023.

         To date, FiberNet has not generated any revenues. Successful
implementation of its business plan, as described herein, will depend upon many
factors, including, but not limited to, the ability to raise adequate financing.

FIBERNET EQUAL ACCESS, LLC

         Equal Access intends to provide high-bandwidth, carrier-class transport
services via fiber optic in-building networks in Class A commercial office
buildings. Equal Access' FINs will connect to Local Fiber's fiber optic backbone
in the local loop, delivering a seamless high-speed, high-capacity link between
users and the data, video and voice information they are sending and receiving.
The FINs will be fully redundant, SONET (Synchronous Optical Network) rings with
a self-healing architecture and diversely routed fiber, yielding carrier-class
reliability. These networks will be capable of quickly provisioning fully
scaleable transport services at the DS-1 through the OC-12 circuit levels to the
telephone closet on every floor in On-Net Buildings. Services will be leased on
a wholesale basis to other telecommunications carriers on a monthly rate basis,
in addition to an installation charge and certain other applicable fees. The
Company believes in the "free choice" of tenants in On-Net Buildings to select
their service providers.



                                     1
<PAGE>


         Management believes Equal Access' FINs will efficiently support the
increased flow of information that has outgrown the transmission capabilities of
existing copper-wire systems. A FIN will connect various types of data, video
and voice communication devices, switching equipment and information management
systems to external fiber optic networks. Equal Access intends to focus on
securing multi-year license agreements with building owners to deploy its FINs
in On-Net Buildings. In order to provide carrier connectivity in a building,
Equal Access generally intends to build a 500 to 1,000 square foot common
equipment room in the basement of each building. This is the colocation facility
within an On-Net Building where the FIN interconnects to Local Fiber's backbone
or other carriers' networks.

LOCAL FIBER, LLC

         Local Fiber intends to offer end-to-end, fiber optic carrier-class
network connectivity through the interconnection of the Local Fiber network with
Equal Access' FINs. Local Fiber has the exclusive right of use for up to eight
strands (four of which are presently usable) of Metromedia Fiber Network Inc.'s
New York City fiber backbone, representing 48 route miles and 384 fiber miles.
(Route miles mean the number of miles spanned by fiber optic cable calculated
without including physically overlapping segments of cable. Fiber miles mean the
number of strands of fiber contained in a length of fiber optic cable multiplied
by the length of cable in miles.) Local Fiber has lit an OC-48 SONET ring and an
OC-12 SONET ring on four of these eight strands providing connectivity between
the Company's On-Net Buildings and Carrier Points. As demand increases, Local
Fiber intends to light additional strands. Local Fiber's network will deliver
the same levels of quality, reliability and scalability, as Equal Access' FINs.
The self-healing fiber architecture will consist of diversely routed fibers that
will provide a consistent quality of service.

         The Company has a 13,400 square foot facility at 60 Hudson Street in
New York City (the "60 Hudson Facility"). Management believes that 60 Hudson
Street is the location of one of the largest carrier hotels in the New York City
metropolitan area. Management believes that the 60 Hudson Facility is a critical
Carrier Point for the Company because it will provide a point of
interconnectivity to major Tier 1 telecommunications carriers and many other
Tier 2 and Tier 3 providers. Local Fiber intends to utilize the 60 Hudson
Facility to (i) locate transmission and networking equipment, (ii) operate its
Network Operations Center ("NOC"), and (iii) offer colocation space to other
carriers. The Company's NOC will be responsible for providing real-time
monitoring of FiberNet's networks, including all FINs, 24 hours per day and 365
days per year. Network surveillance, remote rearrangement of circuits and
database maintenance for all wiring address and assignment records will be
managed from the NOC. In addition, the NOC will be responsible for all
provisioning and fault management processes.

         Local Fiber initially intends to focus on wholesale transport services
in the New York City metropolitan area between the Company's On-Net Buildings,
Carrier Points and other POPs. Local Fiber intends to lease circuits at a
monthly rate to other telecommunications carriers, in addition to charging an
installation charge and certain other applicable fees. Local Fiber also intends
to offer colocation space at the 60 Hudson Facility, in addition to other
various transport and network support services.

         Local Fiber has negotiated interconnection agreements with certain data
and voice carriers and is currently negotiating additional interconnection and
co-carrier agreements with telecommunications carriers and service providers.
These arrangements are intended to provide connectivity between Local Fiber's
network and the networks of other carriers. Local Fiber intends to establish
interconnection agreements with telecommunications carriers in New York and
other markets. There can be no assurance that any such interconnection
agreements will be consummated at all or on acceptable terms.

CORPORATE STRUCTURE

         The Company conducts its business through its direct and indirect
subsidiaries. FiberNet Telecom, Inc., a Delaware corporation, is an
intermediate level holding company

                                     2
<PAGE>

and a direct, wholly-owned subsidiary of FiberNet Telecom Group, Inc. FiberNet
Telecom, Inc. holds the Company's interests in two operating subsidiaries, Equal
Access and Local Fiber. Both subsidiaries are New York limited liability
companies. FiberNet Telecom, Inc. owns 90% of the membership interests of Local
Fiber, and Metromedia Fiber Network, Inc. owns the remaining 10% of the
membership interests. FiberNet Telecom, Inc. owns 100% of the membership
interests of Equal Access.

LIQUIDITY AND CAPITAL RESOURCES

         The Company has to date financed its development efforts through
direct equity investments from its shareholders and the issuance of
additional debt and equity securities in private transactions. The Company
has sustained losses for the nine months ended September 30, 1999 of
$8,066,858 and from August 10, 1994 (date of inception) to September 30, 1999
of $11,636,968. These operating losses are due to the development of the
Company's telecommunications operations, and the Company anticipates that
such losses will continue as it executes its business plan. Cash used to fund
operating activities during the nine months ended September 30, 1999 was
$4,919,615, and purchases of property, plant and equipment during the nine
months ended September 30, 1999 were $6,753,857.

         The Company's planned operations will require significant capital to
fund equipment purchases, engineering and construction costs, marketing costs,
administrative expenses and other operating activities. The Company anticipates
spending over $100 million through the fiscal year 2000 for the construction of
its FINs, expansion of local area loops and backbones, the development of
additional Carrier Points and other network programs, which include the purchase
of equipment, fiber cable, and additional construction, engineering and design
services.

         To date, the Company has secured a commitment for an equipment lease
line of credit totaling $5.1 million, of which $1.3 million was outstanding as
of September 30, 1999. On September 28, 1999, the Company issued $7.77 million
of 8% Senior Secured Convertible Notes due 2004, and on October 19, 1999
FiberNet issued an additional $4.73 million of 8% Senior Secured Convertible
Notes due 2004, for a total of $12.5 million (see Part II, Item 5. OTHER
INFORMATION). FiberNet has had on-going discussions with sources of additional
financing. As a result, the Company may also consider from time to time private
or public sales of additional equity or debt securities, entering into credit
facilities and other financings, depending upon market conditions, in order to
finance the continued operations of its business. To date, no final commitments
have been obtained. There can be no assurance that the Company will be able to
successfully consummate any such financing at all, or on acceptable terms.

         The Company expects to experience significant growth in employees over
the next twelve months as its operations increase. Previously, the Company
out-sourced its principal network design and construction functions. However,
the Company is currently hiring a significant number of new personnel and will
hire more employees over the next twelve months, with the majority of the
increase in engineering and operations, as well as sales and marketing.

RECENT DEVELOPMENTS

         On November 1, 1999 FiberNet announced that it lit four strands of
fiber on its backbone covering downtown and midtown Manhattan. The backbone
network uses two separate diversely routed self-healing SONET rings, one
operating at OC-48 (2.5 Gbps) and the other at OC-12 (622 Mbps). FiberNet has
also initiated service at its primary Network Operations Center at 60 Hudson
Street in New York City.

FORWARD-LOOKING STATEMENTS

         This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of the Company's
management, as well as assumptions made by and information currently available
to the Company's management. When used herein, words such as "anticipate,"
"believe," "estimate," "expect," "intend," and similar expressions, as they
relate to the Company or the Company's management, identify



                                       3
<PAGE>

forward-looking statements. Such statements reflect the current views of the
Company with respect to future events and are subject to certain risks,
uncertainties and assumptions, relating to the operations and results of
operations of the Company, the Company's business strategy, competition and
changes in economic cycles, as well as other factors described herein. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results or outcomes may vary materially from
those described herein as anticipated, estimated, expected or intended.

                          PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 2.  CHANGE IN SECURITIES

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

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

         None.


ITEM 5.  OTHER INFORMATION

         On September 28, 1999, the Company entered into a securities
purchase agreement with certain investors, including Signal Equity Partners,
L.P. (formerly Signal Capital Partners, L.P.) and Waterview Partners, L.P.,
an affiliate of Georgica Advisors LLC, for the sale of $7.77 million of 8%
Senior Secured Convertible Notes due 2004. On October 19, 1999, the Company
sold an additional $4.73 million of 8% Senior Secured Convertible Notes due
2004 to certain other investors, for a total of $12.5 million (the "September
Convertible Notes"). The September Convertible Notes are convertible into
shares of the Company's common stock at a conversion price of $3.00 per
share, subject to anti-dilution adjustments. The September Convertible Notes
are secured by, among other things, a pledge by the Company of the shares of
common stock of its wholly-owned subsidiary, FiberNet Telecom, Inc. ("FTI"),
and by a pledge by FTI of the limited liability company membership interests
owned by FTI in Equal Access and Local Fiber.

         The Company also announced, effective September 28, 1999, the election
of William Vrattos, a Vice President of Georgica Advisors LLC, to the Board of
Directors of the Company, increasing the size of the Board to seven members.

         On October 27, 1999, the Company announced that Joseph Tortoretti
retired from the Board of Directors and as an employee.


ITEM 6.  Exhibits and Reports on Form 8-K

(a) The following exhibits are filed as part of, or incorporated by reference
into, this Form 10-QSB:

    EXHIBIT                                    DESCRIPTION
    NUMBER

     4.1                   Securities Purchase Agreement dated as of
                           September 28, 1999 by and among the Company and the
                           purchasers listed therein (incorporated by reference
                           to Exhibit 4.1 of the Company's Current Report on
                           Form 8-K filed with the Securities and Exchange
                           Commission on October 5, 1999 ("Form 8-K")).

                                       4
<PAGE>

     4.2                   Form of 8% Senior Secured Convertible Note due 2004
                           of the Company (incorporated by reference to Exhibit
                           4.2 of the Company's Form 8-K).

     4.3                   Joinder dated as of September 28, 1999 to the
                           Stockholders Agreement dated as of May 7, 1999 by and
                           among the Company and the stockholders listed therein
                           (incorporated by reference to Exhibit 4.3 of the
                           Company's Form 8-K).

     4.4                   Joinder dated as of September 28, 1999 to the
                           Registration Rights Agreement dated as of May 7, 1999
                           by and among the Company and the parties listed
                           therein (incorporated by reference to Exhibit 4.4 of
                           the Company's Form 8-K).

     4.5                   First Amendment dated as of September 28, 1999 to the
                           Security Agreement dated as of May 7, 1999 from the
                           Company and its subsidiaries to the Collateral Agent
                           listed therein (incorporated by reference to Exhibit
                           4.5 of the Company's Form 8-K).

     4.6                   First Amendment dated as of September 28, 1999 to the
                           Guaranty Agreement dated as of May 7, 1999 made by
                           FiberNet Telecom, Inc. ("FTI"), FiberNet Equal
                           Access, L.L.C. and Local Fiber, L.L.C. (incorporated
                           by reference to Exhibit 4.6 of the Company's Form
                           8-K).

     4.7                   First Amendment dated as of September 28, 1999 to the
                           Pledge Agreement dated as of May 7, 1999 between FTI
                           and the Collateral Agent listed therein (incorporated
                           by reference to Exhibit 4.7 of the Company's Form
                           8-K).

     4.8                   First Amendment dated as of September 28, 1999 to the
                           Parent Pledge Agreement dated as of May 7, 1999
                           between the Company and the Collateral Agent listed
                           therein (incorporated by reference to Exhibit 4.8 of
                           the Company's Form 8-K).

     27.1                  Financial Data Schedule.

(b) The Company did not file any reports on Form 8-K during the period
covered by this Form 10-QSB.

                                       5
<PAGE>




                                   SIGNATURES

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

                                          FIBERNET TELECOM GROUP, INC.

Date: November 12, 1999                   By:   /s/ Kenneth G. Saperstein
                                          ---------------------------------
                                          Name:  Kenneth G. Saperstein
                                          Title: Controller




                                       6
<PAGE>






                          FIBERNET TELECOM GROUP, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                           CONSOLIDATED BALANCE SHEETS
           AS OF SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998




<TABLE>
<CAPTION>
                                                                                         September 30,               December 31,
                                                                                             1999                        1998
                                                                                         ------------                ------------
<S>                                                                                    <C>                          <C>
ASSETS
Current Assets:
      Cash and cash equivalents                                                        $   10,627,965               $    257,384
      Accounts receivable                                                                      81,836                    309,365
                                                                                       --------------               ------------
         Total current assets                                                              10,709,801                    566,749

   Property, plant and equipment, net                                                      12,150,966                  5,397,109

Other Assets:
   Deferred charges, net                                                                    1,023,119                          -
   Other assets                                                                             1,514,293                    363,839
                                                                                       --------------               ------------
         Total other assets                                                                 2,537,412                    363,839
                                                                                       --------------               ------------
TOTAL ASSETS                                                                           $   25,398,179               $  6,327,697
                                                                                       --------------               ------------
                                                                                       --------------               ------------




LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities:
      Accounts payable                                                                 $    2,012,990               $  2,587,085
      Accounts payable - related party                                                              -                  1,387,265
      Accrued expenses                                                                        364,388                    337,384
      Interest payable                                                                        429,236                          -
      Notes payable - current portion                                                          66,635                          -
                                                                                       --------------               ------------
         Total current liabilities                                                          2,873,249                  4,311,734

   Long-Term Liabilities:

      Notes payable                                                                         1,205,979                          -
      Senior Secured Convertible Notes due 2004                                            19,456,582                          -
                                                                                       --------------               ------------
         Total long-term liabilities                                                       20,662,561                          -


   Total Liabilities                                                                       23,535,810                  4,311,734

   Minority Interest                                                                           (2,902)                   104,429




con'd.



                                       7
<PAGE>









   Stockholders' Equity:
      Common Stock, $.001 par value, 50,000,000
      shares authorized, 16,351,529 and 16,000,000
      shares issued and outstanding at September 30,
      1999 and December 31,1998, respectively                                                  16,352                      16,000

      Series B Voting Preferred Stock $.001 par value,
      80,000 shares issued and outstanding at
      December 31,1998 (Preference in involuntary
      liquidation value,$1.00 per share)                                                            -                          80

      Series C Voting Preferred Stock $.001 par value,
      133,333 shares issued and outstanding at
      September 30, 1999 (Preference in involuntary
      liquidation value,$1.50 per share)                                                      200,000                           -


      Additional paid in capital                                                           13,297,833                   5,465,564
      Deficit accumulated during the development stage                                    (11,648,914)                 (3,570,110)
                                                                                       --------------               ------------

   Total stockholders' equity                                                               1,865,271                   1,911,534
                                                                                       --------------               ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                             $   25,398,179               $   6,327,697
                                                                                       --------------               ------------
                                                                                       --------------               ------------
</TABLE>













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




















                                       8
<PAGE>

                          FIBERNET TELECOM GROUP, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
       FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998
    AND FOR THE PERIOD FROM INCEPTION (AUGUST 10, 1994) TO SEPTEMBER 30, 1999


<TABLE>
<CAPTION>
                                                                                                       PERIOD FROM
                                                        FOR THE NINE MONTHS ENDED                     INCEPTION TO
                                                  September 30,             September 30,             September 30,
                                                      1999                      1998                      1999
                                                 --------------            ---------------           ---------------
<S>                                              <C>                       <C>                       <C>
Revenues                                         $            -            $             -           $             -
Cost of revenues                                              -                          -                         -
                                                 --------------            ---------------           ---------------
Gross profit                                                  -                          -                         -

Operating expenses:
         General and administrative                   3,511,602                  1,716,614                 7,061,753
         Non-recurring expenses                         890,338                          -                   890,338
         Other expense-related party                          -                     51,644                   392,000
                                                 --------------            ---------------           ---------------
Total operating expenses                              4,401,940                  1,768,258                 8,344,091
                                                 --------------            ---------------           ---------------
Loss from operations                                 (4,401,940)                (1,768,258)               (8,344,091)

Interest income                                          72,761                    126,519                   255,333
Interest expense (See Note 7)                        (3,845,009)                         -                (3,845,009)
                                                 --------------            ---------------           ---------------
Loss before minority interest                        (8,174,188)                (1,641,739)              (11,933,767)

Minority interest                                       107,330                    123,505                   296,799
                                                 --------------            ---------------           ---------------
Net loss                                         $   (8,066,858)           $    (1,518,234)          $   (11,636,968)
                                                 --------------            ---------------           ---------------
                                                 --------------            ---------------           ---------------


Loss per share
         Basic and diluted                               ($0.50)                    ($0.10)                   ($0.76)
                                                 --------------            ---------------           ---------------
Weighted average shares outstanding                  16,135,203                 15,802,198                15,330,623
                                                 --------------            ---------------           ---------------
</TABLE>





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















                                       9
<PAGE>




                          FIBERNET TELECOM GROUP, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
      FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998




<TABLE>
<CAPTION>
                                                          FOR THE THREE MONTHS ENDED
                                                    September 30,             September 30,
                                                        1999                      1998
                                                    -------------             ------------
<S>                                              <C>                       <C>
Revenues                                         $            -            $             -
Cost of revenues                                              -                          -
                                                    -------------             ------------

Gross profit                                                  -                          -

Operating expenses:
         General and administrative                   1,219,819                    634,296
         Non-recurring expenses                               -                          -
         Other expense-related party                          -                     12,501
                                                    -------------             -------------

Total operating expenses                              1,219,819                    646,797
                                                    -------------             -------------
Loss from operations                                 (1,219,819)                  (646,797)

Interest income                                          26,431                     27,859
Interest expense (See Note 7)                        (3,599,777)                         -
                                                    -------------             -------------
Loss before minority interest                        (4,793,165)                  (618,938)

Minority interest                                        20,708                     48,202
                                                    -------------             -------------
Net loss                                            $(4,772,457)              $   (570,736)
                                                    =============             =============

Loss per share
         Basic and diluted                              ($0.29)                    ($0.04)
                                                    -------------             -------------
Weighted average shares outstanding                  16,351,529                 16,000,000
                                                    -------------             -------------
</TABLE>










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





                                       10
<PAGE>




                          FIBERNET TELECOM GROUP, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
       FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998
    AND FOR THE PERIOD FROM INCEPTION (AUGUST 10, 1994) TO SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
                                                                                                                     PERIOD FROM
                                                                       FOR THE NINE MONTHS ENDED                     INCEPTION TO
                                                               September 30,             September 30,               SEPTEMBER 30,
                                                                   1999                      1998                        1999
                                                             ---------------            --------------             --------------
<S>                                                          <C>                        <C>                        <C>
Cash flows from operating activities:
Net loss                                                     $   (8,066,858)             $   (1,518,234)            $(11,636,968)
         Adjustments to reconcile net loss to
             net cash used in operating activities:
         Depreciation and amortization                                    -                     22,577                    29,793
         Amortization & write-off of deferred charges               284,146                          -                   567,670
         Minority interest                                         (107,330)                  (100,492)                 (280,005)
         Other non-cash expenses                                  3,990,661                     95,625                 4,118,161
         Change in assets and liabilities:
             (Increase) decrease accounts receivable                227,529                          -                   (81,836)
             (Increase) decrease other current assets                     -                   (493,914)                    3,954
             (Increase) decrease other assets                      (223,662)                         -                  (679,692)
             Increase (decrease) in accounts payable             (1,480,341)                 2,050,084                   315,977
             Increase (decrease) in interest payable                429,236                          -                   429,236
             Increase (decrease) in accrued expenses                 27,004                          -                   364,388
                                                             ---------------            --------------               ------------
         Net cash used by operating activities                   (4,919,615)                    55,646                (6,849,322)

Cash flows from investing activities:
         Capital expenditures                                    (6,753,857)                (4,197,175)               (9,926,214)
                                                             ---------------            --------------               ------------
Cash used in investing activities                                (6,753,857)                (4,197,175)               (9,926,214)

Cash flows from financing activities:
         Net proceeds from equipment financing                    1,272,614                          -                 1,272,614
         Net proceeds from issuance of debt securities           19,264,100                          -                19,264,100
         Net proceeds from issuance of equity securities          2,605,900                          -                 7,680,900
         Costs relating to issuance of debt securities           (1,098,561)                         -                (1,098,561)
         Payment of dividends                                             -                    (75,000)                  (75,000)
         Capital contributed                                              -                          -                   359,448
                                                                -------------             -------------              -------------
Cash provided from financing activities                          22,044,053                    (75,000)               27,403,501
                                                                -------------             -------------              -------------
Net increase (decrease) in cash                              $   10,370,581             $   (4,216,529)              $10,627,965

Cash at beginning of period                                  $      257,384             $    5,146,327               $        -
Cash at end of period                                        $   10,627,965             $      929,798               $10,627,965
                                                             ---------------            --------------               ------------
                                                             ---------------            --------------               ------------
Interest paid                                                $            -             $            -               $          -
Income taxes paid                                            $            -             $            -               $          -
</TABLE>

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


                                       11
<PAGE>




                          FIBERNET TELECOM GROUP, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
         CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.       GENERAL

         The consolidated interim financial statements, and accompanying notes,
included herein have been prepared by FiberNet Telecom Group, Inc. (the
"Company") pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and reflect all adjustments which are of a normal recurring
nature and which, in the opinion of management, are necessary for a fair
statement of the results for interim periods. Certain information and footnote
disclosures have been condensed or omitted pursuant to such rules and
regulations. The results of the interim period are not necessarily indicative of
the results for the full year. These consolidated financial statements should be
read in conjunction with the consolidated financial statements and the notes
thereto included in the Company's latest annual report to stockholders (Form
10-KSB for the fiscal year ended December 31, 1998).

2.       BASIS OF PRESENTATION

         The consolidated financial statements include the accounts of the
Company and its subsidiaries, FiberNet Telecom, Inc., FiberNet Equal Access, LLC
and Local Fiber, LLC. All significant inter-company balances and transactions
have been eliminated in consolidation.

         The Company has the exclusive right of use for up to eight strands
(four of which are presently usable) of Metromedia Fiber Network Inc.'s fiber
backbone in New York City at no cost to FiberNet for an initial term of 12
years, with a 15 year renewal at no cost at the Company's request. The Company
has recorded this asset at the lower of cost or value on its consolidated
balance sheets. Therefore, the balance included in property, plant and
equipment, net as of September 30, 1999 and December 31, 1998 is $0 (zero
dollars) for these eight strands of fiber.

         The Company capitalizes interest on funds borrowed for projects under
construction. Such capitalized interest is charged to property, plant and
equipment, net and amortized over the approximate life of the related assets.
For the nine months ended September 30, 1999, the Company capitalized interest
in the amount of $90,165.

3.       COMMITMENTS AND CONTINGENCIES

         The Company has entered into lease agreements for office space in
Rochester, New York and New York, New York and for other space relating to the
Company's operations. Lease expense for the nine months ended September 30, 1999
was $600,334. Estimated future minimum lease payments are:

<TABLE>
<CAPTION>
<S>                                                  <C>
                   1999                              $1,101,096
                   2000                               1,106,402
                   2001                               1,111,973
                   2002                               1,117,823
                   2003                                 865,511
                   2004 and thereafter                  917,284
                                                     -----------
                   Total                             $6,220,089
                                                     ===========
</TABLE>

         The Company has signed various contracts with engineering consulting
firms and building management companies. The Company is committed to make cash
payments and provide other consideration relating to these contracts totaling
approximately $11 million by fiscal year end, of which approximately $5 million
has already been paid by the Company.

         The Company also has entered into an equipment leasing agreement
requiring the payment of $1.7 million over a five year period, that commenced
August 1999. This amount



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<PAGE>

has been included as notes payable on the consolidated balance sheet as of
September 30, 1999.

4.       EARNINGS PER SHARE

         Basic earnings per share was computed by dividing the net loss for the
period by the weighted average number of common shares outstanding during the
period, as required by FASB Statement No. 128, "Earnings per Share" ("SFAS
128"). As shown in the statement of operations, basic earnings per share for the
nine months ended September 30, 1999, the nine months ended September 30, 1998
and the period from inception (August 10, 1994) to September 30, 1999 are
calculated using the weighted average shares outstanding for those respective
periods. Since the net loss per share for the periods presented decreases when
outstanding options and the conversion of convertible securities are included in
the computation of weighted average shares outstanding, those options and
convertible securities are anti-dilutive and are not included in the computation
of diluted earning per share. As of September 30, 1999 assuming the exercise of
all outstanding, vested options and warrants and the conversion of all
convertible securities, the Company would have had 38.4 million shares of common
stock outstanding.

5.       RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. Since the Company does not use derivative instruments
nor hedging activities in its operations, adopting Statement 133 does not have
material impact on our financial statements.

6.       RECENT TRANSACTIONS

         On May 7, 1999 (the  "Closing  Date"),  the Company  entered  into a
securities purchase  agreement with certain  investors,  including Signal
Capital Partners, L.P.,  Trident Partners LLC and Concordia Telecom
Management,  L.L.C.,  for the sale of $14.1  million of  securities,
consisting  of $13.9  million  aggregate amount  of 4% to  8%  Senior
Secured  Convertible  Notes  due  2004  (the  "May Convertible  Notes") and
133,333 shares of convertible  Series C Preferred Stock with an aggregate
redemption  value of $0.2 million,  or $1.50 per share,  (the "Series  C
Preferred  Stock,"  together  with the May  Convertible  Notes,  the
"Securities").  The  Securities  are  convertible  into shares of the
Company's common stock at a conversion  price of $1.50 per share,  which
represented  the approximate  fair market value of the Company's common stock
when the conversion price of the Securities was determined. The May
Convertible Notes are secured by, among other things, a pledge by the
Company  of the  shares of common  stock of its  wholly-owned subsidiary,
FiberNet  Telecom,  Inc.  ("FTI"),  and by a  pledge  by FTI of the limited
liability company  membership  interests owned by FTI in FiberNet Equal
Access,  LLC and Local Fiber, LLC. Together with the sale of the May
Convertible Notes, the Company issued  approximately 7.9 million warrants to
purchase common stock to the  purchasers  of the May  Convertible  Notes (the
 "Warrants").  The Warrants are exercisable at $0.67 to $1.50 per share and
expire five years after the Closing Date.

         In  connection  with the issuance of the May  Convertible  Notes and
the related Warrants, the Company recorded an original issue discount on the
May Convertible Notes in the amount $2,405,900.  As a result, the effective
interest rate on the May Convertible Notes is approximately 11%. The original
issue discount is being amortized  over  the  five-year  life  of the  May
Convertible  Notes.  Certain financing  costs,  totaling  $953,561,  related
to  the  issuance  of  the  May Convertible  Notes  have been  capitalized
as  deferred  charges  and are being amortized over the five-year  life of
the May  Convertible  Notes.  Other costs, totaling $503,031,  relating to
the issuance of the Series C Preferred Stock and Warrants  have been
recorded as a reduction  of the proceeds of the issuance of these equity
securities included in the Company's additional paid in capital, as of the
Closing Date.

          In addition on May 7, 1999, the Company  redeemed 80,000 shares of
the Company's Series B Voting  Preferred  Stock  ("Series B  Preferred
Stock")  for $.001 per share.  As a  result,  there are no issued  and
outstanding  shares of Series B Preferred Stock.

         As of June 18,  1999,  the  Company  converted  certain  accounts
payable  to related  parties,  totaling $527,291, into shares of common stock
and warrants.

         On September 28, 1999, the Company entered into a securities
purchase agreement with certain investors, including Signal Equity Partners,
L.P. (formerly Signal Capital Partners, L.P.) and Waterview Partners, L.P.,
an affiliate of Georgica Advisors LLC, for the sale of $7.77 million of 8%
Senior Secured Convertible Notes due 2004. On October 19, 1999, the Company
issued an additional $4.73 million of 8% Senior Secured Convertible Notes due
2004 to certain other investors, for a total of $12.5 million (the "September
Convertible Notes"). The issuance of the $4.73 million of September
Convertible Notes on October 19, 1999 has not been recorded on the financial
statements included herein. The September Convertible Notes are convertible
into shares of the Company's common stock at a conversion price of $3.00 per
share, subject to anti-dilution adjustments. The September Convertible Notes
are secured by, among other things, a pledge by the Company of the shares of
common stock of its wholly-owned subsidiary, FiberNet Telecom, Inc., and by
a pledge by FTI of the limited liability company membership interests owned
by FTI in Equal Access and Local Fiber.

         In connection with the issuance of $7.77 million of the September
Convertible Notes on September 28, 1999, certain financing costs, totaling
approximately $145,000, have been capitalized as deferred charges and are
being amortized over the five-year life of those September Convertible Notes.

7.       NON-RECURRING EXPENSES


         During the second  quarter ended June 30, 1999, the Company
recorded  certain  non-recurring  expenses of $890,338.  Of those expenses,
$297,090  related to expenses  incurred prior to the transaction on May 7,
1999 (see footnote 6 herein).  The Company  also  decided to  decommission
its Lucent  5ESS-2000  telecommunications  switch located at its  facility
at 60 Hudson  Street in New York,  New York.  As a result,  the  Company  has
recorded a non-recurring  expense of $593,248 in the second quarter ended
June 30, 1999,  representing the cost to FiberNet of de-installation and
restocking by Lucent.

         In connection with the issuance of the September Convertible Notes,
the Company recorded a non-recurring expense of $3.2 million, included in
interest expense for the three month ended September 30, 1999, relating to a
beneficial conversion feature of the September Convertible Notes, in
accordance with EITF Issue 98-5. The Company concurrently recorded an
increase to the Company's additional paid in capital in an equal amount. Both
adjustments were non-cash transactions.

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