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

                                    FORM 10-K

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

                   For the fiscal year ended December 31, 2003

                                       OR

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

                         Commission File Number 0-26371

                          EasyLink Services Corporation
             (Exact Name of Registrant as Specified in its Charter)

               DELAWARE                              13-3787073
   (State or other jurisdiction of        (I.R.S. Employer Identification No.)
   incorporation or organization)

                   33 Knightsbridge Road, Piscataway, NJ 08854
               (Address of Principal Executive Office) (Zip Code)

                                 (732) 652-3500
               (Registrant's Telephone Number Including Area Code)

           Securities registered pursuant to Section 12(b) of the Act:

          Title of Each Class     Name of Exchange on Which Registered
           -----------------------------------------------------------
                                      None.

           Securities registered pursuant to Section 12(g) of the Act:


            Title of Each Class Name of Exchange on Which Registered
            --------------------------------------------------------
          Class A Common Stock, $0.01 par value NASDAQ National Market

Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes [ ] No [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 30, 2003 was $22,565,172. Solely for purposes of this
calculation, the aggregate voting stock held by non-affiliates has been assumed
to be equal to the number of outstanding shares of Class A common stock
excluding shares held by all directors and executive officers of the Company and
by holders of shares representing more than 10% of the outstanding Class A
common stock of the Company.

Indicate the number of outstanding shares of each of the registrants' classes of
common stock as of February 27, 2004: Class A common stock, 42,865,398 shares;
and Class B common stock, 1,000,000 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2004 Annual Meeting of Shareholders are
incorporated by reference into Part III of this Form 10-K.

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Form 10-K Index

Item No.
                                                                        Page No.
Part I
1.   Business............................................................      3
2.   Properties..........................................................     10
3.   Legal Proceedings...................................................     11
4.   Submission of Matters to a Vote of Security Holders.................     12

Part II

5.   Market for Registrant's Common Equity and Related Stockholder
     Matters.............................................................     12
6.   Consolidated Selected Financial Data................................     24
7.   Management's Discussion and Analysis of Financial Condition
     and Results of Operations...........................................     25
7A.  Quantitative and Qualitative Disclosures About Market Risk..........     36
8.   Consolidated Financial Statements and Supplementary Data............     37
9.   Changes in and Disagreements with Accountants on Accounting and
     Financial Disclosure................................................     83
9A.  Controls and Procedures.............................................     83


Part III

The information required by Items 10 through 14 in this part is omitted pursuant
to Instruction G of Form 10-K. This information will be included in an amendment
to this Form 10-K or a definitive Proxy Statement, pursuant to Regulation 14A,
to be filed not later than 120 days after December 31, 2003.

Part IV

15. Exhibits, Financial Statement Schedules and Reports on Form 8-K......     83

(a)      Consolidated Financial Statements, Financial Statement Schedules and
         Exhibits

         (1) Consolidated Financial Statements-See Item 8.

         (2) Financial Statement Schedules - All schedules normally required by
         Form 10-K are omitted since they are either not applicable or the
         required information is shown in the consolidated financial statements
         or the notes thereto.

         (3) Exhibits

(b) Reports on Form 8-K ...............................................      88

Signatures ............................................................      89

Exhibits...............................................................      90


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This report on Form 10-K has not been approved or disapproved by the Securities
and Exchange Commission nor has the Commission passed upon the accuracy or
adequacy of this report.

We make forward-looking statements within the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 throughout this report. These
statements relate to our future plans, objectives, expectations and intentions.
These statements may be identified by the use of words such as "expects,"
"anticipates," "intends," "believes," "estimates," "plans" and similar
expressions. Our actual results could differ materially from those discussed in
these statements. Factors that could contribute to such differences include, but
are not limited to, those discussed in the "Risk Factors" section of this
report. EasyLink Services undertakes no obligation to update publicly any
forward-looking statements for any reason even if new information becomes
available or other events occur in the future.

Unless otherwise indicated or the context otherwise requires, all references to
"we," "us," "our," "EasyLink," "EasyLink Services," the "Company" and similar
terms refer to EasyLink Services Corporation and its direct and indirect
subsidiaries.

Item 1   Business

Company Overview

We are a provider of services that facilitate the electronic exchange of
information between enterprises, their trading communities and their customers.
We handle approximately one million transactions per business day that are
integral to the movement of money, materials, products and people in the global
economy such as insurance claims, trade and travel confirmations, purchase
orders, invoices, shipping notices and funds transfers, among many others. We
offer a broad range of information exchange services to businesses and service
providers, including transaction delivery services such as electronic data
interchange or "EDI," telex, desktop fax, broadcast and production messaging
services; services that protect corporate e-mail systems such as virus
protection, spam control and content filtering services; and transaction
management services including document capture and management services such as
fax to database, fax to data and data conversion services.

We offer our services to thousands of business customers worldwide including the
majority of the Fortune Global 500. In 2003, approximately 76% of EasyLink's
revenue was attributable to our United States business and 24% was attributable
to our business outside the United States. Outside of the United States, we have
either direct and/or indirect distribution channels in Brazil, Dubai, France,
Germany, Hong Kong, India, Japan, Malaysia, Saudi Arabia, Singapore, Turkey and
the United Kingdom. The United Kingdom is the largest contributor to our
international revenues, as well as the primary location of EasyLink's network
and servicing infrastructure, outside of the United States.

Our strategy is to expand our position in the information exchange segment of
the electronic commerce market by offering to our large customer base
transaction delivery services and related transaction management services that
automate more components of our customers' business processes.

We believe that growth of the transaction delivery and related transaction
management services segment will result from continued strong investment in
e-commerce systems. These systems generate transactions requiring delivery of
information to or management of information among a wide range of partners and
customers. The resulting exchanges of information will occur across an
increasingly complex array of disparate networks, marketplaces, systems,
technologies and locations. We believe that third-party providers of transaction
delivery and transaction management services can substantially reduce the
complexity and cost of operating in this environment. Transaction delivery and
transaction management services will provide substantial benefits to businesses
by migrating people-intensive and paper-based processes to electronic
transaction delivery and management services. We expect that businesses will
achieve these benefits by improving inventory turnover, accelerating the
collection of receivables, automating manual processes, improving customer
satisfaction, optimizing purchasing practices and reducing waste and overhead
costs.

We believe enterprises use EasyLink's transaction delivery services to reduce
the complexity, cost and time associated with deploying and managing networks to
conduct business electronically within all or a part of their trading and
customer communities. For example, we help automate the collection and
processing of claims forms for insurance carriers, converting the forms
submitted by independent agents into electronic information that can be
processed directly by the carriers' claims systems. Also, thousands of companies
of all sizes use our services to streamline the routing and delivery of purchase
orders to and from members of their trading communities. Our customers take
advantage of our ability to accept a transaction in just about any form and from
virtually any environment in which enterprise transactions originate, and
deliver it in just about any form to virtually any other environment, replacing
slow, costly, people- and paper-intensive methods that are in wide use today. We
also currently provide virus protection, unsolicited e-mail or spam control and
content filtering services that protect a customer's e-mail system from messages
before they enter or leave the corporate network. We derive revenue from license
fees, monthly per-user fees, per-message charges, per-page charges, per-minute
charges, per-character set charges and consulting fees.


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Typically, our services extend the capabilities and geographic reach of a
customer's e-commerce system. By using our services, a customer can exchange
information in a reliable and secure manner and with the flexibility to adapt to
the diversity of e-commerce systems and applications in use. Our transaction
delivery and management services provide a broad range of strong capabilities to
enterprises, including the ability to:

-        gain access to and use our services through a variety of commonly used
         enterprise e-commerce application platforms such as: SAP, Oracle, Web
         sites, electronic data interchange or EDI systems and others, running
         on computer systems from mainframe to desktop PC to handheld computer
         systems;

-        send and receive and transform information using alternative message
         types: e-mail, EDI, fax, telex, hard copy;

-        connect to our network through the methods in common use today:
         Internet, dedicated or leased lines, frame relay, virtual private
         network or VPN and secure dial-up across a phone line;

-        deliver information securely using a variety of security protocols:
         IP-SEC; SSL, HTTPS, RSA, S/MIME, PGP and non-repudiation/delivery
         confirmation capabilities. EasyLink plays the role of a trusted
         third-party in control of a message from transmission to delivery;

-        exchange information with other computer networks using a broad range
         of communication protocols that computer networks use to exchange
         information: HTTP, SMTP, TCP/IP, FTP, UNIX/UUCP, Telnet, X.400, IBM
         proprietary; and

-        exchange information in over 200 document types or formats, including
         EDI, HTML, XML, PDF, TIFF.

-        Convert paper and fax transactions into electronic data formats
         including EDI and XML, which can be processed directly by customer
         systems such as claims systems, purchasing and payment systems,
         underwriting systems, workflow systems and databases.


Through the ongoing development and introduction of new transaction delivery and
management services, we plan to continue to build upon the substantial customer
base, technology and servicing assets we brought together during 2001. We are
building these capabilities to increase the accessibility, security, data
translation and document transformation capabilities of our network.

Our Business Services

We offer a range of transaction delivery and other services to a customer base
composed primarily of business enterprises. While there are minor variations in
our service mix from market to market, generally speaking, our major services
are offered in all of the markets in which we do business. The following chart
describes our major service offerings:


               Service                           Description
Transaction Delivery Services:

EDI and Trading Community Enablement
Services:
------------------------------------

EasyLink EDI Service                EasyLink EDI (Electronic Data Interchange)
                                    Service is a transaction delivery service
                                    that allows our customers to manage the
                                    electronic exchange of business documents
                                    (such as purchase orders and invoices among
                                    others) using standardized formats such as
                                    ANSI X.12 and UN-EDIFACT without human
                                    intervention. The EasyLink EDI Service
                                    offers businesses all the key elements
                                    needed for traditional EDI implementation
                                    including network, design, systems, software
                                    and implementation support.

EasyLink IP-EDI Service             The EasyLink IP (Internet Protocol)- EDI
                                    Service is a transaction delivery service
                                    that provides Internet access to EDI,
                                    enabling small to medium sized enterprises
                                    to trade with their major partners in a more
                                    cost-effective and easier to implement
                                    manner.


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EasyLink Web EDI Service            An intelligent, browser-based data entry
                                    interface for trading partners to easily and
                                    efficiently exchange business documents
                                    electronically.

                                    EasyLink EDI Testing & Certification Service
                                    - a service specifically designed to help
                                    large companies or "hubs" validate their
                                    trading partners' or "spokes'" existing
                                    transaction capabilities in order to comply
                                    with the "hubs'" existing EDI implementation
                                    guidelines.

                                    EasyLink File Integration Service - enables
                                    small- to mid-sized businesses to exchange
                                    high volumes of transaction data with large
                                    trading partners simply by sending documents
                                    in formats such as Microsoft Excel to
                                    EasyLink, which transforms and delivers them
                                    in Electronic Data Interchange (EDI),
                                    Extensible Markup Language (XML) or similar
                                    formats used by larger enterprises.


Production Messaging Services:
------------------------------

EasyLink Production
Messaging Service                   EasyLink Production Messaging Service is a
                                    transaction delivery service that allows our
                                    Messaging Service customers to deliver high
                                    volumes of mission-critical documents such
                                    as invoices, purchase orders, shipping
                                    notices, insurance claims or bank wire
                                    transfers from virtually any enterprise
                                    environment to global business partners
                                    through various non-EDI message delivery
                                    modes including e-mail, Fax, Telex, and
                                    postal delivery.

Integrated Desktop Messaging Services:
--------------------------------------

EasyLink E-mail to Fax Service

                                    The EasyLink E-mail to Fax Service is a
                                    transaction delivery service that allows our
                                    customers to send documents to fax machines
                                    from their workstations via their corporate
                                    email server by addressing an e-mail to the
                                    recipient's fax number. This service does
                                    not require the user to install any hardware
                                    or software. Documents or files that can be
                                    attached to the e-mail and rendered as a fax
                                    include: MS Office, MS Project, Lotus
                                    SmartSuite, Corel, Visio, HTML, RTF, TIFF,
                                    PDF, PostScript and more.

EasyLink Fax to E-mail Service

                                    The EasyLink Fax to E-mail Service is a
                                    transaction delivery service that allows our
                                    customers to receive faxed documents as
                                    e-mail attachments delivered to their e-mail
                                    address. Customers can receive multiple
                                    transaction documents simultaneously, with
                                    the service transforming the received
                                    documents from paper into universally
                                    accepted electronic formats. Once received,
                                    the user may forward the document to one or
                                    more other e-mail addresses simply by
                                    forwarding the received e-mail that contains
                                    the attachment. The user may also store the
                                    e-mail and attachment in an e-mail folder
                                    and print out received documents.

EasyLink Document Capture and
-----------------------------
Management Services:                EasyLink Document Capture and Management
--------------------                Services are a family of Transaction
                                    Management offerings that significantly
                                    reduce the time and expense associated with
                                    receiving and processing transactions that
                                    originate on paper forms by digitally
                                    converting them into usable data that can be
                                    processed directly by enterprise systems
                                    such as production servers, workflow
                                    solutions, and databases. The service family
                                    currently includes:

                                    EasyLink Fax to E-mail Plus Service is an
                                    enhanced version of Fax to E-mail service
                                    with the ability to route an inbound message
                                    based on the information contained in the
                                    faxed document rather than just to the
                                    single e-mail address associated with the
                                    inbound fax number.

                                    EasyLink's Fax to Database service creates
                                    database records that combine the received
                                    image with associated document information
                                    that is captured and verified from
                                    predefined fields within the image. Database
                                    records can be exported to customer systems
                                    or hosted by EasyLink.


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                                    EasyLink Fax to Data Service is an automated
                                    data entry capability which captures
                                    information on a received form, verifies it
                                    with human operators, and then converts the
                                    information into a 'live' data format such
                                    as EDI or XML. This data is then exported to
                                    customer production systems through various
                                    methods.

                                    EasyLink Data Conversion Service enables
                                    companies to exchange data in different data
                                    types, formats and structures. This
                                    bi-directional service enables customers to
                                    use one consistent data format and to
                                    communicate with many other companies which
                                    require different data formats. EasyLink
                                    supports over 100 data formats which include
                                    XML, EDI, text file, CSV, Excel and other
                                    commonly used proprietary formats.

Virus and Content Scanning Services:
------------------------------------

EasyLink MailWatch Services         EasyLink's MailWatch Services are boundary
                                    services that protect our customers'
                                    corporate e-mail systems against viruses,
                                    spam, offensive content and oversized file
                                    attachments. EasyLink MailWatch allows
                                    customers to establish and enforce policies
                                    controlling the use of the corporate e-mail
                                    system. Messages are scanned while on the
                                    Internet, preventing suspect e-mails from
                                    ever reaching or leaving the customer's
                                    network.

We have also begun to offer in international markets email notification,
interactive conferencing and interactive voice notification services. We provide
these services under EasyLink's brand name through third-party providers.

Revenues

We derive revenues primarily from monthly fees and usage-based charges for our
transaction delivery services; from monthly per-user or per-message fees for
virus protection, spam control and content filtering services; from license fees
for desktop fax services; and from consulting fees for professional services.

Our transaction delivery services generate revenue in a number of different
ways. We charge our EDI customers per message. Customers of our production
messaging services and transaction management services pay consulting fees based
upon the level of integration work and set-up requirements plus per-page or
per-minute usage charges, depending on the delivery method, for all messages
successfully delivered by our network. Customers who purchase our integrated
desktop messaging services pay initial site license fees based on the number of
user seats being deployed plus per page usage charges for all faxes successfully
delivered by our network.

For our virus protection, spam and content filtering services, we charge
customers either a monthly fee per user or per message charges.

Worldwide Sales and Marketing

Our primary marketing objectives are to:

-   promote higher usage of all services in all segments;

-   retain, cross-sell and upsell our existing customer base;

-   grow our customer and distribution base; and

-   build our brand.

We offer our business services in key global markets through multiple sales
channels which include a direct field sales force, a direct telesales
organization, and alternate channels which include value-added resellers,
service aggregators, business technology solutions providers and various types
of telecommunications providers. Our own sales organization targets mid and
large size companies - typically those having greater than 2000 employees, and
in some cases smaller organizations that have a disproportionately large need
for one or more of our services. We employ various marketing techniques to
generate activity for our sales channels, including advertising, telemarketing
and exhibiting at trade shows.


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Customer Support

Customer support is available by e-mail or telephone 24x7x365 and is staffed by
experienced technical support engineers and customer service representatives.
EasyLink Services provides a number of different types of support, including
e-mail support, phone support and technical support. Our principal customer
support operations are located in the USA and the UK.

E-mail support: Customers can contact the customer service organization via
e-mail. Inbound e-mails are managed using e-mail management software, allowing
customer service to view the history of each customer, prioritize issues based
on customer status, classify topic issues and route issues to appropriate
customer service representatives.

Phone support: Inbound phone calls are managed using an Automated Call
Distribution (ACD) system which directs call-prioritization and skill-based
routing. Additionally, proprietary and commercial applications are used to
capture customer phone contact information and maintain customer contact history
files.

Technical support: The customer support teams include technical support
engineers. Technical support engineers provide internal subject matter expertise
to customer service representatives, analyze root causes for customer contacts,
recommend improvements to products, tools, knowledge bases and training. The
engineers also develop support preparation plans to enable customer service to
efficiently support new products and services.

Technology

EasyLink Transaction Delivery Services Network

The EasyLink transaction delivery services network is a distributed, managed
Internet Protocol (IP)-based global network that supports all of our transaction
delivery services (EDI and production messaging). The EasyLink Services
distributed message network is built upon a combination of highly reliable
message switching computer systems dispersed around the world. We strive to
operate our message systems at 99.5% availability. This high availability
ensures continuous reliability for EasyLink Services customer's business
critical applications. The message switching systems currently operate with
substantial unused computer capacity. This enables EasyLink Services to meet its
transaction delivery volume growth objectives without the need for additional
capacity investment.

The message switching systems are located at various operational centers in the
United States as well as in the United Kingdom. The operational centers are
located in major metropolitan centers with easy access to major network
providers such as AT&T. This enables EasyLink Services to easily address
facility growth. It also allows efficient access to EasyLink Services' major
customers and potential markets. All of the EasyLink Services operational
centers are secured with continuous power supply. As part of our acquisition of
the EasyLink messaging services business, message switches for the transaction
delivery network relating to this business are located at an AT&T site.

The EasyLink Services messaging nodes are connected by a managed IP-based
backbone. The IP backbone is constantly monitored by EasyLink Services
operational centers. This allows for diverse routing and efficient management of
volumes so that customers do not experience delays in the routing of messages.
If a remote node does experience a problem, messages for many of our services
can be re-routed to prevent delays in transaction delivery. EasyLink Services
maintains firewalls to prevent unsolicited intrusions from the Internet. Any
unauthorized attempt is tracked and investigated. The constant monitoring of the
network ensures integrity of all messages within the EasyLink Services network.

EasyLink Services offers its customers a wide range of secure access methods
into the EasyLink Services network. Access methods can include X.25, dedicated
point-to-point circuits, frame relay, and virtual private networks (VPN).
EasyLink Services' operational centers work in conjunction with its customers to
ensure the constant availability of access into the network. Any circuit
problems are proactively reported by the EasyLink Services' operational centers.
EasyLink Services can also offer its customers managed and secure access on a
global basis utilizing AT&T's worldwide network access services.


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On February 23, 2001, we completed the acquisition of Swift Telecommunications,
Inc. and the EasyLink Services business that Swift had just acquired from AT&T
Corp. The EasyLink Services business acquired from AT&T provided a variety of
transaction delivery services such as EDI and production messaging services.
This business was a division of AT&T and was not a separate independent
operating entity. We hired only a portion of the employees of the business.
Under a Transition Services Agreement, AT&T provided us with a variety of
services to enable us to continue to operate the business pending the transition
to EasyLink. We have successfully transitioned virtually all of the services
provided by AT&T under the Transition Services Agreement to ourselves, including
customer service, network operations center, telex switching equipment and
services and office space in a variety of locations. The Transition Services
Agreement expired on January 31, 2003. The network for the portion of this
business relating to EDI and production messaging services continues to reside
on AT&T's premises under an Equipment Space Sublease Agreement with AT&T but is
now being operated and maintained by EasyLink. The agreement runs through
January 31, 2005. We plan to seek to extend this agreement prior to its
expiration. If we are unable to extend the agreement, we will need to either
migrate the network off of the AT&T premises to EasyLink's premises or migrate
the customers to a replacement network. Effective February 1, 2003, the Company
entered into a Professional Services Agreement with AT&T providing for technical
support at the AT&T facility where the Company's EDI and production messaging
services network resides. The agreement is for a term of six months but may be
renewed for an additional six months at EasyLink's request at the same or
reduced level of service.

EasyLink MailWatch (Virus Protection, Spam Control and Content Filtering
Services) Network

Hardware Network. The MailWatch service operates on multiprocessor Intel-based
servers running Microsoft Windows NT and SQL Server with Raid 5 storage arrays.

Software. MailWatch incorporates third party virus and content filtering
technology which we have configured for use in a shared services environment
across our customer base. The MailWatch Web-based administrative interface is
hosted on servers that utilize Microsoft Windows NT 4.0 and Internet Information
Server. The site's pages consist of HTML, Active Server Pages (ASP) and
JavaScript.

Network Operations

EasyLink's Network Operations Center or NOC is where network system specialists
monitor the status of servers and messaging operations worldwide. An on-site
team of engineers staffs the NOC 24x7x365 and uses a combination of third party
applications, in combination with our internally developed tools, to automate
the monitoring and management of the entire system.

The NOC is responsible for the management of infrastructure performance,
security and system uptime. RemedySM is used to track all administrative events
and subsequently manage performance reports, recovery times and event
correlation analysis.

Security - Because organizations are transferring mission-critical messages
through the network, EasyLink Services has put in place stringent tools and
procedures to address security issues.

Employees - Security is paramount among our employees. All NOC personnel
backgrounds are scrutinized and a high proportion of our staff have prior
experience in secure environments. Personnel go through continual training to
stay on top of the latest security related issues and technologies.

Technologies - Proxy Based Firewall - This level of intervention means that the
content of the data is scrutinized, allowing data to pass if it matches the more
sophisticated rule base. SSL (Secure Sockets Layer) - Provides data encryption,
server authentication, message integrity, and client authentication.

Access Control - Authorized personnel must access to and from secured areas
through a specially designed single entry monitored door. Specific security
protocols such as monitors, security badges and passcodes are in place and
enhanced with advancement in security technology.

Environmental - Fire protection - Robust fire sensory components are placed
strategically throughout the Network Operations Center. Back-up - The entire NOC
system is protected with back up battery power in case of utility power failure.

Climate control - EasyLink Services has put in place state-of-the-art cooling,
heating and humidity controls to keep the entire infrastructure operating at
optimum conditions.

Telecommunications Services


                                      -8-
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In connection with the acquisition of the EasyLink Services business from AT&T
Corp., we entered into a Master Carrier Agreement with AT&T. Under this
agreement, AT&T has provided us with a variety of telecommunications services
that are required in connection with the provision of our services. The term of
the agreement for network connection services is for 36 months through May 2005
and the term of the agreement for private line and satellite services expired in
March, 2004. The Company is negotiating with AT&T to extend the private line and
satellite services agreement for a period of 18 to 24 months. Under the
agreement, we have a minimum purchase commitment for network connection services
equal to $3 million for each of the three years of the contract. In addition, if
we extend the commitment for private line and satellite services, we expect to
have a minimum purchase commitment for these services equal to approximately
$150,000 per month during the term. If we terminate the network connection
services or the private line and satellite services prior to the end of the term
or AT&T terminates the services for our breach, we must pay to AT&T a
termination charge equal to 50% of the unsatisfied minimum purchase commitment
for these services for the period in which termination occurs plus 50% of the
minimum purchase commitment for each remaining commitment period in the term.
During 2003, we entered into a separate agreement for a term of 36 months ending
in September 2006 for switched services from AT&T which includes a minimum
revenue commitment of $120,000 per year.

We have committed to purchase from MCI Worldcom a minimum of $75,000 per month
in other telecommunications services through January 2005 and to purchase from
XO Communications, Inc., a minimum of $35,000 per month in services through
November 2004. We also have one year commitments to purchase internet bandwidth
services from various providers that aggregate approximately $43,000 per month.


Competition

Depending on the particular service that we offer, we compete with a range of
companies in the transaction delivery services and messaging market, including
both premises-based and service-based solutions providers. We believe that our
ability to compete successfully will depend upon a number of factors, including
market presence; the capacity, reliability and security of our network
infrastructure; the pricing policies of our competitors and suppliers; the
timing of introductions of new services and service enhancements by us and our
competitors; and industry and general economic trends.

Competition in the transaction delivery sector varies. Competitors in the EDI
and Trading Community Enablement Services markets include Inovis, Internet
Commerce Corp., GXS, IBM Interchange Services and Sterling Commerce, Inc., a
subsidiary of SBC Communications Inc. Our competitors in the integrated desktop
messaging and production messaging markets include PTEK Holdings Inc.'s Xpedite
Services and J2 Global Communications as well as a number of smaller, regional
providers around the world. Competition in the document capture and management
services markets is primarily in the form of software-based solutions customers
deploy and operate themselves, as well as a number of small, regional service
bureau companies.

Many of these competitors have greater market presence, engineering and
marketing capabilities, and/or technological and personnel resources than those
available to us. As a result, they may be able to develop and expand their
communications and network infrastructures more quickly, adapt more swiftly to
new or emerging technologies and changes in customer requirements, take
advantage of acquisition and other opportunities more readily, and devote
greater resources to the marketing and sale of their products and services. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase the
ability of their services to address the needs of our current and prospective
customers. Accordingly, it is possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. In addition
to direct competitors, many of our larger potential customers may seek to
internally fulfill their needs through the deployment of their own on premises
messaging systems.

Intellectual Property

Our intellectual property is among our most valued assets. We protect our
intellectual property, technology and trade secrets primarily through contract,
copyrights, trademarks, trade secret laws, restrictions on disclosure and other
methods. Parties with whom we discuss, or to whom we show, proprietary aspects
of our technology, including employees and consultants, are required to sign
confidentiality and non-disclosure agreements. If we fail to protect our
intellectual property effectively, our business, operating results and financial
condition may suffer. In addition, litigation may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of the proprietary rights of others.

Notwithstanding these protections, there is a risk that a third party could copy
or otherwise obtain and use our technology or trade secrets without
authorization. In addition, others may independently develop substantially
equivalent technology. The precautions we take may not prevent misappropriation
or infringement of our technology.

We have patents related to our faxSAV Connector and our "e-mail Stamps" security
technology incorporated into our e-mail to fax service.


                                      -9-
<PAGE>

As part of a settlement entered into in September 1998, NetMoves Corporation,
which we acquired in February 2000, received a perpetual license from AudioFAX
IP, L.L.P. to use certain of AudioFAX's patents relating to store-and-forward
technology. The license is fully paid-up.

From time to time, third parties have asserted claims against us that our
services employ technology covered by their patents. There can be no assurance
that third parties will not assert additional infringement claims against us in
the future. Patents have been granted recently on fundamental technologies in
the communications and desktop software areas, and patents may be issued which
relate to fundamental technologies incorporated into our services. As patent
applications in the United States are not publicly disclosed until the patent is
issued, applications may have been filed which, if issued as patents, could
relate to our services. It is also possible that claims could be asserted
against us because of the sending of messages over our network or the content of
these messages. We could incur substantial costs and diversion of management
resources with respect to the defense of any claims that we have infringed upon
the proprietary right of others, which costs and diversion could have a material
adverse effect on our business, financial condition and results of operations.
Furthermore, parties making such claims could secure a judgment awarding
substantial damages, as well as injunctive or other equitable relief which could
effectively block our ability to license and sell our services in the United
States or abroad. Any such judgment could have a material adverse effect on our
business, financial condition and results of operations. In the event a claim
relating to proprietary technology or information is asserted against us, we may
seek licenses to such intellectual property. There can be no assurance, however,
that licenses could be obtained on terms acceptable to us, or at all. The
failure to obtain any necessary licenses or other rights could have a material
adverse effect on our business, financial condition and results of operations.

We incorporate licensed, third-party technology in our services. In these
license agreements, the licensors have generally agreed to defend, indemnify and
hold us harmless with respect to any claim by a third party that the licensed
software infringes any patent or other proprietary right. The outcome of any
litigation between these licensors and a third party or between us and a third
party may lead to our having to pay royalties for which we are not indemnified
or for which such indemnification is insufficient, or we may not be able to
obtain additional licenses on commercially reasonable terms, if at all. In the
future, we may seek to license additional technology to incorporate in our
services. The loss of or inability to obtain or maintain any necessary
technology licenses could result in delays in introduction of new services or
curtailment of existing services, which could have a material adverse effect on
our business, results of operations and financial condition.

Item 2   Properties

United States

Our headquarters are located in Piscataway, New Jersey where we occupy
approximately 67,000 square feet of office, development lab and network space
under a lease expiring in 2013. Our headquarters were previously located in
Edison, New Jersey, where we have approximately 15,000 square feet still
remaining under leases expiring in 2005 and 2006. In addition, we have office,
development lab and network space at four other locations throughout the United
States under leases expiring primarily in 2005 and 2006; three U.S. network
installations co-located in telehousing facilities under short-term leases; and
sales offices under short term leases for our business messaging staff in the
Dallas and New York metropolitan areas. In connection with the acquisition of
the EasyLink Services business from AT&T we also lease approximately 5,000
square feet under an Equipment Space Sublease Agreement with AT&T for the
operation of the network equipment for this business through January 31, 2005.

While we believe that these facilities meet our anticipated needs at least
through the end of 2004, we continually review our needs and may add facilities
in the future.

International

We lease approximately 25,000 square feet of office space in five locations in
England. The leases expire between September 2004 and June 2017, with
cancellation provisions available in the two longer term leases, 10 years prior
to expiration in 2004 and 2007.

We lease approximately 15,000 square feet of office space in locations in Hong
Kong, Germany, Singapore, Malaysia, Brazil, France, South Korea and India. The
leases expire between December 2003 and January 2007.

We also have telehousing and co-location agreements under short-term leases for
our communications nodes around the world.

See the table of long-term obligations and commitments contained in Item 7, Part
II, Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources for information relating to our
lease commitments.


                                      -10-
<PAGE>

Item 3   Legal Proceedings

From time to time we have been, and expect to continue to be, subject to legal
proceedings and claims in the ordinary course of business. These include claims
of alleged infringement of third-party patents, trademarks, copyrights, domain
names and other similar proprietary rights; employment claims; and contract
claims. These claims include pending claims that some of our services employ
technology covered by third party patents. These claims, even if not
meritorious, could require us to expend significant financial and managerial
resources. No assurance can be given as to the outcome of one or more claims of
this nature. If an infringement claim were determined in a manner adverse to the
Company, we may be required to discontinue use of any infringing technology, to
pay damages and/or to pay ongoing license fees which would increase our costs of
providing service.

The Company has also received notices or claims from certain third parties for
disputed and unpaid accounts payable. The Company believes that it has
appropriately reserved for the amount of any liability that may arise out of
these matters, and management believes that these matters will be resolved
without a material effect on the Company's financial position or results of
operations.

In connection with the termination of an agreement to sell the portal operations
of the Company's discontinued India.com business, the Company brought suit
against a broker that it had engaged in connection with the proposed sale of the
portal operations alleging, among other things, breach of contract and
misrepresentation. The broker brought a counterclaim against the Company for a
brokerage fee that would have been payable on the closing of the proposed sale.
The court entered a judgment in the amount of $931,000 against the Company. In
response to the judgment, the Company filed a motion to alter the judgment in
which the Company, among other things, requested that the Court vacate the
judgment or reduce the amount of damages. On February 20, 2003, the Court
vacated the original judgment and entered a declaratory judgment in EasyLink's
favor that EasyLink does not owe the broker any fee or other compensation
arising from the failed sale of the portal operations. On March 13, 2003, the
broker filed a motion to amend the judgment or for a new trial requesting, among
other things, re-instatement of the original judgment or, in the alternative, a
new trial. On September 10, 2003, the Court reinstated the previously vacated
judgment in favor of the broker in the original amount of $931,000. The Company
has filed for an appeal. The Court has permitted the Company, in lieu of posting
an appeal bond, to place $50,000 per month for eight months commencing November
7, 2003, for a total of $400,000, into a trust account to provide funds for the
payment of the judgment if upheld on appeal. The broker appealed the Court's
order permitting the Company to place funds in the trust account in lieu of
posting an appeal bond. Although the Company intends to pursue its appeal
vigorously, no assurance can be given as to the Company's likelihood of success
or its ultimate liability, if any, in connection with this matter. Although we
intend to defend vigorously the matter described above, we cannot assure you
that our ultimate liability, if any, in connection with the claim will not have
a material adverse effect on our results of operations, financial condition or
cash flows.

On October 20, 2003, the Company entered into a settlement of its legal dispute
with AT&T Corp. ("AT&T") and PTEK Holdings, Inc ("PTEK"). The dispute arose out
of the February 27, 2003 announcement that PTEK had entered into an agreement
with AT&T to purchase 1,423,980 shares of outstanding Class A common stock of
the Company held by AT&T and a promissory note of the Company held by AT&T.
Under the settlement, the Company agreed to consent to the transfer of the
shares and the note from AT&T to PTEK in exchange for a revised amortization
schedule on the note and the return to the Company for cancellation of a warrant
issued to AT&T Corp. to purchase 1,000,000 shares of the Company's Class A
common stock. The parties dismissed all pending actions relating to the matter.
Under the revised terms of the note, the Company will pay the remaining
outstanding balance, approximating $10.0 million, of principal of and interest
on the Note as of March 30, 2004 and all future accrued interest by making equal
quarterly installment payments of principal and interest in the amount of
$800,000 and a final payment of approximately $5.75 million on the June 1, 2006
maturity date. The note was originally issued as part of the purchase price for
the acquisition of the AT&T EasyLink business from AT&T Corp. and is secured by
the assets of that business and the assets of Swift Telecommunications, Inc
acquired at the same time. The principal amount of the note was previously
reduced from its original principal balance of $35,000,000 to $10,000,000
pursuant to the Company's debt restructuring process during 2001 through 2003.
The warrant returned to the Company for cancellation represented the right to
purchase 1,000,000 shares at an exercise price of $6.10 per share and had an
expiration date of November 27, 2011.

On November 19, 2003, Depository Trust Company ("DTC") instituted suit against
the Company in the United States District Court for the District of New Jersey
for moneys allegedly due under a sublease entered into by the Company in
September 1999 for premises located in Jersey City, New Jersey. DTC seeks
additional unspecified amounts from the Company to compensate DTC for alleged
damages resulting from the Company's alleged breach of the Sublease and the
resulting termination thereof by DTC in October 2001. The original sublease term
was through December 30, 2005. The Company's obligations under the sublease
consisted of annual fixed rent of approximately $500,000 and additional rent
based on expenses relating to the building allocated to the Company under the
sublease. The Company has filed an Answer and Counterclaim against DTC seeking
the return of all or a substantial portion of the proceeds of a $1 million
letter of credit procured by the Company to secure its obligations under the
sublease and drawn upon in full by DTC and alleging that DTC failed to mitigate
damages by not re-renting the space. The Company believes that it has
meritorious defenses to the claim filed by DTC and believes that the Company's
counterclaim is meritorious. Although we intend to defend vigorously this
matter, we cannot assure you that our ultimate liability, if any, in connection
with the claim will not have a material adverse effect on our results of
operations, financial condition or cash flows.


                                      -11-
<PAGE>

An Indian-based subsidiary of our discontinued India.com, Inc. subsidiary has
received notices of tax assessment from the Indian tax authorities for
approximately $650,000 in tax assessments. The subsidiary, which ceased
operations in December 2001, intends to defend the assessments. The Company has
established what it believes to be appropriate reserves for any liability of the
subsidiary for these assessments.

Item 4   Submission of Matters to a Vote of Security Holders

No matters were submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders, through the solicitation of
proxies or otherwise.

Item 5:  Market for the Registrant's Common Equity and Related Stockholder
Matters
<TABLE>
<CAPTION>

Market Price                                                                          2003

                                                                Fourth Quarter    Third Quarter    Second Quarter    First Quarter

<S>                                                                  <C>              <C>               <C>              <C>
High.................................................                $1.96            $2.65             $0.88            $1.00
Low..................................................                $1.11            $0.63             $0.45            $0.40
End of Quarter.......................................                $1.49            $1.63             $0.68            $0.46

Market Price                                                                          2002

                                                                Fourth Quarter    Third Quarter    Second Quarter    First Quarter

High.................................................                $1.60            $2.95             $3.15            $6.70
Low..................................................                $0.51            $0.66             $0.96            $2.55
End of Quarter.......................................                $0.64            $1.46             $1.25            $2.70
</TABLE>

The Nasdaq closing market price at February 27, 2004 was $1.61.

Dividends

The Company has never declared or paid any cash dividends on its common stock
and does not anticipate paying any cash dividends on its stock in the
foreseeable future. The Company currently intends to retain future earnings, if
any, to pay its obligations and to finance the expansion of its business.

Number of Security Holders

At February 27, 2004, the approximate number of holders of record of Class A and
Class B common stock was 721 and 1, respectively.

Stock listings

The principal market on which the common stock is traded is the NASDAQ National
Market under the symbol "EASY".

Recent Sales of Unregistered Securities

During the three months ended December 31, 2003, EasyLink Services issued
382,715 Class A common stock to third parties in connection with business
transactions or issued stock or options for the benefit of employees in reliance
upon the exemption from registration pursuant to Section 4(2) of the Securities
Act of 1933, Section 3(a)(9) of the Securities Act or otherwise based on the
inapplicability of the registration requirements of the Act as follows:

During the three months ended December 31, 2003, we issued 76,373 shares of
Class A common stock to employees at a weighted average price of $1.55 per share
representing the Company's matching contribution to its 401(k) plan.


                                      -12-
<PAGE>

During the three months ended December 31, 2003, we issued 9,675 shares valued
at $14,235, in connection with interest payments on our debt.

During the three months ended December 31, 2003, we issued 296,667 shares valued
at $551,801 in exchange for $890,000 principal amount of outstanding convertible
subordinated notes.


RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

We have only a limited operating history and some of our services are in a new
and unproven industry.

We have only a limited operating history upon which you can evaluate our
business and our prospects. EasyLink was incorporated under the name Globecomm,
Inc. in 1994 in the State of Delaware. We launched our business by offering a
commercial email service in November 1996 under the name iName. We changed our
company name to Mail.com, Inc. in January 1999. In February 2000, we acquired
NetMoves Corporation, a provider of a variety of transaction delivery services
to businesses. In March 2000, we formed WORLD.com to develop and operate our
domain name properties as independent Web sites. In the fourth quarter of 2000,
we announced our intention to focus exclusively on the business market and to
sell all assets not related to this business. In February 2001, we acquired
Swift Telecommunications, Inc., which had contemporaneously acquired the
EasyLink Services business from AT&T Corp. The EasyLink Services business is a
provider of transaction delivery services such as electronic data interchange or
EDI and production messaging services. Swift was a provider of production
messaging services, principally telex services. On March 30, 2001, we announced
that we had sold our advertising network business to Net2Phone, Inc., and on May
3, 2001 our Asia.com, Inc. subsidiary completed the sale of its business. In
October 2001, we sold a subsidiary of India.com, Inc. and have since ceased the
conduct of the portal operations of India.com, Inc. In January 2002, we
announced our strategy to expand our position in the transaction delivery
segment of the electronic commerce market and to begin to offer to our large
customer base related transaction management services that automate more
components of our customers' business processes. In 2002, we commercially
introduced two such services - Trading Community Enablement and Management
Services and Document Capture and Management Services. Our success will depend
in part upon our ability to maintain or expand our sales of transaction delivery
services such as EDI, production messaging and integrated desktop messaging to
enterprises, our ability to successfully develop transaction management
services, the development of a viable market for fee-based transaction delivery
and transaction management services on an outsourced basis and our ability to
compete successfully in those markets. For the reasons discussed in more detail
below, there are substantial obstacles to our achieving and sustaining
profitability.

We have incurred losses from operations since inception.

We have not achieved income from operations in any fiscal year, and we may not
be able to achieve or sustain profitability. We incurred a net loss of $85.8
million for the year ended December 31, 2002. We had net income of $50.9 million
for the year ended December 31, 2003; however, the net income for 2003 included
$54.1 million of gains on debt restructuring and settlements. We had an
accumulated deficit of $548.3 million as of December 31, 2003. We intend to
upgrade and enhance our technology, continue our international expansion, and
improve and expand our management information and other internal systems. We
intend to continue to make strategic acquisitions and investments where
resources permit, which may result in significant amortization of intangibles
and other expenses or a later impairment charge arising out of the write-off of
goodwill booked as a result of such acquisitions or investments. We intend to
make these expenditures in anticipation of higher revenues, but there will be a
delay in realizing higher revenues even if we are successful. We have
experienced declining revenues in each of the years ended December 31, 2003 and
2002 as compared to the prior year. See Part II, Item 7: Management's Discussion
and Analysis of Financial Condition and Results of Operations contained in this
Form 10-K. No assurance can be given that we will be able to offset or otherwise
reduce all or any of the cancellation of debt income resulting from the
elimination of debt pursuant to our debt restructuring. If we do not succeed in
substantially increasing our revenues, our losses may recur.

                                      -13-
<PAGE>

We may need to raise capital in the future to invest in the growth of our
business and to fund necessary expenditures.

We may need to raise additional capital in the future. See Part I. Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources. At December 31, 2003, we had $6.6
million of cash and cash equivalents. Our principal fixed commitments consist of
subordinated convertible notes, senior convertible notes, notes payable,
obligations under capital leases, obligations under office space leases,
accounts payable and other current obligations, commitments for capital
expenditures and commitments for telecommunications services. For each of the
four years ended December 31, 2003, 2002, 2001 and 2000, we received a report
from our independent accountants containing an explanatory paragraph stating
that we suffered recurring losses from operations since inception and have a
working capital deficiency that raise substantial doubt about our ability to
continue as a going concern. We may need additional financing to invest in the
growth of our business and to pay other obligations, and the availability of
such financing when needed, on terms acceptable to us, or at all, is uncertain.
See "Risk Factors - We have incurred significant indebtedness for money
borrowed, and we may be unable to pay debt service on this indebtedness." If we
are unable to raise additional financing, generate sufficient cash flow, or
restructure our debt obligations before they become due and payable, we may be
unable to continue as a going concern.

If we raise additional funds by issuing equity securities or debt convertible
into equity securities, stockholders may experience significant dilution of
their ownership interest. The amount of dilution resulting from issuance of
additional shares of Class A common stock and securities convertible into Class
A common stock and the potential dilution that may result from future issuances
has significantly increased in light of the decline in our stock price.
Moreover, we could issue preferred stock that has rights senior to those of the
Class A common stock. Some of our stockholders have registration rights that
could interfere with our ability to raise needed capital. If we raise funds by
issuing debt, our lenders may place limitations on our operations, including our
ability to pay dividends, although we do not anticipate paying any cash
dividends on our stock in the foreseeable future.

We have incurred significant indebtedness for money borrowed, and we may be
unable to pay debt service on this indebtedness.

As of December 31, 2003, we had outstanding $1.4 million in subordinated
convertible notes due in 2005; $12.0 million in principal amount of notes and
other obligations due in installments through June, 2006; obligations under
office space leases; and commitments for telecommunications services. We
currently have $4.4 million in principal and interest, including capitalized
interest, payments due during the twelve month period after December 31, 2003.
We had an operating loss and negative cash flow for each of the years ended
December 31, 2003 and 2002. In addition, we have a substantial amount of
outstanding accounts payable and other obligations. Accordingly, cash generated
by our operations would have been insufficient to pay the amount of principal
and interest payable annually on our outstanding indebtedness or to pay our
other obligations.

We cannot assure you that we will be able to pay interest and other amounts due
on our outstanding indebtedness, or our other obligations, on the scheduled
dates or at all. If our cash flow and cash balances are inadequate to meet our
obligations, we could face substantial liquidity problems. If we are unable to
generate sufficient cash flow or otherwise obtain funds necessary to make
required payments, or if we otherwise fail to comply with any covenants in our
indebtedness, we would be in default under these obligations, which would permit
these lenders to accelerate the maturity of the obligations and could cause
defaults under our indebtedness. Any such default could have a material adverse
effect on our business, results of operations and financial condition. We cannot
assure you that we would be able to repay amounts due on our indebtedness if
payment of the indebtedness were accelerated following the occurrence of an
event of default under, or certain other events specified in, the agreements
governing our outstanding indebtedness and capital leases.

The elimination of outstanding debt pursuant to our debt restructuring completed
in 2003 and prior years resulted in substantial cancellation of debt income for
income tax purposes. We intend to minimize income tax payable as a result of the
restructuring by, among other things, offsetting the income with our historical
net operating losses and otherwise reducing the income in accordance with
applicable income tax rules. As result, we do not expect to incur any material
current income tax liability as a result of the elimination of this debt.
However, the relevant tax authorities may challenge our income tax positions,
including the use of our historical net operating losses to offset some or all
of the cancellation of debt income and the application of the income tax rules
reducing the cancellation of debt income. If we are not able to offset or
otherwise reduce the cancellation of debt income, we may incur material income
tax liabilities as a result of the elimination of debt and we may be unable to
pay these liabilities.

We may incur substantial additional indebtedness in the future. The level of our
indebtedness, among other things, could (1) make it difficult for us to make
payments on our indebtedness, (2) make it difficult to obtain any necessary
financing in the future for working capital, capital expenditures, debt service
requirements or other purposes, (3) limit our flexibility in planning for, or
reacting to changes in, our business, and (4) make us more vulnerable in the
event of a downturn in our business.

Where resources permit, we intend to continue to acquire, or make strategic
investments in, other businesses and acquire or license technology and other
assets and we may have difficulty integrating these businesses or generating an
acceptable return.

We have completed a number of acquisitions and strategic investments since our
initial public offering. For example, we acquired NetMoves Corporation, a
provider of production messaging services and integrated desktop messaging
services to businesses. We also acquired Swift Telecommunications, Inc. and the
EasyLink Services business that it had contemporaneously acquired from AT&T
Corp. Where resources permit, we will continue our efforts to acquire or make
strategic investments in businesses and to acquire or license technology and
other assets, and any of these acquisitions may be material to us. We cannot
assure you that acquisition or licensing opportunities will continue to be
available on terms acceptable to us or at all. Such acquisitions involve risks,
including:


                                      -14-
<PAGE>

         -   inability to raise the required capital;

         -   difficulty in assimilating the acquired operations and
             personnel;

         -   inability to retain any acquired member or customer accounts;

         -   disruption of our ongoing business;

         -   the need for additional capital to fund losses of acquired
             businesses;

         -   inability to successfully incorporate acquired technology into
             our service offerings and maintain uniform standards,
             controls, procedures and policies; and

         -   lack of the necessary experience to enter new markets.

We may not successfully overcome problems encountered in connection with
potential acquisitions. In addition, an acquisition could materially impair our
operating results by diluting our stockholders' equity, causing us to incur
additional debt or requiring us to incur acquisition expenses or amortize or
depreciate acquired intangible and tangible assets or to incur impairment
charges as a result of the write-off of goodwill recorded as a result of such
acquisition.

We may be unable to successfully complete the migration of the network relating
to our business acquired from AT&T off of AT&T premises.

On February 23, 2001, we completed the acquisition of Swift Telecommunications,
Inc. which had contemporaneously acquired the EasyLink Services business of AT&T
Corp. The EasyLink Services business acquired from AT&T provides a variety of
transaction delivery services. This business was a division of AT&T and was not
a separate independent operating entity. We hired only a portion of the
employees of the business.

Under a Transition Services Agreement entered into in connection with the
acquisition, AT&T agreed to provide us with a variety of services to enable us
to continue to operate the business pending the transition to EasyLink. We have
successfully transitioned virtually all of these services provided by AT&T under
the Transition Services Agreement to ourselves, including customer service,
network operations center, telex switching equipment and services and office
space in a variety of locations. However, the network for the portion of this
business relating to EDI, fax and email services continues to reside on AT&T's
premises, but is being operated and maintained by EasyLink. The agreement
expires on January 31, 2005. We plan to seek to extend this agreement prior to
its expiration. If we are unable to extend the agreement, we will need to either
migrate the network off of the AT&T premises to EasyLink's premises or migrate
the customers to a replacement network.

We cannot assure you that we will be able to successfully migrate the remaining
EasyLink Services customers or network from AT&T's premises to our own premises,
or successfully integrate them into our operations, in a timely manner or
without incurring substantial unforeseen expense or without service interruption
to our customers. Even if successfully migrated, we may be unable to operate the
business at expense levels that are ultimately profitable for us. We cannot
assure you that we will be able to retain all of the customers of the EasyLink
Services business. Our inability to successfully migrate, integrate or operate
the network and operations, or to retain customers, of the EasyLink Services
business will result in a material adverse effect on our business, results of
operations and financial condition.

Outsourcing of transaction delivery and transaction management services may not
prove to be viable businesses.

An important part of our business strategy is to leverage our existing global
customer base and global network by continuing to provide our existing
transaction delivery services and by offering these customers additional
transaction delivery and new transaction management services in the future. The
market for transaction management services is only beginning to develop. Our
success will depend on the continued expansion of the market for outsourced
transaction delivery services such as EDI, production messaging services and
integrated desktop messaging services and the development of viable markets for
the outsourcing of additional transaction delivery services and new transaction
management services. Each of these developments is somewhat speculative.

There are significant obstacles to the full development of a sizable market for
the outsourcing of transaction delivery and transaction management services.
Outsourcing is one of the principal methods by which we will attempt to reach
the size we believe is necessary to be successful. Security and the reliability
of the Internet, however, are likely to be of concern to enterprises and service
providers deciding whether to outsource their transaction delivery and
transaction management or to continue to provide it themselves. These concerns
are likely to be particularly strong at larger businesses and service providers,
which are better able to afford the costs of maintaining their own systems.
While we intend to focus exclusively on our outsourced transaction delivery and
transaction management services, we cannot be sure that we will be able to
maintain or expand our business customer base. In addition, the sales cycle for
many of these services is lengthy and could delay our ability to generate
revenues in this market.


                                      -15-
<PAGE>

Our strategy of developing and offering to existing customers additional
transaction delivery and transaction management services may be unsuccessful.

As part of our business strategy, we plan to develop and offer to existing
customers additional transaction delivery and transaction management services
that will automate more of our customers' business processes. We cannot assure
you that we will be able to successfully develop these additional services in a
timely manner or at all or, if developed, that our customers will purchase these
services or will purchase them at prices that we wish to charge. Standards for
pricing in the market for new transaction delivery and transaction management
services are not yet well defined and some businesses and service providers may
not be willing to pay the fees we wish to charge. We cannot assure you that the
fees we intend to charge will be sufficient to offset the related costs of
providing these services.

We may fail to meet market expectations because of fluctuations in our quarterly
operating results, which would cause our stock price to decline.

We may experience significant fluctuations in our quarterly results. It is
likely that our operating results in some quarters will be below market
expectations. In this event, the price of our Class A common stock is likely to
decline. The following are among the factors that could cause significant
fluctuations in our operating results:

         -    incurrence of other cash and non-cash accounting charges,
              including charges resulting from acquisitions or dispositions
              of assets, including from the disposition of our remaining
              non-core assets, and write-downs of impaired assets;

         -    increases or decreases in the number of transactions generated
              by our customers (such as insurance claims, trade and travel
              confirmations, purchase orders, invoices, shipping notices,
              funds transfers, among others), which is affected by factors
              that affect specific customers, the respective industries in
              which our customers conduct business and the economy
              generally;

         -    gains from the restructuring or settlement of debt and other
              obligations;

         -    non-cash charges associated with repriced stock options, if
              our stock price rises above $16.90;

         -    system outages, delays in obtaining new equipment or problems
              with planned upgrades;

         -    disruption or impairment of the Internet;

         -    demand for outsourced transaction delivery and transaction
              management services;

         -    attracting and retaining customers and maintaining customer
              satisfaction;

         -    introduction of new or enhanced services by us or our
              competitors;

         -    changes in our pricing policy or that of our competitors;

         -    changes in governmental regulation of the Internet and
              transaction delivery and transaction management services in
              particular; and

         -    general economic and market conditions and global political
              factors.

Other such factors in our non-core assets include:

         -    incurrence of additional expenditures without receipt of
              offsetting revenues pending the sale of these assets.

We may incur significant stock based compensation charges related to repriced
options if our stock price rises above $16.90.


                                      -16-
<PAGE>

In light of the decline in our stock price and in an effort to retain our
employee base, on November 14, 2000, the Company offered to certain of its
employees, officers and directors, other than Gerald Gorman, the right to
reprice certain outstanding stock options to an exercise price equal to $16.90
per share, the closing price of the Company's Class A common stock on Nasdaq on
November 14, 2000 as adjusted for our reverse stock split effected on January
23, 2002. Options to purchase 632,799 shares were repriced. The repriced options
vest at the same rate that they would have vested under their original terms. In
March 2000, Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation, an interpretation of APB Opinion No. 25" ("Interpretation"). Among
other issues, this Interpretation clarifies (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining whether a plan
qualifies as a noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
combination. As a result, under the Interpretation, stock options repriced after
December 15, 1998 are subject to variable plan accounting treatment. This
guidance requires the Company to remeasure compensation cost for outstanding
repriced options each reporting period based on changes in the market value of
the underlying common stock. If our stock price rises above the $16.90 exercise
price of the repriced options, this accounting treatment may result in
significant non-cash compensation charges in future periods.

Several of our competitors have substantially greater resources, longer
operating histories, larger customer bases and broader product offerings.

Our business is, and we believe will continue to be, intensely competitive. See
"Part I Item 1 - Business - Competition" contained in this Form 10-K and
subsequent reports filed with the Securities and Exchange Commission.

Many of our competitors have greater market presence, engineering and marketing
capabilities, and financial, technological and personnel resources than those
available to us. As a result, they may be able to develop and expand their
communications and network infrastructures more quickly, adapt more swiftly to
new or emerging technologies and changes in customer requirements, take
advantage of acquisition and other opportunities more readily, and devote
greater resources to the marketing and sale of their products and services. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase the
ability of their services to address the needs of our current and prospective
customers. Accordingly, it is possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. In addition
to direct competitors, many of our larger potential customers may seek to
internally fulfill their messaging needs through the deployment of their own on
premises messaging systems.

Some of our competitors provide a variety of telecommunications services and
other business services, as well as software and hardware solutions, in addition
to transaction delivery or transaction management services. The ability of these
competitors to offer a broader suite of complementary services and software or
hardware may give them a considerable advantage over us.

The level of competition is likely to increase as current competitors increase
the sophistication of their offerings and as new participants enter the market.
In the future, as we expand our service offerings, we expect to encounter
increased competition in the development and delivery of these services. We may
not be able to compete successfully against our current or future competitors.

We have aggressively expanded our operations in anticipation of continued growth
in our business and as a result of our acquisitions. We have also developed the
technology and infrastructure to offer a range of services in our target market.
This expansion has placed, and we expect it to continue to place, a significant
strain on our managerial, operational and financial resources. If we cannot
manage our growth effectively, our business, operating results and financial
condition will suffer.

It is difficult to retain key personnel and attract additional qualified
employees in our business and the loss of key personnel and the burden of
attracting additional qualified employees may impede the operation and growth of
our business and cause our revenues to decline.

Our future success depends to a significant extent on the continued service of
our key technical, sales and senior management personnel, but they have no
contractual obligation to remain with us. In particular, our success depends on
the continued service of Gerald Gorman, our Chairman, Thomas F. Murawski, our
President and Chief Executive Officer, George Abi Zeid, our
President-International Operations, and Michael A. Doyle, our Vice President and
Chief Financial Officer. The loss of the services of Messrs. Gorman, Murawski or
Abi Zeid or of Mr. Doyle, or several other key employees, would impede the
operation and growth of our business.


                                      -17-
<PAGE>

To manage our existing business and handle any future growth, we will have to
attract, retain and motivate additional highly skilled employees. In particular,
we will need to hire and retain qualified sales people if we are to meet our
sales goals. We will also need to hire and retain additional experienced and
skilled technical personnel in order to meet the increasing technical demands of
our expanding business. Competition for employees in messaging-related
businesses is intense. We have in the past experienced, and expect to continue
to experience, difficulty in hiring and retaining employees with appropriate
qualifications. If we are unable to do so, our management may not be able to
effectively manage our business, exploit opportunities and respond to
competitive challenges.

Our business is heavily dependent on technology, including technology that has
not yet been proven reliable at high traffic levels and technology that we do
not control.

The performance of our computer systems is critical to the quality of service we
are able to provide to our customers. If our services are unavailable or fail to
perform to their satisfaction, customers may cease using our service. In
addition, our agreements with several of our customers establish minimum
performance standards. If we fail to meet these standards, our customers could
terminate their relationships with us and assert claims for service fee rebates
or monetary damages.

We may need to upgrade some of our computer systems to accommodate increases in
traffic and to accommodate increases in the usage of our services, but we may
not be able to do so while maintaining our current level of service, or at all.

We must continue to expand and adapt our computer systems as the number of
customers and the amount of information they wish to transmit increases and as
their requirements change, and as we further develop our services. Because we
have only been providing some of our services for a limited time, and because
our computer systems for these services have not been tested at greater
capacities, we cannot guarantee the ability of our computer systems to connect
and manage a substantially larger number of customers or meet the needs of
business customers at high transmission speeds. If we cannot provide the
necessary service while maintaining expected performance, our business would
suffer and our ability to generate revenues through our services would be
impaired.

The expansion and adaptation of our computer systems will require substantial
financial, operational and managerial resources. We may not be able to
accurately project the timing of increases in traffic or other customer
requirements. In addition, the very process of upgrading our computer systems
could cause service disruptions. For example, we may need to take various
elements of the network out of service in order to install some upgrades.

Our computer systems may fail and interrupt our service.

Our customers have in the past experienced interruptions in our services. We
believe that these interruptions will continue to occur from time to time. These
interruptions are due to hardware failures, failures in telecommunications and
other services provided to us by third parties and other computer system
failures. These failures have resulted and may continue to result in significant
disruptions to our service. Some of our operations have redundant switch-over
capability. Although we plan to install backup computers and implement
procedures on other parts of our operations to reduce the impact of future
malfunctions in these systems, the presence of single points of failure in our
network increases the risk of service interruptions. In addition, substantially
all of our computer and communications systems relating to our services are
currently located in Glen Head, New York; Jersey City, New Jersey; Piscataway,
New Jersey; Washington, DC; Bridgeton, Missouri; Dayton, Ohio, and London,
England. We currently do not have alternate sites from which we could conduct
these operations in the event of a disaster. Our computer and communications
hardware is vulnerable to damage or interruption from fire, flood, earthquake,
power loss, telecommunications failure and similar events. Our services would be
suspended for a significant period of time if any of our primary data centers
was severely damaged or destroyed. We might also lose customer transaction
documents and other customer files, causing significant customer dissatisfaction
and possibly giving rise to claims for monetary damages. As a result of the
recent relocation of our corporate headquarters during the first quarter of
2003, we plan to consolidate over time an increasing portion of our computer
systems and networks at the new location. This consolidation may result in
interruptions in our services to some of our customers.

Our services will become less desirable or obsolete if we are unable to keep up
with the rapid changes characteristic of our business.

Our success will depend on our ability to enhance our existing services and to
introduce new services in order to adapt to rapidly changing technologies,
industry standards and customer demands. To compete successfully, we will have
to accurately anticipate changes in business demand and add new features to our
services very rapidly. We may not be able to integrate the necessary technology
into our computer systems on a timely basis or without degrading the performance
of our existing services. We cannot be sure that, once integrated, new
technology will function as expected. Delays in introducing effective new
services could cause existing and potential customers to forego use of our
services.

Our business will suffer if we are unable to provide adequate security for our
service, or if our service is impaired by security measures imposed by third
parties.


                                      -18-
<PAGE>

Security is a critical issue for any outsourced transaction delivery or
transaction management service, and presents a number of challenges for us.

If we are unable to maintain the security of our service, our reputation and our
ability to attract and retain customers may suffer, and we may be exposed to
liability. Third parties may attempt to breach our security or that of our
customers whose networks we may maintain or for whom we provide services. If
they are successful, they could obtain information that is sensitive or
confidential to a customer or otherwise disrupt a customer's operations or
obtain confidential information, including our customer's profiles, passwords,
financial account information, credit card numbers, message content, stored
email or other personal or business information. Our customers or their
employees may assert claims for money damages for any breach in our security and
any breach could harm our reputation.

Our computers are vulnerable to computer viruses, physical or electronic
break-ins and similar incursions, which could lead to interruptions, delays or
loss of data. We expect to expend significant capital and other resources to
license or create encryption and other technologies to protect against security
breaches or to alleviate problems caused by any breach. Nevertheless, these
measures may prove ineffective. Our failure to prevent security breaches may
expose us to liability and may adversely affect our ability to attract and
retain customers and develop our business market. Security measures taken by
others may interfere with the efficient operation of our service, which may harm
our reputation, adversely impact our ability to attract and retain customers.
"Firewalls" and similar network security software employed by third parties can
interfere with the operation of our services.

Our customers are subject to, and in turn require that their service providers
meet, increasingly strict guidelines for network and operational security. If we
are unable to meet the security requirements of a customer, we may be unable to
obtain or keep their business. This is particularly the case for customers in
the health insurance and financial services industries.

We are dependent on licensed technology and third party commercial partners.

We license a significant amount of technology from third parties, including
technology related to our virus protection, spam control and content filtering
services, Internet fax services, billing processes and database. We also rely on
third party commercial partners to provide services for our trading community
enablement services, document capture and management services and some of our
other services. We anticipate that we will need to license additional technology
or to enter into additional commercial relationships to remain competitive. We
may not be able to license these technologies or to enter into arrangements with
prospective commercial partners on commercially reasonable terms or at all.
Third-party licenses and strategic commercial relationships expose us to
increased risks, including risks relating to the integration of new technology,
the diversion of resources from the development of our own proprietary
technology, a greater need to generate revenues sufficient to offset associated
license or service fee costs, and the possible termination of or failure to
renew an important license or other agreement by the third-party licensor or
commercial partner.

If the Internet and other third-party networks on which we depend to deliver our
services become ineffective as a means of transmitting data, the benefits of our
service may be severely undermined.

Our business depends on the effectiveness of the Internet as a means of
transmitting data. The recent growth in the use of the Internet has caused
frequent interruptions and delays in accessing and transmitting data over the
Internet. Any deterioration in the performance of the Internet as a whole could
undermine the benefits of our services. Therefore, our success depends on
improvements being made to the entire Internet infrastructure to alleviate
overloading and congestion. We also depend on telecommunications network
suppliers such as AT&T Corp., MCI and XO Communications for a variety of
telecommunications and Internet services. The network for the EasyLink Services
business acquired from AT&T continues to reside on AT&T's premises. See "Risk
Factors - We may be unable to successfully complete the migration of the network
relating to our business acquired from AT&T off of AT&T premises." above, "Item
1. Business - Technology" contained in this Form 10-K and subsequent filings
with the Securities and Exchange Commission.

Gerald Gorman and George Abi Zeid collectively beneficially owned as of February
27, 2004 approximately 27.2% of the total outstanding voting power of EasyLink
and will be able to exert significant influence over any vote of stockholders.

Gerald Gorman, our Chairman, beneficially owned as of February 27, 2004 Class A
and Class B common stock representing approximately 19.4% of the voting power of
our outstanding common stock. Each share of Class B common stock entitles the
holder to 10 votes on any matter submitted to the stockholders. George Abi Zeid,
our President-International Operations and Director, beneficially owned as of
February 27, 2004 Class A common stock representing approximately 7.8% of the
voting power of our outstanding common stock. Based on their voting power as of
February 27, 2004, Mr. Gorman and Mr. Abi Zeid will likely be able to exert
significant influence over the outcome of all matters requiring stockholder
approval, including the election of directors, amendment of our charter and
approval of significant corporate transactions. Mr. Gorman and Mr. Abi Zeid may
be in a position to prevent a change in control of EasyLink even if other
stockholders holding a majority of the voting power of the shares not held by
Mr. Gorman and Mr. Abi Zeid were in favor of the transaction.


                                      -19-
<PAGE>


Our charter contains provisions that could deter or make more expensive a
takeover of EasyLink. These provisions include the ability to issue "blank
check" preferred stock without stockholder approval.

Our expansion into international markets is subject to significant risks and our
losses may increase and our operating results may suffer if our revenues from
international operations do not exceed the costs of those operations.

We intend to continue to expand into international markets and to expend
significant financial and managerial resources to do so. We may not be able to
compete effectively in international markets. If our revenues from international
operations do not exceed the expense of establishing and maintaining these
operations, our losses will increase and our operating results will suffer. We
face significant risks inherent in conducting business internationally, such as:

         -    uncertain demand in foreign markets for transaction delivery
              and transaction management services;

         -    difficulties and costs of staffing and managing international
              operations;

         -    differing technology standards;

         -    difficulties in collecting accounts receivable and longer
              collection periods;

         -    economic instability and fluctuations in currency exchange
              rates and imposition of currency exchange controls;

         -    potentially adverse tax consequences;

         -    regulatory limitations on the activities in which we can
              engage and foreign ownership limitations on our ability to
              hold an interest in entities through which we wish to conduct
              business;

         -    political instability, unexpected changes in regulatory
              requirements, and reduced protection for intellectual property
              rights in some countries;

         -    export restrictions;

         -    terrorism; and

         -    difficulties in enforcing contracts and potentially adverse
              consequences.


Regulation of transaction delivery and transaction management services and
Internet use is evolving and may adversely impact our business.

There are currently few laws or regulations that specifically regulate activity
on the Internet. However, laws and regulations may be adopted in the future that
address issues such as user privacy, pricing, and the characteristics and
quality of products and services. For example, the Telecommunications Act of
1996 restricts the types of information and content transmitted over the
Internet. Several telecommunications companies have petitioned the FCC to
regulate ISPs and online service providers in a manner similar to long distance
telephone carriers and to impose access fees on these companies. This could
increase the cost of transmitting data over the Internet. Any new laws or
regulations relating to the Internet could adversely affect our business.

Moreover, the extent to which existing laws relating to issues such as property
ownership, pornography, libel and personal privacy are applicable to the
Internet is uncertain. We could face liability for defamation, copyright, patent
or trademark infringement and other claims based on the content of messages
transmitted over our system. We may also face liability for unsolicited
commercial and other email and fax messages sent by users of our services. We do
not and cannot screen all the content generated and received by users of our
services. Some foreign governments, such as Germany, have enforced laws and
regulations related to content distributed over the Internet that are more
strict than those currently in place in the United States.


                                      -20-
<PAGE>

A majority of our services are currently classified by the FCC as "information
services," and therefore are exempt from public utility regulation. To the
extent that we are permitted to offer all of our services as a single "bundle of
interrelated products," then the whole bundle is currently exempt from
regulation as a "hybrid service." If considered independent of the bundle,
however, our fax-to-fax services, when conducted over circuit-switched network
lines, and our telex services, qualify as "telecommunications services," and
would thus be subject to federal regulation. Moreover, while the FCC has until
now exercised forbearance in regulating IP communications, it has indicated that
it might regulate certain IP communications as "telecommunications services" in
the future. There can be no assurance that the FCC will not change its
regulatory classification system and thereby subject us to unexpected and
burdensome additional regulation. In addition, a variety of states regulate
certain of our services when provided on an intrastate basis.

We obtained authorizations from the FCC to provide such telecommunications
services in conjunction with our acquisition of these telecommunications
services from NetMoves, and are classified as a "non-dominant interexchange
carrier." While the FCC has generally chosen not to exercise its statutory power
to closely regulate the charges or practices of non-dominant carriers, it will
act upon complaints against such carriers for failure to comply with statutory
obligations or with the FCC's rules, regulations and policies - to the extent
that such services are, in the FCC's view, subject to regulation.

Continued changes in telecommunications regulations may significantly reduce the
cost of domestic and international calls. To the extent that the cost of
domestic and international calls decreases, we will face increased competition
for our fax services which may have a material adverse effect on our business,
financial condition or results in operations.

In connection with the deployment of Internet-capable nodes in countries
throughout the world, we are required to satisfy a variety of foreign regulatory
requirements. We intend to explore and seek to comply with these requirements on
a country-by-country basis as the deployment of Internet-capable fax nodes
continues. There can be no assurance that we will be able to satisfy the
regulatory requirements in each of the countries currently targeted for node
deployment, and the failure to satisfy such requirements may prevent us from
installing Internet-capable fax nodes in such countries. The failure to deploy a
number of such nodes could have a material adverse effect on our business,
operating results and financial condition.

Our fax nodes and our faxLauncher service utilize encryption technology in
connection with the routing of customer documents through the Internet. The
export of such encryption technology is regulated by the United States
government. We have authority for the export of such encryption technology other
than to countries such as Cuba, Iran, Iraq, Libya, and North Korea.
Nevertheless, there can be no assurance that such authority will not be revoked
or modified at any time for any particular jurisdiction or in general. In
addition, there can be no assurance that such export controls, either in their
current form or as may be subsequently enacted, will not limit our ability to
distribute our services outside of the United States or electronically. While we
take precautions against unlawful exportation of our software, the global nature
of the Internet makes it virtually impossible to effectively control the
distribution of our services. Moreover, future Federal or state legislation or
regulation may further limit levels of encryption or authentication technology.
Any such export restrictions, the unlawful exportation of our services, or new
legislation or regulation could have a material adverse effect on our business,
financial condition and results of operations.

The legal structure and scope of operations of our subsidiaries in some foreign
countries may be subject to restrictions which could result in severe limits to
our ability to conduct business in these countries. To the extent that we
develop or offer messaging services in foreign countries, we will be subject to
the laws and regulations of these countries. The laws and regulations relating
to the Internet in many countries are evolving and in many cases are unclear as
to their application. For example, in India, the PRC and other countries we may
be subject to licensing requirements with respect to the activities in which we
propose to engage and we may also be subject to foreign ownership limitations or
other approval requirements that preclude our ownership interests or limit our
ownership interests to up to 49% of the entities through which we propose to
conduct any regulated activities. If these limitations apply to our activities,
including our activities conducted through our subsidiaries, our opportunities
to generate revenue will be reduced, our ability to compete successfully in
these markets will be adversely affected, our ability to raise capital in the
private and public markets may be adversely affected and the value of our
investments and acquisitions in these markets may decline. Moreover, to the
extent we are limited in our ability to engage in certain activities or are
required to contract for these services from a licensed or authorized third
party, our costs of providing our services will increase and our ability to
generate profits may be adversely affected.

Our intellectual property rights are critical to our success, but may be
difficult to protect.

We regard our copyrights, service marks, trademarks, trade secrets, domain names
and similar intellectual property as critical to our success. We rely on
trademark and copyright law, trade secret protection and confidentiality and/or
license agreements with our employees, customers, strategic partners and others
to protect our proprietary rights. Despite our precautions, unauthorized third
parties may improperly obtain and use information that we regard as proprietary.
Third parties may submit false registration data attempting to transfer key
domain names to their control. Our failure to pay annual registration fees for
domain names may result in the loss of these domains to third parties. Third
parties have challenged our rights to use some of our domain names, and we
expect that they will continue to do so, which may affect the value that we can
derive from the planned disposition of the domain names included among our
non-core assets.


                                      -21-
<PAGE>

The status of United States patent protection for software products and services
is not well defined and will evolve as additional patents are granted. We have
applied for a patent for some of our services, and we do not know if our
application will be issued with the scope of the claims we seek or at all. The
laws of some foreign countries do not protect proprietary rights to the same
extent as do the laws of the United States. Our means of protecting our
proprietary rights in the United States or abroad may not be adequate and
competitors may independently develop similar technology.

Third parties may infringe or misappropriate our copyrights, trademarks and
similar proprietary rights. In addition, other parties have asserted and may in
the future assert infringement claims against us. We cannot be certain that our
services do not infringe issued patents. Because patent applications in the
United States are not publicly disclosed until the patent is issued,
applications may have been filed which relate to our services.

We have been and may continue to be subject to legal proceedings and claims from
time to time in the ordinary course of our business, including claims related to
the use of our domain names and claims of alleged infringement of the trademarks
and other intellectual property rights of third parties. Third parties have
challenged our rights to register and use some of our domain names based on
trademark principles and on the Anticybersquatting Consumer Protection Act. If
domain names become more valuable to businesses and other persons, we expect
that third parties will continue to challenge some of our domain names and that
the number of these challenges may increase. In addition, the existing or future
laws of some countries, in particular countries in Europe, may limit or prohibit
the use in those countries or elsewhere of some of our geographic names that
contain the names of a city in those countries or the name of those countries.
Intellectual property litigation is expensive and time-consuming and could
divert management's attention away from running our business. These claims and
the potential for such claims may reduce the value that we can expect to receive
from the disposition of our domain names.

In connection with the sale of our consumer-based email and advertising network
business, we transferred to the buyer the rights to direct the "MX" record, or
the right to direct email messages addressed to domain names owned by us and
used in this business. Although we do not operate the service or have any role
in the delivery of messages sent by users of the service, our position as the
registrant of the domain names used as addresses for email accounts maintained
by such service may subject us to claims from time to time. We could face
liability for defamation, copyright, patent or trademark infringement,
harassment, unsolicited commercial e-mail and other claims based on the content
of the messages transmitted over the service of this business. These claims,
even if without merit, can cause us to incur legal expenses and may divert
management time and resources.

We may incur expenses and liabilities as a result of pending legal proceedings.

The Company is involved in legal proceedings that may result in additional
expenses or liability. See "Legal Proceedings" contained in Part I, Item 3 of
this Form 10-K. These proceedings include a broker's fee dispute in which the
Company is appealing a $931,000 judgment imposed on it, a claim by a landlord
for an unspecified amount of damages arising out of the termination of a lease
and tax assessments relating to our discontinued India.com business in the
amount of approximately $650,000. See Part I, Item 3, Legal Proceedings
contained in this annual report on Form 10-K. Although the Company intends to
pursue its defense of these matters vigorously, no assurance can be given that
the Company's efforts will be successful. To the extent that the Company is not
successful in appealing the judgment or defending the claims, it will be
required to pay the judgment in the broker's fee dispute or to pay any damages
or tax assessments that may be found to apply in the lease termination dispute
or the India tax proceedings. To date, the Company has funded $250,000 and by
June 2004 the Company will have paid $400,000 into a trust account to secure the
payment of the judgment relating to the broker fee if the judgment is upheld on
appeal. Although we intend to defend vigorously these matters, we cannot assure
you that our ultimate liability, if any, in connection with these matters will
not have a material adverse effect on our results of operations, financial
condition or cash flows.


A substantial amount of our common stock may come onto the market in the future,
which could depress our stock price.

Sales of a substantial number of shares of our common stock in the public market
could cause the market price of our Class A common stock to decline. As of
February 27, 2004, we had an aggregate of 43,865,398 shares of Class A and Class
B common stock outstanding. As of February 27, 2004, we had options to purchase
approximately 4.9 million shares of Class A common stock outstanding. As of
February 27, 2004, we had warrants to purchase 798,523 shares of Class A common
stock outstanding. As of February 27, 2004, we had approximately 44,591 shares
of Class A common stock issuable upon conversion of outstanding convertible
notes and an indeterminate number of additional shares of Class A common stock
issuable over three years in payment of interest on $370,714 in principal amount
of notes.


                                      -22-
<PAGE>

As of February 27, 2004, over 41.9 million shares of Class A common stock and
Class B common stock were freely tradable, in some cases subject to the volume
and manner of sale limitations contained in Rule 144. The remainder of our
shares of Class A common stock will become available for sale at various dates
upon the expiration of one-year holding periods or upon the expiration of any
other applicable restrictions on resale. We may issue large amounts of
additional Class A common stock, which may also be sold and which could
adversely affect the price of our stock. Approximately 22.5 million of our
outstanding shares were issued in connection with the elimination of debt during
the six months ended September 30, 2003. If the holders of these shares sell
large numbers of shares, these holders could cause the price of our Class A
common stock to fall.

As of February 27, 2004, the holders of approximately 8.2 million shares of
outstanding Class A common stock, the holders of 0.8 million shares of Class A
common stock issuable upon exercise of our outstanding warrants and the holders
of approximately 86,189 shares of Class A common stock issuable upon conversion
of our outstanding senior convertible notes had the right, subject to various
conditions, to require us to file registration statements covering their shares,
or to include their shares in registration statements that we may file for
ourselves or for other stockholders. By exercising their registration rights and
selling a large number of shares, these holders could cause the price of the
Class A common stock to fall. An undetermined number of these shares have been
sold publicly pursuant to Rule 144.

Our Class A common stock may be subject to delisting from the Nasdaq National
Market.

Our Class A common stock may face potential delisting from the Nasdaq National
Market which could hurt the liquidity of our Class A common stock. We may be
unable to comply with the standards for continued listing on the Nasdaq National
Market. These standards require, among other things, that our Class A common
stock have a minimum bid price of $1. Specifically, an issuer will be considered
non-compliant with the minimum bid price requirement only if it fails to satisfy
the applicable requirement for any 30 consecutive trading day period. It would
then be afforded a 90-calendar day grace period in which to regain compliance.
In addition, the listing standards require that we maintain compliance with
various other standards, including market capitalization or total assets and
total revenue, number of publicly held shares, which are shares held by persons
who are not officers, directors or beneficial owners of 10% of our outstanding
shares, and market value of publicly held shares. Alternatively, we can comply
with certain other standards, including a $10 million minimum stockholders'
equity requirement. The minimum bid price of our stock was below $1 during
various periods in the fourth quarter of 2000 and the first quarter of 2001 and
was below $1 during the period from March 14, 2001 through January 22, 2002.

On January 23, 2002, we effected a ten-for-one reverse stock split. Although our
stock price exceeded the $1 minimum bid price requirement for a period of time
since our reverse stock split, our stock price was also below $1.00 during the
period from July 10, 2002 through July 26, 2002 and from July 30, 2002 through
August 16, 2002 and from November 18, 2002 until July 11, 2003. Although the
Company regained compliance with the minimum bid price requirement on August 4,
2003 after a hearing before a Nasdaq Listing Qualifications Panel, no assurance
can be given that we will maintain compliance with the minimum bid price
requirement. If we are unable to maintain compliance, we may be subject to
delisting.

We had a total stockholders' equity in the amount of $4.4 million as of December
31, 2003. As a result, we are currently not in compliance with the $10 million
minimum total stockholders' equity requirement. An alternative listing standard
to the minimum total stockholders equity standard requires that we maintain a
minimum market value of our publicly held shares of not less than $15 million.
As of the filing of this Form 10-K, we were in compliance with the $15 million
minimum market value of publicly held shares alternative standard.

There can be no assurance that EasyLink will maintain compliance with the
minimum bid price requirement or that it will maintain compliance with the other
listing standards, including the $15 million minimum market value of publicly
held shares requirement.

If our common stock were to be delisted from trading on the Nasdaq National
Market and were neither re-listed thereon nor listed for trading on the Nasdaq
Small Cap Market or other recognized securities exchange, trading, if any, in
the Class A common stock may continue to be conducted on the OTC Bulletin Board
or in the non-Nasdaq over-the-counter market. Delisting would result in limited
release of the market price of the Class A common stock and limited news
coverage of EasyLink and could restrict investors' interest in our Class A
common stock and materially adversely affect the trading market and prices for
our Class A common stock and our ability to issue additional securities or to
secure additional financing.

Our stock price has been volatile and we expect that it will continue to be
volatile.


                                      -23-
<PAGE>

Our stock price has been volatile since our initial public offering and we
expect that it will continue to be volatile. As discussed above, our financial
results are difficult to predict and could fluctuate significantly. In addition,
the market prices of securities of electronic services companies have been
highly volatile. A stock's price is often influenced by rapidly changing
perceptions about the future of electronic services or the results of other
Internet or technology companies, rather than specific developments relating to
the issuer of that particular stock. As a result of volatility in our stock
price, a securities class action may be brought against us. Class-action
litigation could result in substantial costs and divert our management's
attention and resources.


Item 6   Consolidated Selected Financial Data

The following consolidated selected financial data should be read in conjunction
with the consolidated financial statements and the notes to these statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" elsewhere in this document. The consolidated financial statements
included herein have been prepared assuming that the Company will continue as a
going concern. The Company's independent public accountants have included two
explanatory paragraphs in their audit report accompanying the 2003 consolidated
financial statements. The first explanatory paragraph states that the Company
has suffered recurring losses from operations since inception and has a working
capital deficiency that raises substantial doubt about its ability to continue
as a going concern. Management's plans in regard to this matter are also
described in Note 1(b). The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty. The second
explanatory paragraph states that as discussed in Notes 1(i), 1(j) and 6, the
Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" as of January 1, 2002.

We believe that due to the many acquisitions that we made in recent years and
dispositions during 2001, the period to period comparisons for 1999 through 2003
are not meaningful and should not be relied upon as indicative of future
performance.



                                      -24-
<PAGE>

Five Year Summary of Selected Financial Data (in thousands, except per share and
employee data)

<TABLE>
<CAPTION>

                                                                             2003        2002         2001        2000       1999
                                                                             ----        ----         ----        ----       ----
Consolidated Statement of Operations Data for the Year Ended December 31,
<S>                                                                       <C>         <C>         <C>            <C>      <C>
Revenues.........................................................         $101,347    $114,354    $123,929       $52,698  $12,709
Total cost of revenues and operating expenses (a)................          102,264     201,287     296,170       204,196   66,352
Total other income (expense), net (b)............................           52,803       1,088      28,203        (7,405)   6,628
Loss from operations.............................................             (917)    (86,933)   (172,241)     (151,498) (53,643)
Loss from discontinued operations................................             (938)         --     (63,027)      (70,624)      --
Extraordinary gain...............................................               --          --         782            --       --
Net income (loss)................................................           50,948     (85,845)   (206,283)     (229,527) (47,015)
Cumulative dividends on settlement of contingent obligations to
preferred stockholders...........................................                           --          --            --  (14,556)
Net income (loss) attributable to common stockholders............           50,948     (85,845)   (206,283)     (229,527) (61,571)

Basic net income(loss) per common share:
Income(loss) from continuing operations..........................            $1.47      (5.13)     (15.26)       (27.79)  (19.63)
Loss from discontinued operations................................           (0.03)          --      (6.68)       (12.35)       --
Extraordinary gain...............................................               --          --        0.09            --       --
                                                                             -----     -------    --------      --------     ----
Net income (loss) per common share ..............................            $1.44     $(5.13)    $(21.85)      $(40.14)  (19.63)
                                                                             =====     =======    ========      ========  =======

Diluted net income(loss) per common share:
Income(loss) from continuing operations..........................            $1.46       (5.13)    (15.26)       (27.79)  (19.63)
Loss from discontinued operations................................           (0.03)          --      (6.68)       (12.35)       --
Extraordinary gain...............................................               --          --        0.09            --       --
                                                                             -----     -------    --------      --------  -------
Net income(loss) per common share................................            $1.43     $(5.13)    $(21.85)      $(40.14)  (19.63)
                                                                             =====     =======    ========      ========  =======


Weighted average basic shares outstanding........................           35,402      16,733       9,442         5,718    3,137

Weighted average diluted shares outstanding......................           35,654      16,733       9,442         5,718    3,137

Consolidated Balance Sheet Data at December 31,

Cash and cash equivalents........................................            6,623       9,554      13,278         4,331   36,870
Marketable securities............................................               --          --          --        12,595    7,006
Total current assets.............................................           19,813      23,511      36,900        86,490   50,137
Property and equipment, net......................................           10,641      14,833      21,956        38,997   28,935
Goodwill and other intangible assets, net........................           17,895      20,814     107,937       154,804   28,964
Total assets.....................................................           49,411      61,011     170,242       306,917  137,267

Total current liabilities........................................           31,575      43,126      54,494        54,242   28,336
Long-term capital lease obligations..............................               37         196         566        12,638   12,016
Capitalized interest on notes payable, less current portion......              956       7,402      13,750             -        -
Long-term notes payable..........................................           10,511      71,398      80,923       100,321        -
Total stockholders' equity (deficit).............................            4,412     (61,822)     20,503       138,935   96,014

Number of employees at December 31,..............................              483         572         587         1,401      276

(a) Included in operating expenses are:
                                                                              2003        2002        2001         2000      1999
                                                                            ------      ------      ------       ------    ------
Amortization of goodwill and other intangible assets.............            2,919       6,751      52,068        39,977    2,979
Write-off of acquired in-process technology......................               --          --          --         7,650      900
Impairment of intangible assets..................................             ----      78,784      62,200            --       --
Restructuring charges............................................            1,478       2,320      25,337         5,338       --
(Gain) loss on sale of businesses................................               --        (426)      1,804            --       --


(b) Included in other income (expense), net are:
                                                                              2003        2002        2001          2000     1999
                                                                              ----        ----        ----          ----     ----
Interest income..................................................               36         189         565         4,686    1,885
Interest expense.................................................           (1,390)     (4,785)    (10,383)       (9,791)    (751)
Gain on debt restructuring and settlements.......................           54,078       6,558      47,960            --       --
Impairment of investments........................................               --      (1,515)    (10,131)         (200)      --
Loss on equity investment........................................               --          --          --        (2,100)      --
Other, net.......................................................               79         641         192            --    5,494
</TABLE>

See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for a discussion of factors that affect the comparability of the
selected financial data in the years presented above.

Item 7 Management's Discussion and Analysis of Financial Condition and Results
       of Operations

The following discussion and analysis of the financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and the related notes included elsewhere in this annual report. The
consolidated financial statements included herein have been prepared assuming
that the Company will continue as a going concern. The Company's independent
public accountants have included two explanatory paragraphs in their audit
report accompanying the 2003 consolidated financial statements. The first
explanatory paragraph states that the Company has suffered recurring losses from
operations since inception and has a working capital deficiency that raise
substantial doubt about its ability to continue as a going concern. As shown in
the accompanying consolidated financial statements, prior to 2003, the Company
incurred net losses of $85.8 million and $206.3 million for the two years ended
December 31, 2002 and 2001, respectively. As of December 31, 2003, the Company
had an accumulated deficit of $548.3 million and stockholders' equity of $4.4
million. Management's plans in regard to this matter are also described in Note
1(b). The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty. The second explanatory
paragraph states that as discussed in Notes 1(i), 1(j) and 6, the Company
adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" as of January 1, 2002.

                                      -25-
<PAGE>

Overview

We are a provider of services that facilitate the electronic exchange of
information between enterprises, their trading communities and their customers.
On an average business day, we handle approximately one million transactions
that are integral to the movement of money, materials, products and people in
the global economy such as insurance claims, trade and travel confirmations,
purchase orders, invoices, shipping notices and funds transfers, among many
others. We offer a broad range of information exchange services to businesses
and service providers, including transaction delivery services such as
electronic data interchange or "EDI," telex, desktop fax, broadcast and
production messaging services; services that protect corporate e-mail systems
such as virus protection, spam control and content filtering services; and
document capture and management services such as fax to database, fax to data
and data conversion services.

Until March 30, 2001, we also offered advertising services and consumer e-mail
services to Web sites, ISP's and direct to consumers. In this market, we
provided Web-based e-mail services or WebMail to Internet Service Providers
(ISPs) including several of the world's top ISPs, and we partnered with top
branded Web sites to provide WebMail services to their users. In addition, we
served the market directly through our flagship web site www.mail.com. On
October 26, 2000, we announced our intention to sell our advertising network
business and stated that we would focus exclusively on our established
outsourced messaging business. We also announced that as a result of our
decision to focus on outsourced messaging business, we would streamline the
organization and further integrate our technological and operational
infrastructures. On March 30, 2001, we completed the sale of our advertising
network and consumer e-mail business to Net2Phone. In connection with the sale,
we entered into a hosting agreement under which we would host or arrange for a
third party to host the consumer e-mailboxes for Net2Phone for a minimum of one
year. In November 2001, we terminated the hosting agreement with Net2Phone.

In March 2000, we formed WORLD.com to develop the Company's extensive portfolio
of domain names into major Web properties, such as Asia.com and India.com, which
served the business-to-business and business-to-consumer marketplace. Through
its subsidiaries, WORLD.com generated revenues primarily from sales of
information technology products, system integration and website development for
other companies, advertising related sales and commissions earned from booking
travel arrangements. On November 2, 2000, we announced our intent to sell all
assets not related to our core outsourced messaging business, including Asia.com
Inc., India.com Inc., and our portfolio of domain names. On May 3, 2001, our
majority-owned subsidiary Asia.com, Inc. sold its business to an investor group.
In October 2001, we sold a subsidiary of India.com, Inc. and we have ceased
conducting its portal business. Accordingly, the results of World.com and its
subsidiaries have been reclassified as discontinued operations in our financial
statements for all periods presented. See Notes 1(c) and 9 to our consolidated
financial statements for additional information.

Revenues

For the year ended December 31, 2003 total revenues were $101.3 million compared
to $114.4 million in 2002 and $123.9 million in 2001. The declines in revenue in
2003 and 2002 as compared to the prior year primarily occurred in our production
messaging services, which include fax, telex and email hosting as a result of
lower volumes and negotiated individual customer price reductions at the time of
service contract renewals and loss of certain customers. However, the declines
may continue. These services have been impacted by continuing pricing pressures
in the telecommunications market and by technological factors that replace or
reduce the deployment of such services by our customers. We intend to offset
this continuing revenue erosion by offering new services including Document
Capture and Management services and Integrated Desktop Management services.

During 2003 and 2002, we generated substantially all of our revenues from
information exchange services to enterprises. During 2001, we generated
approximately 98% of our revenues from information exchange services provided to
enterprises and approximately 2% of our revenue from the advertising network
business and other sources. All revenues from information exchange services for
the years ended December 31, 2003 and 2002 were generated from companies we
acquired since August 1999. Approximately 98% of our revenues came from these
acquired businesses during 2001.


                                      -26-
<PAGE>

Operating Results

Our operating results have significantly improved in 2003 even though revenues
declined in comparison to 2002 and 2001. Our net income was $50.9 million for
2003 as compared to net losses of $85.8 million and $206.3 million for the years
ended December 31, 2002 and 2001, respectively. The improved results are
attributable to a number of key factors including (1) the decision to stop
offering advertising and consumer email services and to discontinue the
operations of the WORLD.com businesses as described above, (2) the acquisition
of the EasyLink Services business as part of the Swift acquisition and (3) the
restructuring of our debt obligations which reduced interest expense to $1.4
million in 2003 from $4.8 million in 2002 and from $10.4 million in 2001 and
which resulted in gains of $54.1 million in 2003, $6.6 million in 2002 and $48.0
million in 2001. The results for 2002 and 2001 also included charges of $78.8
million and $62.2 million, respectively for the impairment of intangible assets
and, in 2001, amortization of goodwill amounted to $40.4 million.


In light of the evolving nature of our business and our limited operating
history, we believe that period-to-period comparisons of our revenues and
operating results are not meaningful and should not be relied upon as
indications of future performance. We believe the nature of our revenues in
future periods will be more comparable to that of 2003.

Our prospects should be considered in light of risks described in the section of
this report entitled "Risk Factors That May Affect Future Results."

Critical Accounting Policies

In response to the Securities & Exchange Commission's (SEC) Release No. 33-8040,
"Cautionary Advice Regarding Disclosure About Critical Accounting Policies," we
have identified the most critical accounting principles upon which our financial
status depends. Critical principles were determined by considering accounting
policies that involve the most complex or subjective decisions or assessments.
The most critical accounting policies were identified to be those related to
revenue recognition, accounts receivable, long-lived assets and intangible
assets, contingencies and litigation, and restructurings.

Revenue Recognition

The Company's business messaging services include message delivery services such
as electronic data interchange or "EDI," telex, desktop fax, broadcast and
production messaging services; groupware hosting services; services that help
protect corporate e-mail systems such as virus protection, spam control and
content filtering services, and professional messaging services and support. The
Company derives revenues from monthly fees and usage-based charges for our
message delivery services; from monthly per-user or per-message fees for
groupware hosting and virus protection, spam control and content filtering
services, and license and consulting fees for our professional services. Revenue
from e-mail and groupware hosting services, virus protection, spam control and
content filtering services, message delivery services and professional services
is recognized as the services are performed. Facsimile license revenue is
recognized over the average estimated customer life of 3 years.

Prior to the sale of the Advertising Network Business on March 30, 2001 (see
Note 3), advertising revenues were derived principally from the sale of banner
advertisements. Revenue on banner advertisements was recognized ratably as the
advertisements or respective impressions were delivered either on a "cost per
thousand" or "cost per action" basis. Revenue on upfront placement fees and
promotions was deferred and recognized over the term of the corresponding
agreement.

The Company also traded advertisements on its Web properties in exchange for
advertisements on the Internet sites of other companies as part of the ad
network business. Barter revenues and expenses were recorded at the fair market
value of services provided or received; whichever was more determinable in the
circumstances. Revenue from barter transactions were recognized as income when
advertisements were delivered on the Company's Web properties. Barter expense
was recognized when the Company's advertisements are run on other companies' Web
sites, which is typically in the same period when barter revenue was recognized.
Barter revenues, which are a component of advertising revenue, amounted to $0.6
million for the year ended December 31, 2001. Barter expenses, which are a
component of cost of revenues, were approximately the same $0.6 million for the
year ended December 31, 2001.

Other revenues includes revenues from (1) the sale of domain names, which are
recognized at the time when the ownership of the domain name is transferred
provided that no significant Company obligation remains and collection of the
resulting receivable is probable and (2) the licensing of domain names wherein
the revenue is recognized ratably over the license periods. To date, such
revenues have not been material.


                                      -27-
<PAGE>

Accounts Receivable

We perform ongoing credit evaluations of our customers and adjust credit limits
based upon payment history and the customer's current credit worthiness, as
determined by a review of their current credit information. We continuously
monitor collections and payments from our customers and maintain a provision for
estimated credit losses based upon historical experience and any specific
customer collection issues that have been identified. While such credit losses
have historically been within our expectations and the provisions established,
we cannot guarantee that we will continue to experience the same credit loss
rates that have been experienced in the past.

Impairment of Long-Lived Assets

Effective January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other
Intangible Assets" and SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets". SFAS 142 eliminates the amortization of goodwill and
indefinite-lived intangible assets, addresses the amortization of intangible
assets with finite lives and addresses impairment testing and recognition for
goodwill and indefinite-lived intangible assets. SFAS No. 144 establishes a
single model for the impairment of long-lived assets. We assess goodwill and
indefinite-lived intangibles for impairment annually unless events occur that
require more frequent reviews. Long-lived assets, including amortizable
intangibles, are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Discounted cash flow analyses are used to assess indefinite-lived
intangible impairment while undiscounted cash flow analyses are used to assess
long-lived asset impairment. If an assessment indicates impairment, the impaired
asset is written down to its fair market value based on the best information
available. Estimated fair market value is generally measured with discounted
estimated future cash flows. Considerable management judgment is necessary to
estimate undiscounted and discounted future cash flows. Assumptions used for
these cash flows are consistent with internal forecasts. On an on-going basis,
management reviews the value and period of amortization or depreciation of
long-lived assets, including goodwill and other intangible assets. During this
review, we reevaluate the significant assumptions used in determining the
original cost of long-lived assets. Although the assumptions may vary from
transaction to transaction, they generally include revenue growth, operating
results, cash flows and other indicators of value. Management then determines
whether there has been an impairment of the value of long-lived assets based
upon events or circumstances, which have occurred since acquisition. The
impairment policy is consistently applied in evaluating impairment for each of
the Company's wholly owned subsidiaries and investments.

Contingencies and Litigation

We evaluate contingent liabilities including threatened or pending litigation in
accordance with SFAS No. 5, "Accounting for Contingencies" and record accruals
when the outcome of these matters is deemed probable and the liability is
reasonably estimable. We make these assessments based on the facts and
circumstances and in some instances based in part on the advice of outside legal
counsel.

Restructuring Activities

Restructuring activities in 2003 and 2002 are accounted for in accordance with
SFAS No. 146. Prior to 2002, restructuring activities are accounted for in
accordance with the guidance provided in the consensus opinion of the Emerging
Issues Task Force ("EITF") in connection with EITF Issue 94-3 ("EITF 94-3").
EITF 94-3 generally requires, with respect to the recognition of severance
expenses, management approval of the restructuring plan, the determination of
the employees to be terminated, and communication of benefit arrangement to
employees.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 will supersede Emerging Issues
Task Force Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." SFAS No. 146 requires that costs associated
with an exit or disposal plan be recognized when incurred rather than at the
date of a commitment to an exit or disposal plan. In accordance with the
standard, the Company will apply SFAS No. 146 to exit or disposal activities
initiated after December 31, 2002.

Acquisitions, Investments and Divestitures

Continuing Operations


                                      -28-
<PAGE>

GN Comtext

During July 2001, we acquired the assets of GN Comtext ("GN") for $1.
Additionally, we received a $1.1 million unsecured interest free loan from the
former parent company of GN, GN Store Nord A/S, which was paid in the fourth
quarter of 2001, and received approximately $175,000 for transition services
revenues which were recorded as a reimbursement of costs during the third
quarter of 2001. GN offers value-added messaging services to over 3,000
customers ranging from small business to multi-national companies around the
world. The excess of fair market value of the assets acquired and the
liabilities assumed over the purchase price resulted in negative goodwill of
$782,000 which was recognized as an extraordinary gain during the quarter ended
September 30, 2001 in accordance with the provisions of Financial Accounting
Standards Board Statement No. 141, "Business Combinations."

Swift Telecommunications, Inc. and EasyLink Services

On February 23, 2001, we acquired Swift Telecommunications, Inc., ("STI"). Just
prior to the acquisition in January 2001, STI acquired the EasyLink Services
business ("EasyLink Services") from AT&T Corp. At the closing of the acquisition
by STI of the EasyLink Services business from AT&T, we advanced $14 million to
STI in the form of a loan, the proceeds of which were used to fund part of the
cash portion of the purchase price to AT&T. Upon the closing of the acquisition
of STI, we assumed a $35 million note issued by STI to AT&T. The $35 million
note was secured by the assets of STI, including the EasyLink Services business,
and the shares of our Class A common stock issued to STI's then sole shareholder
(who became an officer and director of EasyLink) in the transaction. The note
was payable in equal monthly installments over four years with interest at the
rate of 10% per annum. In November 2001, the note, and accrued interest thereon,
was exchanged for a new note in the principal amount of $10 million, 1 million
shares of the Company's Class A common stock and warrants to purchase an
additional 1 million shares of stock. In March 2003, the Company commenced a
lawsuit against AT&T and PTEK Holdings, Inc. arising out of the attempt by AT&T
to sell the new note and the shares to PTEK. In October 2003, the Company
entered into a settlement of the lawsuit. Under the settlement, the Company
agreed to consent to the transfer of the shares and the note from AT&T to PTEK
in exchange for a revised amortization schedule on the new note and the return
of the warrant to the Company for cancellation. Under the revised terms of the
note, the Company will repay the $10,019,464 remaining outstanding balance of
principal of and interest on the Note as of March 30, 2004 and all future
accrued interest by making equal quarterly installment payments of principal and
interest in the amount of $800,000 and a final payment of approximately $5.75
million on the June 1, 2006 maturity date. The note continues to be secured by
the same security interests that secured the $35 million note. See Note 7
for a description of the Restructuring of certain debt and lease obligations.

Upon the closing of the acquisition of STI, the Company paid to the sole
shareholder of STI (who became an officer and director of EasyLink) $835,000 in
cash and issued an unsecured note for approximately $9.2 million and
approximately 1.9 million shares of our Class A common stock valued at
approximately $30.8 million as the purchase price for the acquisition of STI. We
have also agreed to pay additional consideration to the former sole shareholder
of STI equal to the amount of the net proceeds, after satisfaction of certain
liabilities of STI and its subsidiaries, from the sale or liquidation of the
assets of one of STI's subsidiaries. Through March 30, 2004, we have paid an
aggregate of $1.4 million of this additional commitment. We also reimbursed the
sole shareholder of STI for a $1.5 million advance made to STI, the proceeds of
which were used to fund the balance of the cash portion of the purchase price
for STI's acquisition of the EasyLink Services business and certain other
obligations to AT&T. The $9.2 million note was non-interest bearing and payable
in four equal semi-annual installments over two years. In November 2001, this
note was exchanged for a new note in the principal amount of $2.7 million,
268,296 shares of the Company's Class A common stock and warrants to purchase
268,296 shares of stock. In May 2003, the $2.7 million note was further
exchanged for a new note in principal amount of $284,504 of which $47,250
remains outstanding as of March 30, 2004. See Note 7 for a description of the
restructuring and settlement of certain debt and lease obligations.

In connection with the acquisition of STI, we also entered into a conditional
commitment to acquire Telecom International, Inc. ("TII"). TII was an affiliate
of STI prior to our acquisition of STI. The former sole shareholder of STI (who
became an officer and director of the Company) is a principal beneficial
shareholder of TII. The purchase price for TII was originally agreed to be
$117,646 in cash, a promissory note in the aggregate principal amount of
approximately $1,294,118 and 267,059 shares of our Class A common stock. In
order to facilitate the debt restructuring and to reduce our debt obligations
and cash commitments, the parties agreed to modify our commitments in respect of
TII. In lieu of acquiring TII, we purchased certain assets owned by TII for
$250,000, payable in six monthly payments of $10,000 commencing May 27, 2002 and
one payment of $190,000 on November 27, 2002. We also agreed to reimburse TII
for up to 50% of TII's payments on certain accounts payable up to a maximum
reimbursement of $200,000, to cancel a $236,000 payable owed by TII to STI and
to issue up to 20,000 shares of Class A common stock to TII valued at $122,000.
In addition, we issued 300,000 shares of Class A common stock to TII valued at
$1,890,000.

As part of the transaction with STI, we also entered into a conditional
commitment to acquire the 25% minority interests in two STI subsidiaries for
$47,059 in cash, promissory notes in the aggregate principal amount of
approximately $517,647 and 106,826 shares of Class A Common Stock. This
transaction is subject to certain conditions, including satisfactory completion
of due diligence, receipt of regulatory approvals and other customary
conditions.


                                      -29-
<PAGE>

NetMoves

On February 8, 2000, we acquired NetMoves Corporation ("NetMoves"), a provider
of Internet fax transmission services for approximately $168.3 million including
acquisition costs of approximately $2.1 million. The acquisition was accounted
for as a purchase business combination. We issued 635,448 shares of Class A
common stock valued at approximately $145.7 million. In addition, we assumed
outstanding options and warrants of NetMoves which represent the right to
purchase 96,244 shares and 5,734 shares respectively, of our Class A common
stock at weighted average exercise prices of $66.90 and $86.40, respectively.
The options and warrants were valued at an aggregate of approximately $20.5
million.

NetMoves (renamed Mail.com Business Messaging Services, Inc., and, again,
EasyLink Services, USA, Inc.) designs, develops and markets to businesses a
variety of Internet document delivery services, including e-mail-to-fax,
fax-to-e-mail, fax-to-fax and broadcast fax services. This acquisition enhanced
our presence in the domestic and international business service market, provided
us with an established sales force and international distribution channels and
expanded our offering of Internet-based messaging services.


Discontinued Operations

In March 2000, we formed World.com, Inc. in order to develop our portfolio of
domain names into independent web properties and subsequently acquired or formed
its subsidiaries Asia.com, Inc. and India.com, Inc., in which World.com was the
majority owner. On March 30, 2001, we announced our intention to sell all assets
not related to our core outsourced messaging business including Asia.com, Inc.,
India.com, Inc. and our portfolio of domain names. Accordingly, World.com has
been reflected as a discontinued operation.

On March 14, 2000, we acquired eLong.com, Inc., a Delaware corporation
("eLong.com") for approximately $62 million including acquisition costs of
approximately $365,000. eLong.com, through its wholly owned subsidiary in the
People's Republic of China, operated the Web Site www.eLong.com, which was a
provider of local content and other internet services. The acquisition was
accounted for as a purchase business combination. Concurrently with the merger,
eLong.com changed its name to Asia.com, Inc. ("Asia.com"). In the merger, we
issued to the former stockholders of eLong.com an aggregate of 359,949 shares of
Class A common stock valued at approximately $57.2 million, based upon our
average trading at the date of acquisition. All outstanding options to purchase
eLong.com common stock were converted into options to purchase an aggregate of
27,929 shares of Class A common stock. The options were valued at approximately
$4.4 million.

During the fourth quarter of 2000, we wrote off approximately $7.8 million of
goodwill, as it was determined that the carrying value had become permanently
impaired as a result of our November 2, 2000 decision, as approved by the Board
of Directors, to sell all assets not related to our core messaging business,
including our Asia-based businesses. Please see the discussion on Impairment
Charges included in the Results of Operations and Liquidity and Capital
Resources sections below for additional information.

On May 3, 2001, our majority owned subsidiary Asia.com, Inc. sold its business
to an investor group. Under the terms of the sale, the buyer paid Asia.com $1.5
million and assumed eLong.com liabilities of approximately $1.5 million. The
consideration paid was determined as a result of negotiations between the buyer
and us. In addition, we issued 20,000 shares of its Class A common stock valued
at $138,000 in exchange for the cancellation of certain options granted to the
former owners of eLong.com. The Company accounted for this transaction as part
of the sale of the business of Asia.com. As a result of the sale, we recorded a
loss on the sale of eLong.com, Inc. of $264,000. After the closing of the sale,
we issued 36,232 shares to eLong.com, Inc. in 2001 as full satisfaction of an
indemnity obligation. The indemnity obligation arose out of eLong.com's
settlement of a claim brought by former Lohoo shareholders for a contingent
payment. Lohoo was previously acquired by eLong.com, Inc.

RESULTS OF OPERATIONS - 2003 and 2002

Revenues

Revenues in 2003 were $101.3 million as compared to $114.4 million in 2002. The
decrease of $13.1 million was due primarily to reduced revenues in our
production messaging services, which include fax, telex and email hosting, as a
result of lower volumes and negotiated individual customer price reductions and
loss of certain customers. Revenues consist almost entirely of revenues from
providing information exchange services to businesses and are derived from
electronic data interchange services or `EDI"; production messaging services;
integrated desktop messaging services; boundary and managed email services; and
other services.


                                      -30-
<PAGE>

Cost of Revenues

Cost of revenues for 2003 decreased to $49.6 million from $57.6 million in 2002.
As a percentage of revenues these costs decreased to 48.9% in 2003 as compared
to 50.0% in 2002. However, the 2003 costs are net of a $1.2 million (1.2% of
revenues) reversal of previously accrued telecom costs as a result of a
negotiated agreement with one of the company's providers. Without the reversal,
costs as a percentage of revenue would have remained unchanged at 50%. Cost of
revenue reflects a decrease in costs as a percentage of revenue equal to 2% due
to depreciation charges and an increase in other costs as a percentage of
revenues equal to 2% due to fixed network expenses and fixed telecom expenses.
Reductions in costs from continuing cost reduction programs in network
operations, telecom rates, reductions in facilities, including reducing the
number of circuits, and reduced variable telecom charges consistent with reduced
customer volumes also reduced total 2003 costs in comparison to 2002.

Cost of revenues consists primarily of costs incurred in the delivery and
support of our services, including depreciation of equipment used in our
computer systems, the cost of telecommunications services including local access
charges, leased network backbone circuit costs and long distance domestic and
international termination charges, and personnel costs associated with our
systems and databases.

Sales and Marketing Expenses

Sales and marketing expenses were $18.4 million and $20.2 million in 2003 and
2002, respectively. Included in this category are costs related to salaries and
commissions for sales, marketing, and business development personnel. Also
included are costs for promotional programs, trade shows and marketing
materials. The cost decrease of $1.8 million is primarily the result of lower
staffing levels in 2003. We anticipate increases in sales and marketing expenses
beyond 2003.

General and Administrative Expenses

General and administrative expenses were $24.4 million in 2003 as compared to
$28.7 million in 2002. The $4.3 million decrease is the net impact of various
cost component changes but the most significant reduction was $2.6 million in
our provision for bad debts as a result of improved collection and credit
activities. While certain cost components may vary, we anticipate general and
administrative expenses in total to be comparable to 2003 levels.

Product Development Expenses

Product development costs, which consist primarily of personnel and consultants'
time and expense to research, conceptualize, and test product launches and
enhancements to our products, were $6.4 million for 2003 as compared to $7.4
million in 2002. The net decrease in costs mostly relates to lower consultants
costs and lower salaries attributable to fewer employees. We anticipate that
spending for product development will increase over 2003 in connection with
continuing development of new services.

Restructuring Charges

During the year ended December 31, 2002, restructuring charges of $2.3 million
were recorded by the Company. The Company's restructuring initiatives are
related to the relocation and consolidation of its New Jersey office facilities
into one location which was completed in 2003 and a similar consolidation of
facilities for our operations in England. The restructuring charges are
comprised of net abandonment cost with respect to leases and the write-off of
leasehold improvements. During the year ended December 31, 2003, the Company
recorded additional restructuring charges of $1.5 million for net abandonment
costs on U.S. leases as estimated sublease rentals were reduced due to
deteriorating market conditions for subleasing the vacant facilities and a
negotiated settlement of lease obligations in England.

Gain on Sale of Business

In 2002, the Company recorded a $300,000 gain attributable to the sale of
customer contracts for hosted email services (NIMS) and a $126,000 gain
attributable to the sale of a software and consulting business in Europe.


Amortization of Other Intangible Assets

As of January 1, 2002, the Company adopted FASB No. 142, "Goodwill and Other
Intangibles". Statement No. 142 requires companies to no longer amortize
goodwill but instead to test goodwill for impairment on an annual basis.
Accordingly, we did not amortize any goodwill during the years ended December
31, 2003 and 2002 respectively. We completed an impairment assessment in the 4th
quarter of 2002 with the assistance of an independent appraiser and determined
that an impairment of goodwill had occurred. Based on a subsequent fair value
analysis of the Company's goodwill, other intangible assets and other long-lived
assets, we recorded an aggregate impairment of $78.8 million in the 4th quarter
of 2002. The impairment of the other intangible assets reduced the basis for
future amortization charges resulting in the $4.7 million decrease in
amortization charges for 2003 in comparison to 2002. Total charges are $2.1
million and $6.8 million in 2003 and 2002, respectively.


                                      -31-
<PAGE>

Other Income (Expense), Net

Interest income for 2003 was $36,000 as compared to $189,000 during 2002. The
decrease was due to lower cash balances and lower interest rates on temporary
investments.

Interest expense was $1.4 million in 2003 as compared to $4.8 million in 2002.
The decrease was primarily due to reductions in the total debt balances
outstanding as a result of the debt restructurings and settlements completed in
2003 and 2002.

Gain on Debt Restructurings and Settlements

During 2003, we eliminated $63.0 million of indebtedness in exchange for the
payment of $3.1 million in cash and the issuance of 23.9 million shares of Class
A common stock valued at $13.6 million pursuant to our announced efforts to
eliminate substantially all of our outstanding indebtedness. After reversing
$6.5 million of previously capitalized interest and $2.4 million of accrued
interest net of debt issuance costs, we recorded total gains of $54.1 million on
these transactions.

In 2002, we eliminated $5.5 million of indebtedness in exchange for the payment
of $0.6 million in cash and the issuance of 5,415 shares of Class A common stock
valued at $6,000 pursuant to our announced efforts to eliminate substantially
all of our outstanding indebtedness. After reversing $1.7 million of previously
capitalized interest, we recorded a gain of $6.6 million on these transactions

The elimination of outstanding debt will result in substantial income from
cancellation of debt for income tax purposes. We intend to minimize the income
tax payable as a result of the restructuring by, among other things, offsetting
the income with our historical net operating losses and otherwise reducing the
income in accordance with applicable income tax rules. As a result, we do not
expect to incur any material current income tax liability from the elimination
of this debt. However, the relevant tax authorities may challenge our income tax
positions.

Loss from Discontinued Operations

In September 2003, a previously vacated judgment in the amount of $931,000 was
reinstated against the Company in connection with the Company's suit against a
broker engaged by the Company in connection with the proposed sale of the portal
operations of its discontinued India.com business and the broker's counterclaim
against the company. The judgment and related costs, net of previously recorded
reserves, is reflected as the loss from discontinued operations in the current
quarter statement. See Note 18 - Commitments and Contingencies - Legal
Proceedings for additional information.

RESULTS OF OPERATIONS - 2002 and 2001

Revenues

Revenues in 2002 were $114.4 million as compared to $123.9 million in 2001. The
decrease of $9.5 million occurred even though revenues from our acquisition of
STI in 2001, including the EasyLink Services business acquired by STI from AT&T
Corp., were included for the full year 2002 as compared to the shorter 2001
period from February 23, 2001, the date of acquisition, through December 31,
2001. The decrease in revenues was partially due to lower volumes associated
with our production messaging services and negotiated customer price reductions.
Also impacting comparative results were (1) a decrease in advertising revenues
of $1.6 million as a result of the sale of our advertising network in March 2001
and (2) the loss of $1.5 million in email hosting revenues resulting from the
termination of a hosting arrangement related to the sale of our advertising
network.

Revenues for 2002 and 2001 consist almost entirely of revenues from providing
information exchange services to businesses which are derived from electronic
data interexchange services or "EDI"; production messaging services; integrated
desktop messaging services; boundary and managed email services; and other
services largely consisting of legacy fax services. In 2001, $1.6 million or 2%
of our revenues were from our advertising network, which included barter
revenues of $0.6 million.

                                      -32-
<PAGE>

Cost of Revenues

Cost of revenues in 2002 decreased to $57.6 million as compared to $75.9 million
in 2001. The reduction in our cost of revenues resulted in a gross profit of 50%
in 2002, representing an improvement of 11 percentage points over the 2001
results of 39%, Cost of revenues consists primarily of costs directly related to
the delivery of EDI, telex, fax and email messages. It includes depreciation of
equipment used in our computer systems; the cost of telecommunications services
including local access charges, leased network backbone circuit costs and long
distance domestic and international termination charges; licensing charges for
third party network software; and personnel costs associated with our systems,
databases and support services. In addition, as it related to our advertising
network in 2001, we included the cost of barter trades.

The reduction in cost of revenues in 2002, both in total amount and as a
percentage of revenues, and the increase in gross profit percentage, is
attributable to the increase in higher margin revenues from the STI acquisition,
including the EasyLink Services business, the on-going benefit of cost reduction
programs implemented throughout 2001 and 2002; $3.3 million of reduced charges
for network support under the Transition Services Agreement (TSA) with AT&T;
$6.1 million in lower depreciation charges; negotiated cost reductions in
certain telecommunications services; and the elimination of $2.0 million of
costs associated with our advertising network business that was sold in March
2001.

Sales and Marketing Expenses

Sales and marketing expenses were $20.2 million in 2002 as compared to $28.2
million for 2001, representing a decrease of $7.9 million. In 2001 the Company
recognized $1.6 million in gains related to favorable advertising and marketing
cost settlements, which were recorded as a reduction of our sales and marketing
expenses in 2001. Without these net cost reductions in 2001, sales and marketing
expenses for 2002 in comparison to 2001 would have decreased by $9.5 million.
The decrease from year to year was primarily due to eliminating $4.1 million in
costs associated with our advertising network business that was sold on March
31, 2001; $2.9 million in reduced domestic employee related sales expenses; and
$0.7 million in reduced advertising spending. Included in this category are
costs related to salaries and commissions for sales, marketing and business
development personnel and costs associated with various campaigns mostly
conducted in 2001 to build our brand.

General and Administrative Expenses

General and administrative expenses were $28.7 million during 2002 as compared
to $41.4 million during 2001. The $12.7 million decrease was primarily
attributable to $1.8 million in reduced charges under the AT&T Transition
Services Agreement as support for these administrative functions from AT&T
ceased in 2001; $2.0 million in reduced costs for consultants without a
corresponding increase in salaries and related costs; the reversal of $0.6
million of prior years' accrued employee cash bonuses in 2002 and a decrease of
$3.4 million in our provision for doubtful accounts for 2002 as compared to 2001
due to enhanced billing and collection efforts. General and administrative
expenses primarily consist of compensation and other employee costs for
corporate office functions, customer support, customer billing operations and
management information systems. This cost category also includes our provision
for doubtful accounts and corporate wide overhead expenses.

Product Development Expenses

Product development costs, which consist primarily of personnel and consultants'
time and expense to research, conceptualize and test product launches and
enhancements to our products were $7.4 million in 2002 as compared to $9.2
million in 2001. The prior year's costs were significantly higher as the first
quarter of 2001 included the development expenses related to our advertising
network, which we sold on March 31, 2001 and we utilized consultants to a
greater degree during 2001.

Amortization of Goodwill and Other Intangible Assets and Impairment of
Intangible Assets

Amortization of intangible assets decreased to $6.8 million in 2002 as compared
to $52.1 million in 2001 as a result of the adoption of SFAS No. 142 - "Goodwill
and Other Intangible Assets". This standard eliminates goodwill amortization
upon adoption and requires an initial assessment for goodwill impairment within
six months of adoption and at least annually thereafter. For the year ended
December 31, 2001, goodwill amortization from continuing operations was $43.1
million or $2.57 per share and $3.9 million or $0.23 per share from discontinued
operations.

In connection with the adoption of Statement 142 on January 1, 2002, we
reclassified $3.6 million in net book value associated with assembled workforce
to goodwill.


                                      -33-
<PAGE>

Upon initial adoption, we completed an assessment with the assistance of an
independent appraiser and determined that there was no impairment.

In connection with our annual assessment in the fourth quarter of 2002, a third
party impairment assessment was completed which indicated that there was an
impairment of goodwill. The current economic and market conditions have led to
forecasts with lower growth rates and a significantly lower market
capitalization for the Company. Accordingly, a fair value analysis was performed
on the Company's goodwill, other intangible assets and other long lived assets.
This resulted in an aggregate impairment of $78.8 million which is included in
the 2002 loss from continuing operations which is attributable to current
economic and market conditions. In 2001, we recorded $62.2 million in goodwill
impairment charges associated with our NetMoves and professional services
acquisitions. The impairment charges in 2001 resulted from our previously
employed business review process, based on quantitative and qualitative
measures, and the assessment of the need to record impairment losses on
long-lived assets used in operations when impairment indicators are present.

Restructuring Charges

During 2002 and 2001, restructuring charges of $2.3 million and $25.3 million,
respectively were recorded by the Company. During 2002, our restructuring
charges were related to the relocation and consolidation of our New Jersey-based
corporate office facilities into one location and a similar consolidation of our
office facilities in England. For 2001, our restructuring initiatives were
related to our strategic decisions to exit the consumer messaging business and
to focus on our outsourced messaging business. The 2001 restructuring program
also included an incremental reduction in the workforce of approximately 150
employees. In addition, asset disposals of $24.1 million reflect write-downs of
excess fixed assets and other assets to their net realizable values.

Gain or loss on the sale of businesses

Gains on sales of businesses in 2002 included $300,000 derived from the sale of
our customer contracts for hosted email services (NIMS) and $126,000
attributable to the sale of a software and consulting business in Europe. Loss
on sale of businesses of $1.8 million in 2001 represents the loss incurred from
the sale of our advertising network in March 2001.

Other Income (Expense), Net

Other income (expense), net includes interest income from our cash investments
and marketable securities; interest expense related to our 7% Convertible Note
offering, other notes payable and capital lease obligations; gains on debt
restructuring and settlements; and gains, losses and impairment charges related
to investments.

Interest income for the year ended December 31, 2002 was $189,000 as compared to
$565,000 in 2001. The decrease in 2002 was principally due to lower cash
balances and lower interest rates.

Interest expense was $4.8 million in 2002 as compared to $10.4 million in 2001.
The $5.6 million decrease was due to reductions in the total debt balances
outstanding during 2002 as compared to 2001 as a result of the exchange
transactions and debt restructurings completed in 2001 as described below. In
addition, no interest expense is recognized on the notes issued in connection
with the exchange transactions or on the restructured notes issued to AT&T and
the former shareholder of STI in accordance with FASB Statement No. 15
"Accounting by Debtors and Creditors for Troubled Debt Restructurings" (See Note
7 to the Consolidated Financial Statements).

Gain on Debt Restructuring and Settlements

In 2002, we eliminated $5.5 million of indebtedness in exchange for the payment
of $0.6 million in cash and the issuance of 5,415 shares of Class A common stock
valued at $6,000 pursuant to our announced efforts to eliminate substantially
all of our outstanding indebtedness. After reversing $1.7 million of previously
capitalized interest, we recorded a gain of $6.6 million on these transactions.

In 2001, net gains of $48.0 million on debt restructuring were primarily related
to the issuance of $23.8 million principal amount of 10% Senior Convertible
Notes in exchange for the cancellation of $75.9 million principal amount of 7%
Convertible Subordinated Notes and the subsequent exchange of $2.5 million of
the new 10% Senior Convertible Notes for 1.4 million shares of our Class A
common stock.


                                      -34-
<PAGE>

Impairment of Investments

As indicated above, management performs on-going business reviews and, based on
quantitative and qualitative measures, assesses the need to record impairment
losses on its investments when impairment indicators are present. Management
determined that the decline in value of its cost investments in Bantu, Inc.,
BulletN.net and OnView was other-than-temporary and recorded charges of $1.5
million and $10.1 million for the years ended December 31, 2002 and 2001,
respectively.

Discontinued Operations

In 2001, the loss from discontinued operations includes the results and other
costs related to our discontinuance of our World.com business including
subsidiaries, Asia.com, Inc. and India.com Inc. The $63.0 million loss from
discontinued operations included a write-down of $56.4 million of assets,
primarily goodwill, to net realizable value, operating losses of $4.5 million,
severance and related benefits of $1.3 million and other related costs and
expenses including the closure of facilities of $0.8 million.

Extraordinary Gain

During July 2001, we acquired the assets of GN Comtext ("GN") for $1.
Additionally, we received a $1.1 million unsecured interest free loan from the
former parent company of GN, GN Store Nord A/S, which was paid in the fourth
quarter of 2001, and received approximately $175,000 for transition services
which were recorded as a reimbursement of costs during the third quarter of 2001
and will collect and retain a percentage of certain accounts receivable
collected on behalf of GN. GN offers value-added messaging services to over
3,000 customers ranging from small business to multi-national companies around
the world. The excess of fair market value of the assets acquired and the
liabilities assumed over the purchase price resulted in negative goodwill of
$782,000 which was recognized as an extraordinary gain, in accordance with the
provisions of FASB Statement No. 141, "Business Combinations."

Liquidity and Capital Resources

Net cash provided by operating activities was $7.7 million for the year ended
December 31, 2003 in comparison to $2.2 million in cash provided from operating
activities for 2002 and ($1.0) million used in operations for 2001. This
improvement is consistent with the improvement in operating results as we
implemented a restructuring of our operations through acquisitions and the
discontinuance of the consumer advertising network and the development of domain
name properties through WORLD.com as previously described. In addition, we have
reduced our debt obligations to $13.5 million at December 31, 2003 from $75.6
million at December 31, 2002.

Net cash used in investing activities for purchases of property and equipment
was $4.2 million and $3.5 million for the years ended December 31, 2003 and
2002, respectively. The expenditures in the 2003 period included $1.9 million
related to the consolidation of our New Jersey office facilities into a single
location. For 2001, cash used for capital equipment purchases amounted to $5.3
million and cash used for acquisitions, mostly related to the STI transaction,
was $15.3 million. Offsetting these 2001 uses were $12.5 million in proceeds
from the sales and maturities of marketable securities, $2.0 million from the
sales of investments and $4.6 million from the sales of businesses.

Net cash used in financing activities was $6.0 million for the year ended
December 31, 2003 as compared to cash used of $2.3 million for the year ended
December 31, 2002. The 2003 activity includes $5.8 million in debt payments and
additional payments to extinguish debt in connection with the previously
mentioned debt elimination transactions and proceeds of $1.0 million from the
issuance in a private placement of 1.9 million shares of Class A common stock.
In the 2002 period, we made $0.8 million of scheduled principal and debt
extinguishment payments, $0.9 million of interest payments on restructured notes
and $0.6 million in payments under capital lease obligations. In 2001, $16.3
million cash was provided by financing activities. This included $25.3 million
in financing activities and payments for debt service and capital leases of $9.0
million.

At December 31, 2003, we had $6.6 million of cash and cash equivalents. Although
this reflects a $2.9 million reduction in cash balances from December 31, 2002,
cash of $1.9 million was used for our new office facilities 2003 and will not
occur in 2004. Payments in 2003 to complete the debt elimination transactions
will not occur in 2004. Debt service payments in 2004 are expected to be $4.0
million in comparison to the $5.8 million in payments for 2003. In 2001, $16.3
million was provided by financing activities. During 2001, the company raised
approximately $16.5 million from the issuance of convertible debt and notes
payable and $8.7 million from the issuance of Class A common stock.


                                      -35-
<PAGE>

Below is a table that presents our contractual obligations and commitments at
December 31, 2003:

Payments Due by Period (in thousands)
<TABLE>
<CAPTION>

Contractual Obligations                                                  Less than
                                                              Total       One Year       1-3 years      4-5 years     After 5 years
                                                              -----       --------       ---------      ---------     -------------
<S>                                                         <C>             <C>          <C>             <C>
Long-term debt obligations,
  including capitalized interest.....................       $15,464         $3,997       $11,467         $  --          $  --
Operating lease obligations..........................        18,356          4,321         4,966           4,051          5,018
Purchase obligations mostly consisting of
  telecommunications contract commitments............        10,638          7,756         2,882            --             --
Other long-term liabilities
  reflected on our balance sheet.....................         1,104            --          1,104             --            --
                                                            -------        -------       -------          ------        -------
     Total...........................................       $45,562        $16,074       $20,419          $4,051        $ 5,018
                                                            =======        =======       =======          ======        =======
</TABLE>

We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.

For the years ended December 31, 2003, 2002 and 2001, we received a report from
our independent auditors containing an explanatory paragraph stating that we
suffered recurring losses from operations since inception and have a working
capital deficiency that raises substantial doubt about our ability to continue
as a going concern. As shown in the accompanying consolidated financial
statements, prior to 2003, the Company incurred net losses of $85.8 million and
$206.3 million for the two years ended December 31, 2002 and 2001, respectively.
As of December 31, 2003, the Company had an accumulated deficit of $548.3
million and stockholders' equity of $4.4 million. Our consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classification of
liabilities that might be necessary should we be unable to continue as a going
concern. If the Company's cash flow is not sufficient, we may need additional
financing to meet our debt service and other cash requirements. However, if we
are unable to raise additional financing, restructure or settle additional
outstanding debt or generate sufficient cash flow, we may be unable to continue
as a going concern. Management believes the Company's ability to continue as a
going concern is dependent upon its ability to generate sufficient cash flow to
meet its obligations on a timely basis, to obtain additional financing or
refinancing as may be required, and to achieve and maintain profitable
operations. Throughout 2001, management improved the Company's operations and
liquidity through a variety of actions, including the acquisition and
integration of STI/EasyLink Services, a reduction of its workforce, the sale or
closure of all of its World.com businesses, and the sale of its advertising
network. In addition, management raised over $20 million in cash financing
during 2001. Throughout 2002 and 2003, management continued the process of
improving the Company's operations through further cost reductions to the point
that net cash of $2.2 million and $7.7 million, respectively, was provided from
operations for those years. In 2003, the Company reduced its debt by $63.0
million, thereby reducing its interest expense from $4.8 million in 2002 to $1.4
million in 2003. Management is continuing the process of further reducing
telecommunications and network-related operating costs while increasing its
sales and marketing efforts. There can be no assurance that the Company will be
successful in these efforts.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk, primarily from changes in interest rates,
foreign exchange rates and credit risk. The Company maintains continuing
operations in Europe (mostly in the United Kingdom) and, to a lesser extent, in
Singapore, Malaysia and India. Fluctuations in exchange rates may have an
adverse effect on the Company's results of operations and could also result in
exchange losses. The impact of future rate fluctuations cannot be predicted
adequately. To date the Company has not sought to hedge the risks associated
with fluctuations in exchange rates.

Market Risk - Our accounts receivable are subject, in the normal course of
business, to collection risks. We regularly assess these risks and have
established policies and business practices to protect against the adverse
effects of collection risks. As a result we do not anticipate any material
losses in this area.

Interest Rate Risk - Interest rate risk refers to fluctuations in the value of a
security resulting from changes in the general level of interest rates.
Investments that are classified as cash and cash and equivalents have original
maturities of three months or less. Changes in the market's interest rates do
not affect the value of these investments.

                                      -36-
<PAGE>


Item 8   Consolidated Financial Statements and Supplementary Data



                          EASYLINK SERVICES CORPORATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                                                                                                              Page
<S>                                                                                                             <C>
Independent Auditors' Report...............................................................................     38
Consolidated Balance Sheets as of December 31, 2003 and 2002...............................................     39
Consolidated Statements of Operations for the years ended December 31, 2003, 2002, and 2001................     40
Consolidated Statements of Stockholders' Equity  (Deficit) and Comprehensive
    Loss for the years ended December 31, 2003, 2002 and 2001..............................................     41
Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001.................     50
Notes to Consolidated Financial Statements.................................................................     52
</TABLE>



                                      -37-
<PAGE>



                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
EasyLink Services Corporation:

We have audited the accompanying consolidated balance sheets of EasyLink
Services Corporation and subsidiaries as of December 31, 2003 and 2002, and the
related consolidated statements of operations, stockholders' equity (deficit)
and comprehensive loss, and cash flows for each of the years in the three-year
period ended December 31, 2003. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of EasyLink Services
Corporation and subsidiaries as of December 31, 2003 and 2002, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 2003 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1(b) to
the consolidated financial statements, the Company has suffered recurring losses
from operations since inception and has a working capital deficiency that raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to this matter are also described in Note 1(b). The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

As discussed in Note 1 (i), 1(j) and 6, the Company adopted Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets",
as of January 1, 2002.


                                           /s/KPMG LLP

New York, New York
February 12, 2004


                                      -38-
<PAGE>



                          EasyLink Services Corporation
                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>

                                                                                                      December 31,
                                                                                                 2003              2002
                                                                                                 ----              ----
                                     ASSETS
<S>                                                                                              <C>             <C>
Current assets:
Cash and cash equivalents...........................................................             $6,623          $9,554
Accounts receivable, net of allowance for doubtful accounts of $4,824 and
 $8,052 as of December 31, 2003 and 2002, respectively.............................              11,430          11,938
Prepaid expenses and other current assets..........................................               1,760           2,019
                                                                                                 ------          ------
Total current assets...............................................................              19,813          23,511
                                                                                                 ------          ------

Property and equipment, net........................................................              10,641          14,833
Goodwill, net......................................................................               6,266           6,266
Other intangible assets, net.......................................................              11,629          14,548
Other assets.......................................................................               1,062           1,853
                                                                                                 ------          ------

Total assets.......................................................................             $49,411         $61,011
                                                                                                =======         =======

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable...................................................................              $9,082         $10,235
Accrued expenses...................................................................              14,336          20,853
Restructuring reserves payable.....................................................               1,894           1,651
Current portion of notes payable...................................................               2,957           4,152
Current portion of capitalized interest on notes payable...........................               1,040           4,283
Other current liabilities..........................................................               1,438           1,592
Net liabilities of discontinued operations.........................................                 828             360
                                                                                                 ------          ------
Total current liabilities..........................................................              31,575          43,126
                                                                                                 ------          ------

Notes payable, less current portion................................................              10,511          71,398
Capitalized interest on notes payable, less current portion........................                 956           7,402
Other long term liabilities........................................................               1,957             907
                                                                                                 ------          ------

Total liabilities..................................................................              44,999         122,833
                                                                                                 ------         -------

Stockholders' equity (deficit):
Common stock, $0.01 par value; 510,000,000 shares authorized at December 31,
2003 and 2002:
  Class A--500,000,000 shares authorized at December 31, 2003 and 2002;
    42,821,500 and 16,129,319 shares issued and outstanding at
    December 31, 2003 and 2002, respectively.......................................                 428             161
  Class B--10,000,000 shares authorized at December 31, 2003 and 2002;
    1,000,000 issued and outstanding at December 31, 2003 and .....................                  10              10
Additional paid-in capital.........................................................             552,589         537,544
Accumulated other comprehensive loss...............................................                (272)           (246)
Accumulated deficit................................................................            (548,343)       (599,291)
                                                                                               ---------       ---------

Total stockholders' equity (deficit)...............................................               4,412         (61,822)
                                                                                               --------         --------
Commitments and contingencies
Total liabilities and stockholders' equity (deficit)...............................             $49,411         $61,011
                                                                                                =======         =======
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      -39-
<PAGE>


                          EasyLink Services Corporation
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>

                                                                                        Year Ended December 31,
                                                                                        -----------------------
                                                                                2003             2002            2001
                                                                                ----             ----            ----

<S>                                                                          <C>               <C>             <C>
Revenues...............................................................      $101,347          $114,354        $123,929

Operating expenses:
   Cost of revenues....................................................        49,553            57,601          75,914
                                                                               ------            ------          ------

Gross profit...........................................................        51,794            56,753          48,015
                                                                               ------            ------          ------

Sales and marketing....................................................        18,379            20,151          28,218
General and administrative.............................................        24,405            28,694          41,421
Product development....................................................         6,383             7,412           9,208
Amortization of goodwill and other intangible assets...................         2,066             6,751          52,068
Impairment of intangible assets........................................            --            78,784          62,200
Restructuring charges..................................................         1,478             2,320          25,337
(Gain) loss on sale of businesses......................................            --              (426)          1,804
                                                                               ------              -----          -----
                                                                               52,711           143,686         220,256
                                                                               ------           -------         -------

Loss from operations...................................................          (917)          (86,933)       (172,241)
                                                                               -------          --------       ---------

Other income (expense):
   Interest income.....................................................            36               189             565
   Interest expense....................................................        (1,390)           (4,785)        (10,383)
   Gain on debt restructuring and settlements..........................        54,078             6,558          47,960
   Impairment of investments...........................................            --            (1,515)        (10,131)
   Other, net..........................................................            79               641             192
                                                                               ------             -----           -----
  Total other income, net..............................................        52,803             1,088          28,203
                                                                               ------             -----          ------

Income (loss) from continuing operations...............................        51,886           (85,845)       (144,038)
                                                                               ------           --------       ---------

Loss from discontinued operations......................................          (938)               --         (63,027)
                                                                               -------          -------         --------

Income (loss) before extraordinary item................................        50,948           (85,845)       (207,065)

Extraordinary gain.....................................................            --                --             782
                                                                                 ----           -------             ---

Net income (loss)......................................................       $50,948           (85,845)       (206,283)
                                                                              =======           ========       =========

Basic net income (loss) per share:
Income (loss) from continuing operations...............................         $1.47            $(5.13)        $(15.26)
Loss from discontinued operations......................................         (0.03)               --           (6.68)
Extraordinary gain.....................................................            --                --             0.09
                                                                                -----            ------             ----
Net income (loss) per share............................................         $1.44            $(5.13)        $(21.85)
                                                                                =====            =======        ========

Diluted net income (loss) per share:
Income (loss) from continuing operations...............................         $1.46            $(5.13)        $(15.26)
Loss from discontinued operations......................................         (0.03)               --           (6.68)
Extraordinary gain.....................................................            --                --            0.09
                                                                                -----            ------         --------
Net income (loss) per share............................................         $1.43            $(5.13)        $(21.85)
                                                                                =====            =======        ========

Weighted-average basic shares outstanding..............................    35,401,809        16,732,793       9,442,047
                                                                           ==========        ==========       =========
Weighted-average diluted shares outstanding............................    35,653,336        16,732,793       9,442,047
                                                                           ==========        ==========       =========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      -40-
<PAGE>

                          EasyLink Services Corporation

       Statement of Stockholders' Equity (Deficit) and Comprehensive Loss

                        (in thousands, except share data)
<TABLE>
<CAPTION>


                                                                        Class A Common          Class B Common
                                                                             Stock                   Stock            Additional
                                                                    -------------------      ---------------------      Paid-in
                                                                    Shares        Amount      Shares       Amount       Capital
                                                                    ------        ------      ------       ------       -------

<S>                                                              <C>               <C>    <C>               <C>      <C>
Balance at December 31, 2000                                      5,178,920         $52    1,000,000         $10      $446,231
Net loss                                                                 -            -            -           -             -
Realized holding gains on marketable securities                          -            -            -           -             -
Cumulative foreign exchange currency translation                         -            -            -           -             -
Comprehensive loss                                                       -            -            -           -             -
Reversal of stock subscription receivable                                -            -            -           -             -
Exercise of employee stock options                                    2,000           -            -           -            10
Issuance of Class A common stock in connection
with 401(k) plan                                                     75,209           1            -           -           411
Issuance of Class A common stock in connection with
employee stock purchase plan                                          3,869           -            -           -            19
Reversal of deferred compensation related to employee
terminations                                                             -            -            -           -         (193)
Issuance of Class A common stock to certain employees                81,456           1            -           -         1,029
Issuance of Class A common stock in connection with
STI acquisition                                                   1,876,618          19            -           -        30,828
Issuance of Class A common stock in connection with
private placement                                                   300,000           3            -           -         2,997
Issuance of Class A common stock in connection with
debt restructuring                                                2,810,937          28            -           -        17,120
Issuance of Class A common stock in connection with
financing                                                         1,460,000          15            -           -         5,825
Issuance of Class A common stock for investments                     22,222           -            -           -           285
Issuance of Class A common stock in connection with
Asia.com settlements                                                 33,292           -            -           -           321
Issuance of Class A common stock to in connection with
exchange of senior notes                                            155,609           2            -           -         2,725
Issuance of Class A common stock in connection with
India.com employees                                                  10,590           -            -           -           106
Issuance of Class A common stock in connection with
contingent consideration to TCOM employees                          162,083           2            -           -         1,258
Issuance of Class A common stock in connection with
My India acquisition                                                 19,600           -            -           -           272
Issuance of Class A common stock in connection with
vendor settlements                                                  196,604           2            -           -         1,156
Issuance of Class A common stock as payment for promissory
note                                                                103,359           1            -           -           474
Issuance of Class A common stock to minority interest
shareholders in exchange for preferred stock                      1,420,400          14            -           -         6,094
Issuance of Class A common stock to TII                             300,000           3            -           -         1,887
Issuance of Class A common stock in connection with
New Millenium                                                        19,591           -            -           -           120
Issuance of Class A common stock in connection with
Lansoft/Allegro merger agreements                                    53,319           -            -           -           259
Issuance of Class A common stock in lieu of cash
interest on debt                                                    294,533           3            -           -           637
Interest expense related to Senior Convertible Notes payable
in common stock                                                          -            -            -           -         1,506
Beneficial conversion in connection with debt restructuring              -            -            -           -         1,092
Issuance of warrants in connection with debt restructuring               -            -            -           -        10,957
Transfer of officer's shares to certain employees in lieu of
compensation                                                            --           --           --          --           452
                                                                 ----------        ----    ---------         ---      --------

Balance at December 31, 2001                                     14,580,211        $146    1,000,000         $10      $533,878
                                                                 ----------        ----    ---------         ---      --------
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      -41-
<PAGE>

<TABLE>
<CAPTION>

                                                                                                            Accumulated
                                                                                                               Other
                                                                           Subscriptions     Deferred      Comprehensive
                                                                            Receivable     Compensation        Loss
                                                                            ----------     ------------        ----

<S>                                                                          <C>            <C>                <C>
Balance at December 31, 2000                                                  $(33)          $(214)             $58
Net loss                                                                         -               -                -
Realized holding gains on marketable securities                                  -               -              (62)
Cumulative foreign exchange currency translation                                 -               -              (33)
                                                                                 -               -              ---

Comprehensive loss                                                               -               -              (95)
                                                                                 -               -              ---

Reversal of Stock Subscription Receivable                                       33               -                -
Exercise of employee stock options                                               -               -                -
Issuance of Class A common stock in connection
with 401(k) plan                                                                 -               -                -
Issuance of Class A common stock in connection with
employee stock purchase plan                                                     -               -                -
Reversal of deferred compensation related to employee
terminations                                                                     -              214               -
Issuance of Class A common stock to certain employees                            -             (42)               -
Issuance of Class A common stock in connection with
STI acquisition                                                                  -               -                -
Issuance of Class A common stock in connection with
private placement                                                                -               -                -
Issuance of Class A common stock in connection with
debt restructuring                                                               -               -                -
Issuance of Class A common stock in connection with
financing                                                                        -               -                -
Issuance of Class A common stock for investments                                 -               -                -
Issuance of Class A common stock in connection with
Asia.com settlements                                                             -               -                -
Issuance of Class A common stock in connection with
exchange of senior notes                                                         -               -                -
Issuance of Class A common stock in connection with
India.com employees                                                              -               -                -
Issuance of Class A common stock in connection with
contingent consideration to TCOM employees                                       -               -                -
Issuance of Class A common stock in connection with
My India acquisition                                                             -               -                -
Issuance of Class A common stock in connection with
vendor settlements                                                               -               -                -
Issuance of Class A common stock as payment for promissory
note                                                                             -               -                -
Issuance of Class A common stock to minority interest
shareholders in exchange for preferred stock                                     -               -                -
Issuance of Class A common stock to TII                                          -               -                -
Issuance of Class A common stock in connection with
New Millenium                                                                    -               -                -
Issuance of Class A common stock in connection with
Lansoft/Allegro merger agreements                                                -               -                -
Issuance of Class A common stock in lieu of cash
interest on debt                                                                 -               -                -
Interest expense related to Senior Convertible Notes payable
in common stock                                                                  -               -                -
Beneficial conversion in connection with debt restructuring                      -               -                -
Issuance of warrants in connection with debt restructuring                       -               -                -
Transfer of officer's shares to certain employees in lieu of
compensation                                                                     -               -                -
                                                                                 -            ----             ----

Balance at December 31, 2001                                                     -            $(42)            $(37)
                                                                                 -            ----             ----
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      -42-
<PAGE>

<TABLE>
<CAPTION>

                                                                                                          Total
                                                                                 Accumulated      Stockholders Equity/
                                                                                   Deficit              (Deficit)
                                                                                   -------              ---------

<S>                                                                             <C>                      <C>
Balance at December 31, 2000                                                    $(307,163)                 $138,941
Net loss                                                                         (206,283)                (206,283)
Realized holding gains on marketable securities                                         -                      (62)
Cumulative foreign exchange currency translation                                        -                      (33)
                                                                                        -                 --------

Comprehensive loss                                                               (206,283)                (206,378)
                                                                                 --------                 --------

Reversal of Stock Subscription Receivable                                               -                        33
Exercise of employee stock options                                                      -                        10
Issuance of Class A common stock in connection with
401(k) plan                                                                             -                       412
Issuance of Class A common stock in connection with
employee stock purchase plan                                                            -                        19
Reversal of deferred compensation related to employee
terminations                                                                            -                        21
Issuance of Class A common stock to certain employees                                   -                       988
Issuance of Class A common stock in connection with
STI acquisition                                                                         -                    30,847
Issuance of Class A common stock in connection with
private placement                                                                       -                     3,000
Issuance of Class A common stock in connection with
debt restructuring                                                                      -                    17,148
Issuance of Class A common stock in connection with
financing                                                                           5,840                         -
Issuance of Class A common stock for investments                                        -                       285
Adjustment of Class A common stock in connection with
Asia.com settlements                                                                    -                       321
Issuance of Class A common stock in connection with
exchange of senior notes                                                                -                     2,727
Issuance of Class A common stock in connection with
India.com employees                                                                     -                       106
Issuance of Class A common stock in connection with
contingent consideration to TCOM employees                                              -                     1,260
Issuance of Class A common stock in connection with
My India acquisition                                                                    -                       272
Issuance of Class A common stock in connection with
vendor settlements                                                                      -                     1,158
Issuance of Class A common stock as payment for promissory
note                                                                                    -                       475
Issuance of Class A common stock to minority interest
shareholders in exchange for preferred stock                                            -                     6,108
Issuance of Class A common stock to TII                                                 -                     1,890
Issuance of Class A common stock in connection with
New Millenium                                                                           -                       120
Issuance of Class A common stock in connection with
Lansoft/Allegro merger agreements                                                       -                       259
Issuance of Class A common stock to in lieu of cash
interest on debt                                                                        -                       640
Interest expense related to Senior Convertible notes payable
in common stock                                                                         -                     1,506
Beneficial conversion in connection with debt restructuring                             -                     1,092
Issuance of warrants in connection with debt restructuring                              -                    10,957
Transfer of officer's shares to certain employees in lieu of
compensation                                                                            -                       452
                                                                                ---------                   -------

Balance at December 31, 2001                                                    $(513,446)                  $20,509
                                                                                ---------                   -------
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      -43-
<PAGE>


                          EasyLink Services Corporation

 Statement of Stockholders' Equity (Deficit) and Comprehensive Loss (continued)
                        (in thousands, except share data)
<TABLE>
<CAPTION>

                                                                       Class A Common           Class B Common
                                                                            Stock                    Stock           Additional
                                                                   -----------------------   ---------------------     Paid-in
                                                                   Shares        Amount      Shares       Amount       Capital
                                                                   ------        ------      ------       ------       -------

<S>                                                             <C>               <C>     <C>               <C>      <C>
Balance at December 31, 2001                                    14,580,211        $146    1,000,000         $10      $533,878
Net loss                                                                -            -            -          -             -
Cumulative foreign exchange currency translation                        -            -            -          -             -
Comprehensive loss                                                      -            -            -          -             -
Issuance of Class A common stock in connection
with 401(k) plan                                                   314,642           3            -          -            434
Issuance of Class A common stock to certain employees                   -            -            -          -              -
Issuance of Class A common stock in connection with
employee terminations                                               19,265           -            -          -             84
Issuance of Class A common stock in connection with
private placement                                                  100,000           1            -          -             (1)
Issuance of Class A common stock in connection with
MyIndia.com contingent liability                                     6,534           -            -          -              6
Issuance of Class A common stock in connection with
MyIndia.com sale                                                    56,075           1            -          -            314
Issuance of Class A common stock in connection with
vendor settlements                                                 106,534           1            -          -            103
Issuance of Class A common stock issued to Lohoo                    36,232           -            -          -            203
Issuance of Class A common stock to third party vendors             21,016           -            -          -             78
Issuance of Class A common stock in lieu of cash
interest on debt                                                   888,810           9            -          -          1,821
Interest expense related to Senior Convertible Notes payable
in common stock                                                         -            -            -          -            330
Interest expense related to Capitalized Interest                        -            -            -         -             294
                                                                 --------          ---      -------         ---       -------
Balance at December 31, 2002                                    16,129,319        $161    1,000,000         $10      $537,544
                                                                ----------        ----    ---------         ---      --------
</TABLE>


          See accompanying notes to consolidated financial statements.



                                      -44-
<PAGE>

<TABLE>
<CAPTION>

                                                                                                                  Accumulated
                                                                                                                     Other
                                                                              Subscriptions      Deferred        Comprehensive
                                                                               Receivable      Compensation          Loss
                                                                               ----------      ------------          ----

<S>                                                                             <C>             <C>               <C>
Balance at December 31, 2001                                                      $-              $(42)             $(37)
Net loss                                                                           -                 -                 -
Realized holding gains on marketable securities                                    -                 -                 -
Cumulative foreign exchange currency translation                                   -                 -              (209)
                                                                                   -                 -              -----

Comprehensive loss                                                                 -                 -              (209)
                                                                                   -                 -              -----

Reversal of Stock Subscription Receivable                                          -                 -                 -
Exercise of employee stock options                                                 -                 -                 -
Issuance of Class A common stock in connection
with 401(k) plan                                                                   -                 -                 -
Issuance of Class A common stock to certain employees                              -                42                 -
Issuance of Class A common stock in connection with
employee termination                                                               -                 -                 -
Issuance of Class A common stock in connection with
private placement                                                                  -                 -                 -
Issuance of Class A common stock in connection with
India.com contingent liability                                                     -                 -                 -
Issuance of Class A common stock to Fir Tree                                       -                 -                 -
Issuance of Class A common stock in connection with
MyIndia.com sale                                                                   -                 -                 -
Issuance of Class A common stock in connection with
vendor settlements                                                                 -                 -                 -
Issuance of Class A common stock issued to Lohoo                                   -                 -                 -
Issuance of Class A common stock to third party vendors                            -                 -                 -
Issuance of Class A common stock in lieu of cash
interest on debt                                                                   -                 -                 -
Interest expense related to Senior Convertible Notes payable
in common stock                                                                    -                 -                 -
Interest expense related to Capitalized Interest                                   -                 -                 -
                                                                                   -                 -             -----

Balance at December 31, 2002                                                       -                 -             $(246)
                                                                                   -                 -             -----
</TABLE>

          See accompanying notes to consolidated financial statements.



                                      -45-
<PAGE>

<TABLE>
<CAPTION>

                                                                                                              Total
                                                                             Accumulated            Stockholders' (Deficit)/
                                                                               Deficit                       Equity
                                                                               -------                       ------

<S>                                                                           <C>                             <C>
Balance at December 31, 2001                                                  $(513,446)                      $20,509
Net loss                                                                        (85,845)                      (85,845)
Realized holding gains on marketable securities                                       -                             -
Cumulative foreign exchange currency translation                                      -                          (208)
                                                                                      -                          -----

Comprehensive loss                                                              (85,845)                      (86,054)
                                                                                --------                      --------

Issuance of Class A common stock in connection with
401(k) plan                                                                           -                           437
Issuance of Class A common stock to certain employees                                 -                            42
Issuance of Class A common stock in connection with
employee terminations                                                                 -                            84
Issuance of Class A common stock in connection with
private placement                                                                     -                             -
Issuance of Class A common stock in connection with
MyIndia.com contingent liability                                                      -                             6
Adjustment of Class A common stock in connection with
MyIndia.com sale                                                                      -                           315
Issuance of Class A common stock in connection with
vendor settlements                                                                    -                           104
Issuance of Class A common stock issued to Lohoo                                      -                           203
Issuance of Class A common stock issued to third party vendors                        -                            78
Issuance of Class A common stock in lieu of cash
interest on debt                                                                      -                         1,830
Interest expense related to Senior Convertible notes payable
in common stock                                                                       -                           330
Interest expense related to Capitalized Interest                                      -                           294
                                                                                -------                       -------

Balance at December 31, 2002                                                  $(599,291)                     $(61,822)
                                                                              ----------                     ---------
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      -46-
<PAGE>

                          EasyLink Services Corporation

 Statement of Stockholders' Equity (Deficit) and Comprehensive Loss (continued)
                        (in thousands, except share data)
<TABLE>
<CAPTION>

                                                                       Class A Common           Class B Common
                                                                            Stock                    Stock           Additional
                                                                   -----------------------   ---------------------     Paid-in
                                                                   Shares        Amount      Shares       Amount       Capital
                                                                   ------        ------      ------       ------       -------

<S>                                                             <C>               <C>     <C>               <C>      <C>
Balance at December 31, 2002                                    16,129,319        $161    1,000,000         $10      $537,544
Net income                                                              -            -            -          -             -
Cumulative foreign exchange currency translation                        -            -            -          -             -
Comprehensive income                                                    -            -            -          -             -
Issuance of Class A common stock in connection
with 401(k) plan                                                   531,545           5            -          -            486
Issuance of Class A common stock to certain employees                   -            -            -          -              -
Issuance of Class A common stock in connection with
employee terminations                                                    -           -            -          -              -
Issuance of Class A common stock in connection with
private placement                                                1,923,077          19            -          -             981
Issuance of Class A common stock in connection with
cancellation of debt                                            23,881,705         239           -           -          13,328
Issuance of Class A common stock in lieu of cash
interest on debt                                                   284,304           3            -          -            181
Interest expense related to Senior Convertible Notes payable
in common stock                                                         -            -            -          -
Proceeds from the exercise of stock options                        71,550            1            -          -             69
Interest expense related to Capitalized Interest                        -            -            -         -               -
                                                                 --------          ---      -------         -         -------
Balance at December 31, 2003                                    42,821,500        $428    1,000,000         $10      $552,589
                                                                ==========        ====    =========         ===      ========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      -47-
<PAGE>


<TABLE>
<CAPTION>

                                                                                                                  Accumulated
                                                                                                                     Other
                                                                              Subscriptions      Deferred        Comprehensive
                                                                               Receivable      Compensation          Loss
                                                                               ----------      ------------          ----

<S>                                                                             <C>                <C>           <C>
Balance at December 31, 2002                                                      $-                 $-            $(246)
Net income                                                                         -                 -                 -
Cumulative foreign exchange currency translation                                   -                 -               (26)
                                                                                ----              ----               ----
Comprehensive income                                                               -                 -               (26)
                                                                                ----              ----               ----

Issuance of Class A common stock in connection
with 401(k) plan                                                                   -                 -                 -
Issuance of Class A common stock to certain employees                              -                 -                 -
Issuance of Class A common stock in connection with
employee termination                                                               -                 -                 -
Issuance of Class A common stock in connection with
private placement                                                                  -                 -                 -
Issuance of Class A common stock in connection with
cancellation of debt                                                               -                  -                -
Issuance of Class A common stock in lieu of cash
interest on debt                                                                   -                 -                 -
Interest expense related to Senior Convertible Notes payable
in common stock
Proceeds from the exercise of stock options                                        -                 -                 -
Interest expense related to Capitalized Interest                                   -                 -                 -
                                                                                   -                 -             -----
Balance at December 31, 2003                                                       -                 -             $(272)
                                                                                   =                 =             =====
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      -48-
<PAGE>


<TABLE>
<CAPTION>

                                                                                   Total
                                                                                Accumulated                 Stockholders'
                                                                                  Deficit                       Equity
                                                                                  -------                       ------

<S>                                                                           <C>                            <C>
Balance at December 31, 2002                                                   $(599,291)                     $(61,822)
Net income                                                                        50,948                        50,948
Cumulative foreign exchange currency translation                                      -                           (20)
                                                                                      -                           ----

Comprehensive income                                                              50,948                        50,928
                                                                                  ------                        ------

Issuance of Class A common stock in connection with
401(k) plan                                                                           -                           492
Issuance of Class A common stock to certain employees                                 -                            --
Issuance of Class A common stock in connection with
employee terminations                                                                 -
Issuance of Class A common stock in connection with
private placement                                                                     -                         1,000
Issuance of Class A common stock in connection with
cancellation of debt                                                                  -                        13,567
Issuance of Class A common stock in lieu of cash
interest on debt                                                                      -                           184
Interest expense related to Senior Convertible notes payable
in common stock                                                                       -                             -
Proceeds from the exercise of stock options                                           -                            70
Interest expense related to Capitalized Interest                                      -                             -
                                                                              ---------                         ------
Balance at December 31, 2003                                                  $(548,343)                        $4,412
                                                                              =========                         ======
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      -49-
<PAGE>

                          EasyLink Services Corporation
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                                        Year Ended December 31,
                                                                                        -----------------------
                                                                                2003             2002             2001
                                                                                ----             ----             ----

<S>                                                                           <C>              <C>            <C>
Cash flows from operating activities:
Net income(loss).......................................................       $50,948          $(85,845)      $(206,283)
Adjustments to reconcile net income (loss) to net cash
   provided by (used in) operating activities:
Loss from discontinued operations......................................           938                --          63,027
Depreciation and amortization..........................................         8,295            10,417          16,811
Amortization of goodwill and other intangible assets...................         2,919             8,039          52,068
Amortization of partner advances.......................................            --                --           2,304
Non-cash compensation..................................................            --                --             479
Non-cash interest......................................................           184             1,830           1,030
Provision for doubtful accounts........................................             1             2,596           7,224
Provision for restructuring and impairments............................         1,478             2,320          25,337
Extraordinary gain.....................................................            --                --            (782)
Gain on debt restructuring and settlements.............................       (54,078)           (6,558)        (47,960)
Issuance of shares as matching contributions to employee
   benefit plans.......................................................           492               437             441
Other amortization charges.............................................            65               208           1,076
Write-off of fixed assets..............................................           119               204             956
(Gain) loss on sale of businesses......................................            --              (426)          1,804
Impairments of goodwill................................................            --            78,784          62,200
Impairments of investments.............................................            --             1,515          10,131
Issuance of common stock for India.com preferred stock.................            --                --           6,108
Changes in operating assets and liabilities, net of effect of
acquisitions and discontinued operations:
    Accounts receivable, net...........................................           508             7,278           2,276
    Prepaid expenses and other current assets..........................           260              (210)          3,216
    Other assets.......................................................           460               (83)            375
    Accounts payable, accrued expenses and other
     current liabilities...............................................        (4,931)          (18,346)         (2,800)
                                                                              -------           -------         -------

Net cash provided by (used) in operating activities....................         7,658             2,160            (962)
                                                                              -------           -------         -------

Cash flows from investing activities:
Purchases of property and equipment, including capitalized software....        (4,214)           (3,498)         (5,267)
Proceeds from sales of businesses......................................            --               426           4,641
Proceeds from sales and maturities of marketable securities............            --                --          12,533
Purchases of intangible assets.........................................            --                --          (1,756)
Proceeds from sales of investments.....................................            --                --           1,950
Acquisitions, net of cash acquired ....................................            --                --         (15,308)
                                                                              -------           -------         -------

Net cash used in investing activities..................................        (4,214)           (3,072)         (3,207)
                                                                               ------            ------          ------

Cash flows from financing activities:
Net proceeds from issuance of Class A common stock.....................         1,000                --           8,725
Net proceeds from issuance of Class A common stock upon
    exercise of employee stock options.................................            70                --              --
Proceed from issuance of convertible notes, net........................            --                --          14,110
Payments under capital lease obligations...............................          (426)             (585)         (5,137)
Proceeds from notes payable............................................            --                --           2,441
Principal payments of notes payable....................................        (5,793)             (821)         (3,870)
Interest payments on restructured notes and capitalized interest.......          (843)             (897)             --
                                                                                ------           ------          ------
</TABLE>

                                      -50-
<PAGE>

<TABLE>
<CAPTION>

<S>                                                                            <C>               <C>             <C>
Net cash (used in) provided by financing activities....................        (5,992)           (2,303)         16,269
                                                                              -------           -------         ------

Effect of foreign exchange rate changes on cash and cash equivalents...           (27)             (209)            (34)
                                                                              -------           -------         -------

Net (decrease) increase in cash and cash equivalents...................        (2,575)           (3,424)         12,066

Cash (used in) discontinued operations.................................          (356)             (300)         (3,119)

Cash and cash equivalents at beginning of the year.....................         9,554            13,278           4,331
                                                                              -------           -------         -------
Cash and cash equivalents at the end of the year.......................        $6,623            $9,554         $13,278
                                                                              =======            ======         =======
</TABLE>

          See accompanying notes to consolidated financial statements.


Supplemental disclosure of non-cash information:

During the three years ended December 31, 2003, 2002 and 2001, the Company paid
approximately $0.7 million, $3.1 million, $6.5 million, respectively, for
interest. In addition, the Company issued 284,304, 888,810 and 294,533 shares of
Class A common stock valued at approximately $184,000, $1.8 million and
$640,000, respectively, as payment of interest in lieu of cash for the years
ended December 31, 2003, 2002 and 2001, respectively.

During the years ended December 31, 2002 and 2001, the Company issued 98,841 and
682,234 shares, respectively, of its Class A common stock valued at
approximately $524,000 and $4.4 million, respectively, in connection with
certain settlement obligations.

During the years ended December 31, 2002 and 2001, the Company issued 127,550
and 196,000 shares, respectively, of its Class A common stock valued at
approximately $182,000 and $1.2 million, respectively, in settlement of vendor
obligations.

During the year ended December 31, 2003, 2002 and 2001, respectively the Company
issued 531,545, 314,642 and 75,209 shares respectively in connection with
matching contributions to its 401K plan. These shares were valued at
approximately $492,000, $437,000 and $412,000, respectively.

Non-cash investing activities:

During the years ended December 31, 2001, the Company issued 22,222 shares of
its Class A common stock in connection with certain investments. These
transactions resulted in non-cash investing activities of $400,000. During the
year ended December 31, 2001, the Company issued 1,896,218 shares of its Class A
Common stock plus stock options in connection with certain acquisitions. These
transactions resulted in non-cash investing activities of $31.1 million. (See
Note 2).

No shares were issued in connection with non-cash investing activities during
the years ended December 31, 2003 and 2002.

Non-cash financing activities:

During the year ended December 31, 2003, the company issued 23,881,705 shares of
Class A common stock in connection with its cancellation of debt. This resulted
in non-cash financing activities of $13.57 million (See Note 7). During the year
ended December 31, 2001, the Company issued approximately 2,810,937 shares of
Class A common stock in connection with the cancellation of debt. This resulted
in non-cash financing activities of $17.1 million (See Note 7).


                                      -51-
<PAGE>


                          EasyLink Services Corporation
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002


(1)      Summary of Operations and Significant Accounting Policies

(a)      Summary of Operations

The Company offers a broad range of information exchange services to businesses
and service providers, including transaction delivery services such as
electronic data interchange or "EDI," telex, desktop fax, broadcast and
production messaging services; managed e-mail and groupware hosting services;
and services that protect corporate e-mail systems such as virus protection,
spam control and content filtering services and transaction management services
including document capture and management services such as fax to database, fax
to data and data conversion services.

Until March 30, 2001, the Company also offered advertising services and consumer
e-mail services to Web sites, ISP's and direct to consumers through its web site
www.mail.com. On October 26, 2000, the Company announced its intention to sell
its advertising network business and stated that it will focus exclusively on
its established outsourced messaging business. The Company also announced that
as a result of its decision to focus on its outsourced messaging business, it
was streamlining the organization, taking advantage of lower cost areas and
further integrating its technological and operational infrastructures. On March
30, 2001, the Company completed the sale of its advertising network and consumer
e-mail business to Net2Phone. See Note 3 for additional information.

In March 2000, EasyLink formed WORLD.com to develop the Company's extensive
portfolio of domain names into major Web properties, such as Asia.com and
India.com, which served the business-to-business and business-to-consumer
marketplace. Through its subsidiaries, WORLD.com generated revenues primarily
from sales of information technology products, system integration and website
development for other companies, advertising related sales and commissions
earned from booking travel arrangements. On November 2, 2000, the Company
announced that it would sell all assets not related to its core outsourced
messaging business, including its Asia.com Inc., and India.com Inc.
subsidiaries, and its portfolio of category-defining domain names. On May 3,
2001, Asia.com, Inc. sold its business to an investor group. In October 2001,
the Company sold 90% of a subsidiary of India.com, Inc. and the Company has
ceased conducting its portal business. Accordingly, the results of World.com and
its subsidiaries have been reflected as discontinued operations in the
consolidated financial statements for all periods presented. See Notes 1(c) and
9 for additional information.

(b) Consolidated Results of Operations and Management's Plan.

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. To date, the Company has
suffered recurring losses from operations since inception and has a working
capital deficiency that raises substantial doubt about its ability to continue
as a going concern. As shown in the accompanying consolidated financial
statements, prior to 2003, the Company incurred net losses of $85.8 million and
$206.3 million for the two years ended December 31, 2002 and 2001, respectively.
As of December 31, 2003, the Company had an accumulated deficit of $548.3
million and stockholders' equity of $4.4 million. The Company may need
additional financing to meet cash requirements for its operations. If the
Company is unable to generate sufficient cash flow or raise additional
financing, the Company may be unable to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustment
relating to the recoverability and classification of recorded asset amounts or
the amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern. Management believes the
Company's ability to continue as a going concern is dependent upon its ability
to generate sufficient cash flow to meet its obligations on a timely basis, to
obtain additional financing or refinancing as may be required, and to achieve
and maintain profitable operations. Throughout 2001, management improved the
Company's operations and liquidity through a variety of actions, including the
acquisition and integration of STI/EasyLink Services, a reduction of its
workforce, the sale or closure of all of its World.com businesses, and the sale
of its advertising network. In addition, management raised over $20 million in
cash financing during 2001. Throughout 2002 and 2003, management continued the
process of improving the Company's operations through further cost reductions to
the point that net cash of $2.2 million and $7.7 million, respectively, was
provided from operations for those years. In 2003, the Company reduced its debt
by $63.0 million, thereby reducing its interest expense from $4.8 million in
2002 to $1.4 million in 2003. Management is continuing the process of further
reducing telecommunications and network-related operating costs while increasing
its sales and marketing efforts. There can be no assurance that the Company will
be successful in these efforts.


                                      -52-
<PAGE>

(c) Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company and
its wholly-owned or majority-owned subsidiaries from the dates of acquisition.
All other investments that the Company does not have the ability to control or
exercise significant influence over are accounted for under the cost method. The
interest of shareholders other than those of EasyLink is recorded as minority
interest in the accompanying consolidated statements of operations and
consolidated balance sheets. When losses applicable to minority interest holders
in a subsidiary exceed the minority interest in the equity capital of the
subsidiary, these losses are included in the Company's results, as the minority
interest holder has no obligation to provide further financing to the
subsidiary. All significant intercompany accounts and transactions have been
eliminated in consolidation.

WORLD.com, a wholly owned subsidiary, and its majority-owned subsidiaries have
been reflected as discontinued operations and prior year amounts have been
reclassified to reflect such treatment (See Note 9). In September 2003, a
previously vacated judgment in the amount of $931,000 was reinstated against the
Company in connection with a suit against a broker engaged by the Company to
sell the portal operations of its discontinued India.com business and the
broker's counterclaim thereof. The judgment and related costs, net of reserves,
are reflected in the loss from discontinued operations in the consolidated
statement of operations for the year ended December 31, 2003.

Effective January 23, 2002, the Company authorized and implemented a 10-for-1
reverse stock split of all issued and outstanding stock. Accordingly, all issued
and outstanding share and per share amounts in the accompanying consolidated
financial statements have been retroactively restated to reflect the reverse
stock split.

(d)      Use of Estimates

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities and the
reported amounts of revenues and expenses. These estimates and assumptions
relate to the estimates of collectibility of accounts receivable, the
realization of goodwill and other intangibles, accruals and other factors.
Actual results could differ from those estimates.

(e)      Cash and Cash Equivalents

The Company considers all highly liquid securities, with original maturities of
three months or less when acquired, to be cash equivalents.

(f)      Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the related assets,
generally ranging from three to five years. Property and equipment under capital
leases are stated at the present value of minimum lease payments and are
amortized using the straight-line method over the shorter of the lease term or
the estimated useful lives of the assets. Leasehold improvements are amortized
using the straight-line method over the estimated useful lives of the assets or
the term of the lease, whichever is shorter.

(g)      Domain Assets Held For Sale and Registration Fees

A domain name is the part of an email address that comes after the @ sign (for
example, if membername@Europe.com is the email address then "Europe.com" is the
domain name). Domain assets represent the purchase of domain names and are
amortized using the straight-line method over their economic useful lives, which
had been estimated to be five years. During the first quarter of 2001, the
e-mail addresses for many of the domain names were sold to Net2Phone as part of
the sale of the advertising network (see Note 3). The net carrying value of
these assets at the time of sale was approximately $2.3 million.

All domain assets are classified as held for sale at December 31, 2003 and 2002
and are no longer being amortized. The net carrying value of domain assets
amounting to $0.2 million is included in Other Assets.

(h)      Investments

Investments in which the Company owns less than 20% of a company's stock and
does not have the ability to exercise significant influence are accounted for on
the cost basis. Such investments are stated at the lower of cost or market value
and are included in other non current assets on the balance sheet. The equity
method of accounting is used for companies and other investments in which the
Company has significant influence; generally this represents common stock
ownership of at least 20% but not more than 50%. Under the equity method, the
Company's proportionate share of each investee's operating losses is included in
loss on equity investments within the Statement of Operations. These investments
are included in other non current assets on the Balance Sheet. The Company
assesses the need to record impairment losses on investments and records such
losses when the impairment is determined to be other-than-temporary. These
losses are included in other income (expense) in the Statement of Operations.


                                      -53-
<PAGE>

(i)     Accounting for Impairment of Long-Lived and Intangible Assets

Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other
Intangible Assets" and SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Asset". SFAS 142 eliminates the amortization of goodwill and
indefinite-lived intangible assets, addresses the amortization of intangible
assets with finite lives and addresses impairment testing and recognition for
goodwill and intangible assets. SFAS No. 144 establishes a single model for the
impairment of long-lived assets. The Company assesses goodwill and
indefinite-lived intangible assets for impairment annually unless events occur
that require more frequent reviews. Long-lived assets, including amortizable
intangibles, are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Discounted cash flow analyses are used to assess indefinite-lived
intangible asset impairment while undiscounted cash flow analyses are used to
assess finite lived intangibles and other long-lived asset impairment. If an
assessment indicates impairment, the impaired asset is written down to its fair
market value based on the best information available. Estimated fair market
value is generally measured with discounted estimated future cash flows.
Considerable management judgment is necessary to estimate undiscounted and
discounted future cash flows. Assumptions used for these cash flows are
consistent with internal forecasts. On an on-going basis, management reviews the
value and period of amortization or depreciation of long-lived assets, including
goodwill and other intangible assets. During this review, we reevaluate the
significant assumptions used in determining the original cost of long-lived
assets. Although the assumptions may vary from transaction to transaction, they
generally include revenue growth, operating results, cash flows and other
indicators of value. Management then determines whether there has been an
impairment of the value of long-lived assets based upon events or circumstances,
which have occurred since acquisition. The impairment policy is consistently
applied in evaluating impairment for each of the Company's wholly owned
subsidiaries and investments.

(j)      Intangible Assets

Intangible assets include goodwill, trademarks, customer lists, technology and
other intangibles. Goodwill represents the excess of the purchase price of
acquired businesses over the estimated fair value of the tangible and
identifiable intangible net assets acquired. In 2001, goodwill amortization was
recorded using the straight-line method over periods ranging from three to ten
years. Effective January 1, 2002, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 142 Goodwill & Other
Intangible Assets, which ceases goodwill amortization and requires an annual
assessment of goodwill for impairment in the absence of an indicator of possible
impairment. Trademarks and customer lists are being amortized on a straight-line
basis over ten years. Technology is being amortized on a straight-line basis
over its estimated useful lives from three to five years. See note 6.

(k)      Income Taxes

Income taxes are accounted for under the asset and liability method. Under this
method, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in results of operations in the period that
the tax change occurs. Valuation allowances are established, when necessary, to
reduce deferred tax assets to the amount expected to be realized.

(l)      Revenue Recognition

The Company's business messaging services include message delivery services such
as electronic data interchange or "EDI," telex, desktop fax, broadcast and
production messaging services; managed e-mail and groupware hosting services;
services that help protect corporate e-mail systems such as virus protection,
spam control and content filtering services, and professional messaging services
and support. The Company derives revenues from monthly fees and usage-based
charges for our message delivery services; from monthly per-user or per-message
fees for managed e-mail and groupware hosting and virus protection, spam control
and content filtering services; from license fees for desktop fax; and from
consulting fees for our professional services. Revenue from e-mail and groupware
hosting services, virus protection, spam control and content filtering services,
message delivery services and from professional services are recognized as
services are performed. Facsimile license revenue is recognized over the average
estimated customer life of 3 years.


                                      -54-
<PAGE>

Prior to the sale of the Advertising Network Business on March 30, 2001 (see
Note 3), advertising revenues were derived principally from the sale of banner
advertisements. Revenue on banner advertisements was recognized ratably as the
advertisements or respective impressions were delivered either on a "cost per
thousand" or "cost per action" basis. Revenue on upfront placement fees and
promotions was deferred and recognized over the term of the corresponding
agreement. The Company also traded advertisements on its Web properties in
exchange for advertisements on the Internet sites of other companies as part of
the ad network business. Barter revenues and expenses were recorded at the fair
market value of services provided or received; whichever is more determinable in
the circumstances. For the year ended December 31, 2001, barter revenues, which
are a component of advertising revenue, amounted to $0.6 million and barter
expenses, which are a component of cost of revenues, were approximately the same
$0.6 million .

Other revenues includes revenues from (i) the sale of domain names, which are
recognized at the time when the ownership of the domain name is transferred
provided that no significant Company obligation remains and collection of the
resulting receivable is probable and (ii) the licensing of domain names wherein
revenue is recognized ratably over the license period. To date, such revenues
have not been material.

(m)      Product Development Costs

Product development costs consist primarily of personnel and consultants' time
and expense to research, conceptualize, and test product launches and
enhancements to each of the Company's services. Such costs are expensed as
incurred.

(n)      Sales and Marketing Costs

The primary component of sales and marketing expenses are salaries and
commissions for sales, marketing, and business development personnel. The
Company expenses the cost of advertising and promoting its services as incurred.

(o)      Financial Instruments and Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist of cash, cash equivalents, accounts
receivable, notes payable and convertible notes payable. At December 31, 2003
and 2002, the fair value of cash, cash equivalents, restricted investments,
marketable securities and accounts receivable approximated their financial
statement carrying amount because of the short-term maturity of these
instruments. The recorded values of notes payable and convertible notes payable
approximate their fair values, as interest approximates market rates with the
exception of the Convertible Subordinated Notes payable with a carrying value of
$1.4 million. However, as these notes are payable in February 2005, management
estimates that their fair value approximates their carrying value.

Credit is extended to customers based on the evaluation of their financial
condition and collateral is not required. The Company performs ongoing credit
assessments of its customers and maintains an allowance for doubtful accounts.
No single customer exceeded 10% of either total revenues or accounts receivable
in 2003, 2002 or 2001. Revenues from the Company's five largest customers
accounted for an aggregate of 7%, 6% and 3% of the Company's total revenues in
2003, 2002 and 2001, respectively.

(p)      Stock-Based Compensation Plans

In 2003, 2002 and 2001, the Company had stock option plans, which are described
more fully in Note 13. As allowed by SFAS No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, the Company has retained the
compensation measurement principles of Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees, and its related
interpretations for stock options. SFAS No. 148 also requires more prominent and
more frequent disclosures in both interim and annual financial statements about
the method of accounting for stock-based compensation and the effect of the
method used on reporting results. The Company adopted the disclosure provisions
of SFAS No. 148 as of December 31, 2002 and continues to apply the measurement
provisions of APB 25. Under APB Opinion No. 25, compensation expense is
recognized based upon the difference, if any, at the measurement date between
the market value of the stock and the option exercise price. The measurement
date is the date at which both the number of options and the exercise price for
each option are known. The following table illustrates the effect on net income
(loss) and net income (loss) per share if we had applied the fair value
recognition provisions of SFAS No. 123 to stock-based employee compensation.


                                      -55-
<PAGE>
<TABLE>
<CAPTION>

($ in thousands, except per share amounts)                                            For the year ended December 31,
                                                                                      -------------------------------

                                                                              2003                 2002                2001
                                                                              ----                 ----                ----

<S>                                                                         <C>                  <C>                <C>

Net income (loss):
Income (loss) from continuing operations, as reported..............         $51,886              $(85,845)          $(144,038)
Deduct total stock based employee compensation expense
determined under the fair value method for all awards,
net of tax.........................................................          (8,394)               (9,343)             (7,610)
                                                                             -------               -------             -------

Pro forma income (loss) from continuing operations.................         $43,492              $(95,188)          $(151,648)

Loss from discontinued operations..................................           $(938)                   --            $(63,027)

Extraordinary gain.................................................              --                    --                 782
                                                                            -------              --------                 ---

Proforma net income (loss).........................................         $42,554              $(95,188)          $(213,893)
                                                                            =======              =========          ==========

Basic net income (loss) per share:
Income (loss) from continuing operations as reported...............           $1.47               $(5.13)             $(15.26)
Deduct total stock based employee compensation
expense determined under the fair value method for
all awards, net of tax.............................................          $(0.24)              $(0.56)              $(0.81)
                                                                             -------              -------              -------

Pro forma income (loss) from continuing operations.................           $1.23               $(5.69)             $(16.07)
Loss from discontinued operations..................................          $(0.03)                   --              $(6.68)

Extraordinary gain.................................................              --                    --               $0.08
                                                                              -----               -------               -----

Proforma basic net income (loss)...................................           $1.20               $(5.69)             (22.66)
                                                                              =====               =======             =======

Diluted net income (loss) per share:
Income (loss) from continuing operations as reported...............           $1.46               $(5.13)             $(15.26)
Deduct total stock based employee compensation
Expense determined under the fair value method for
all awards, net of tax.............................................          $(0.24)              $(0.56)              $(0.81)
                                                                             -------              -------             --------

Pro forma income (loss) from continuing operations.................           $1.22               $(5.69)              $16.07)
Loss from discontinued operations..................................          $(0.03)                  --               $(6.68)

Extraordinary gain.................................................              --                   --                $0.09
                                                                              -----               ------              --------
Proforma diluted net income (loss).................................           $1.19               $(5.69)             $(22.65)
                                                                              =====               =======             ========
</TABLE>


The resulting effect on the pro forma net loss disclosed for the years ended
December 31, 2003, 2002 and 2001 is not likely to be representative of the
effects of the net loss on a pro forma basis in future years, because the pro
forma results include the impact of three, four and five years, respectively, of
grants and related vesting of option prices ranging from $0.53 per share to
$294.80 per share. Subsequent years will include additional grants at the then
current stock prices and vesting. For purposes of pro-forma disclosure, the
estimated fair value of the options is amortized to expense over the options'
vesting period.

The fair value of each option grant is estimated on the date of grant using the
Black Scholes method option-pricing model with the following assumptions used
for grants made in 2003: dividend yield of zero (0%) percent, average risk-free
rate interest rate of 3.0%, expected life of 5 years and volatility of 135%,
2002: dividend yield of zero (0%) percent, average risk-free interest rate of
4.1%, expected life of 5 years and volatility of 136%, 2001: dividend yield of
zero (0%) percent, average risk-free interest rate of 4.4%, expected life of 5
years and volatility of 115%.


                                      -56-
<PAGE>

(q)      Basic and Diluted Net Income (Loss) Per Share

Net income (loss) per share is presented in accordance with the provisions of
SFAS No. 128, "Earnings Per Share", and the Securities and Exchange Commission
Staff Accounting Bulletin No. 98. Under SFAS No. 128, basic Earnings per Share
("EPS") excludes dilution for common stock equivalents and is computed by
dividing income or loss available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock and resulted in the
issuance of common stock. Diluted net loss per share is equal to basic loss per
share since all common stock equivalents are anti-dilutive for each of the
periods presented.

Diluted net income per common share for the year ended December 31, 2003
includes the effect of employee options to purchase 251,527 shares of common
stock.

Diluted net income (loss) per common share for the years ended December 31,
2003, 2002 and 2001, does not include the effects of employee options to
purchase 1,429,516, 2,773,446 and 1,855,781 shares of common stock,
respectively, and 798,523, 1,843,982, and 1,843,982 common stock warrants,
respectively, as their inclusion would be antidilutive. Similarly, the
computation of diluted net loss per share for 2002 excludes the effect of shares
issuable upon the conversion of any outstanding Convertible Notes at December
31, 2002.

(r)      Computer Software

Capitalized computer software is recorded in accordance with the American
Institute of Certified Public Accountants Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" and is depreciated using the straight-line method over the
estimated useful life of the software, generally 3 years. SOP 98-1 provides
guidance for determining whether computer software is internal-use software and
guidance on accounting for the proceeds of computer software originally
developed or obtained for internal use and then subsequently sold to the public.
It also provides guidance on capitalization of the costs incurred for computer
software developed or obtained for internal use.

(s)      Recent Accounting Pronouncements

In June 2001, Statement of Financial Accounting Standards No. 143, "Accounting
for Asset Retirement Obligations" ("Statement 143") was issued. Statement 143
addresses financial accounting and reporting for legal obligations associated
with the retirement of tangible long-lived assets and the associated retirement
costs that result from the acquisition, construction, or development and normal
operation of a long-lived asset. Upon initial recognition of a liability for an
asset retirement obligation, Statement 143 requires an increase in the carrying
amount of the related long-lived asset. The asset retirement cost is
subsequently allocated to expense using a systematic and rational method over
the asset's useful life. Statement 143 is effective for fiscal years beginning
after June 15, 2002. The adoption of this statement did not have a material
impact on the Company's financial position or results of operations.

In April 2002, Statement of Financial Accounting Standards No. 145, "Rescission
of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("Statement 145") was issued. FASB Statement No. 4
required all gains and losses from the extinguishment of debt to be reported as
extraordinary items and Statement No. 64 related to the same matter. Statement
145 requires gains and losses from certain debt extinguishment to not be
reported as extraordinary items when they meet the definitions of APB 30.
Statement 145 also amends Statement No. 13 requiring sale-leaseback accounting
for certain lease modifications. Statement 145 is effective for fiscal years
beginning after May 15, 2002. The provisions relating to sale-leaseback are
effective for transactions after May 15, 2002. The Company adopted Statement 145
effective July 1, 2002. The adoption of this Statement resulted in gains and
losses from debt restructuring and extinguishments of debt that were previously
recorded as extraordinary being reclassified as operating activities. The
following sets forth the impact of the reclassifications on the income (loss)
from continuing operations and income (loss) per share from continuing
operations:


                                      -57-
<PAGE>

<TABLE>
<CAPTION>

                                                                                             For the year ended December 31,
                                                                                        2003             2002              2001
                                                                                        ----             ----              ----

<S>                                                                                   <C>           <C>              <C>
Income (loss) from continuing operations - pre FAS 145.....................            $51,886       $(85,845)        $(191,145)
Extraordinary gain reclassified to Gain on
debt restructuring and supplements.........................................                 --              --            47,960
Extraordinary loss reclassified to operating expenses......................                 --              --             (853)
                                                                                       -------         -------        ----------
Income (loss) from continuing operations - post FAS 145....................            $51,886       $(85,845)        $(144,038)

Income (loss) per share from continuing operations - pre FAS 145...........              $1.47         $(5.13)          $(20.24)
Income (loss) per share from continuing operations - post FAS 145..........              $1.47         $(5.13)          $(15.26)
Change in income (loss) per share on continuing operations.................              $  --          $  --             $4.98
</TABLE>

In July 2002, Statement of Financial Accounting Standards No. 146, "Accounting
for Costs Associated with Exit or Disposal Activities" ("Statement 146") was
issued. This Statement addresses financial accounting and reporting for costs
associated with exit or disposal activities and nullifies Emerging Issues Task
Force Issue ("EITF") 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The principal difference between Statement
146 and EITF 94-3 relates to the timing of liability recognition. Under
Statement 146, a liability for a cost associated with an exit or disposal
activity is recognized when the liability is incurred. Under EITF 94-3, a
liability for an exit cost was recognized at the date of an entity's commitment
to an exit plan. The provisions of Statement 146 are effective for exit or
disposal activities that are initiated after December 31, 2002. The adoption of
this statement did not have a material impact on the Company's financial
position or results of operations.


In November 2002, the FASB issued FIN 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others." FIN 45 elaborates on the existing disclosure requirements for most
guarantees, including residual value guarantees issued in conjunction with
operating lease agreements. It also clarifies that at the time a company issues
a guarantee the company must recognize an initial liability for the fair value
of the obligation it assumes under that guarantee and must disclose that
information in its interim and annual financial statements. The initial
recognition and measurement provisions apply on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements are effective for financial statements or interim or annual periods
ending after December 15, 2002. The adoption of FIN 45 did not have a
significant impact on the Company's financial position and results of
operations.

In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities", and amended the interpretation
with FIN 46(R) in December 2003. This interpretation and its amendment set forth
a requirement for an investor with a majority of the variable interests in a
variable interest entity ("VIE") to consolidate the entity and also requires
majority and significant variable interest investors to provide certain
disclosures. A VIE is an entity in which the equity investors do not have a
controlling interest, or the equity investment at risk is insufficient to
finance the entity's activities without receiving additional subordinated
financial support from the other parties. The provisions of FIN 46 were
effective immediately for all arrangements entered into with new VIEs created
after January 31, 2003. The Company has not entered into any arrangements with
VIEs after January 31, 2003. For arrangements entered into with VIEs created
prior to January 31, 2003, the provisions of FIN 46 have been delayed to the
first interim or annual period beginning after December 15, 2003. The Company
has evaluated the impact of adoption of FIN 46(R) for its arrangements created
before January 31, 2003. The adoption of this standard is not expected to impact
the Company's financial statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of SFAS No. 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS
No. 133. In particular, this Statement clarifies under what circumstances a
contract with an initial net investment meets the characteristic of a
derivative. It also clarifies when a derivative contains a financing component
that warrants special reporting in the statement of cash flows. SFAS No. 149 is
generally effective for contracts entered into or modified after June 30, 2003
and is not expected to have a material impact on the Company's financial
statements.

In May 2003, the FASB issued Statement of Financial Accounting Standard No. 150
("SFAS 150"), "Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity", which establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. The provisions of SFAS 150 are effective
immediately for all instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. The adoption of this standard did not have an effect on the
Company's financial statements.


                                      -58-
<PAGE>

(t)      Foreign Currency

The functional currencies of the Company's foreign subsidiaries are their
respective local currencies. The financial statements are maintained in local
currencies and are translated to United States dollars using period-end rates of
exchange for assets and liabilities and average rates during the period for
revenues, cost of revenues and expenses. Translation gains and losses are
included in accumulated other comprehensive loss as a separate component of
stockholders' equity (deficit). Gains and losses from foreign currency
transactions are included in consolidated statements of operations and were not
significant.

(u) Certain 2002 amounts have been reclassified in the consolidated financial
statements to conform to the 2003 presentation.

(2)      Acquisitions

GN Comtext

During July 2001, the Company acquired the assets of GN Comtext ("GN") for $1.
Additionally, the Company received a $1.1 million unsecured interest free loan
from the former parent company of GN, GN Store Nord A/S and received
approximately $175,000 for transition services which were recorded as a
reimbursement of costs during the third quarter of 2001 and has collected and
retained a percentage of certain accounts receivable collected on behalf of GN.
This loan was paid in December 2001. GN offers value-added messaging services to
over 3,000 customers ranging from small business to multi-national companies
around the world. The excess of fair market value of the assets acquired and the
liabilities assumed over the purchase price resulted in negative goodwill of
$782,000 which was recognized as an extraordinary gain during the quarter ended
September 30, 2001 in accordance with the provisions of FASB Statement No. 141,
"Business Combinations."

Swift Telecommunications, Inc. And Easylink Services

On January 31, 2001, the Company and Swift Telecommunications, Inc. ("STI"), a
New York corporation, entered into an Agreement and Plan of Merger ("Merger
Agreement"). On February 23, 2001, the Company completed the acquisition of STI.
On January 31, 2001, and concurrent with the execution and delivery of the
Merger Agreement, STI acquired from AT&T Corp. its EasyLink Services business
("EasyLink Services"). On April 2, 2001, Mail.com changed its name to EasyLink
Services Corporation (formerly Mail.com, Inc., the "Company" or "EasyLink").

STI together with its newly acquired EasyLink Services business is a global
provider of transaction delivery services such as electronic data interchange,
e-mail, fax and telex.

At the closing of the acquisition by STI of the EasyLink Services business from
AT&T, the Company advanced $14 million to STI in the form of a loan, the
proceeds of which were used to fund part of the $15 million cash portion of the
purchase price to AT&T. Upon the closing of the acquisition of STI, the Company
assumed a $35 million note issued by STI to AT&T. The $35 million note was
secured by the assets of STI, including the EasyLink Services business, and the
shares of EasyLink Class A common stock issued to the former sole shareholder of
STI (who became an officer and director of the Company). The AT&T note was
payable in equal monthly installments over four years, bearing interest at the
rate of 10% per annum for the first six months of the note. Thereafter the rate
was to be adjusted every six months equal to 1% plus the prime rate as listed in
the Wall Street Journal on such date of adjustment. See Note 7 for a description
of the restructuring of this obligation in 2001 and a subsequent amendment and
restatement in 2003.

Upon the closing of the acquisition of STI, the Company paid to the former sole
shareholder (who became an officer and director of the Company) of STI $835,000
in cash and issued an unsecured note for $9.2 million and 1,876,618 shares of
EasyLink Class A common stock, valued at $30.8 million, as consideration for the
acquisition of STI. The value of the common stock issued to STI was based on the
average market price of EasyLink's common stock, as quoted on the Nasdaq
national market, for the two days immediately prior to, the day of, and the two
days immediately after the announcement of the transaction on February 8, 2001.
The $9,188,000 note was payable in four equal semi-annual installments over two
years. See Note 7 for a description of the subsequent exchange of this Note
payable in 2001 and other subsequent transactions in 2003.

The cash portion of the merger consideration and the reimbursement of payments
made by the sole shareholder of STI were funded out of EasyLink's available cash
and from the proceeds received by the Company on January 8, 2001 from the
issuance of $10.3 million of 10% Senior Convertible Notes due January 8, 2006.

The Company allocated a portion of the purchase price to the fair market value
of the acquired assets and liabilities assumed of STI and the EasyLink Services
business. The excess of the purchase price over the fair market value of the
acquired assets and liabilities assumed of STI and the EasyLink Services
business was allocated to goodwill ($24 million), assembled workforce ($3
million), technology ($11 million), trademarks ($16 million) and customer lists
($11 million). The purchase price that was allocated was based upon the final
outcome of the valuation and appraisals of the fair value of the acquired assets
and assumed liabilities at the date of acquisition, as well as the
identification and valuation of certain intangible assets such as customer
lists, in-place workforce, technology and trademarks, etc. The fair value of the
technology, assembled workforce, trademarks, customer lists and goodwill was
determined by management using the excess earnings method, a risk-adjusted cost
approach and the residual method, respectively. Amortization expense for the
year ended December 31, 2001 was approximately $7 million.


                                      -59-
<PAGE>

The consideration paid by EasyLink was determined as a result of negotiations
between EasyLink and STI.

During January 2001, STI purchased the real time fax business from Xpedite
Systems, Inc. located in Singapore and Malaysia (these two subsidiaries conduct
business under the name "Xtreme") for approximately $500,000 in cash.

In connection with the acquisition of STI, the Company entered into a
conditional commitment to acquire Telecom International, Inc. ("TII"), which
immediately prior to the acquisition of STI was an affiliate of the former sole
shareholder of STI. The purchase price for TII was originally negotiated at
$117,646 in cash, a promissory note in the aggregate principal amount of
approximately $1,294,000 and 267,059 shares of the Company's Class A common
stock. In order to facilitate the Company's proposed debt restructuring and to
reduce the Company's debt obligations and cash commitments, the former sole
shareholder of STI and the Company agreed to modify the Company's commitments in
respect of TII. In lieu of acquiring TII, the Company purchased certain assets
owned by TII and assumed certain liabilities. As consideration, the Company
issued 300,000 shares of Class A common stock valued at $1.9 million as the
purchase price. As a result of this transaction, the Company recorded a loss on
the extinguishment of this commitment of $2.4 million.

As part of the transaction with STI, the Company also entered into a conditional
commitment to acquire the 25% minority interests in two STI subsidiaries for
$47,059 in cash, promissory notes in the aggregate principal amount of
approximately $517,647 and 106,826 shares of Class A common stock. This
transaction is subject to certain conditions, including satisfactory completion
of due diligence, receipt of regulatory approvals and other customary
conditions.

 (3)      Sale of Businesses

On September 20, 2002, the Company sold its customer contracts related to its
email hosting service ("NIMS") line to Call Sciences, Inc. Call Sciences paid
$300,000 in cash upon closing. In connection with the sale, the parties entered
into a transition services agreement whereby the Company would receive payments
for services rendered during the 2 month period following the close. As a result
of the sale, the Company transferred the customer contracts and recorded a gain
on the sale of NIMS of $300,000. In October 2002, the Company sold for $126,000
a software and consulting business in England that was previously acquired in
the GN Context acquisition. The full purchase price was recorded as a gain as
the net book value of assets transferred was zero.

On March 30, 2001, the Company sold its advertising network to Net2Phone, Inc.
for $3 million in cash. The Company received an additional $500,000 in April
2001 based upon the achievement of certain milestones. In connection with the
sale, the parties entered into a hosting agreement whereby the Company would
receive payments for hosting the consumer mailboxes for a minimum of one year.
As a result of the sale, the Company transferred net assets, including certain
domain names and partner agreements, and liabilities related to the advertising
network to Net2Phone, and recorded a loss on the sale of the advertising network
of $1.8 million during the first quarter of 2001. During the second quarter of
2001, the Company completed the migration of the hosting of these consumer
mailboxes to a third party provider. The hosting agreement was terminated as of
September 30, 2001.

 (4)      Balance Sheet Components

Property and equipment, net of accumulated depreciation and amortization, are
stated at cost or allocated fair value and are summarized as follows, in
thousands:


                                      -60-
<PAGE>

<TABLE>
<CAPTION>

                                                                                            December 31,

                                                                                       2003             2002
                                                                                       ----             ----

<S>                                                                                  <C>              <C>
              Computer equipment and software                                        $40,878          38,882
              Furniture and fixtures..........................................         1,589           1,081
              Web development.................................................           181             181
              Leasehold improvements..........................................         2,187             814
                                                                                       -----             ---

                  Subtotal....................................................        44,835          40,958
              Less accumulated depreciation and amortization                          34,194          26,125
                                                                                      ------          ------

              Property and equipment, net....................................        $10,641         $14,833
                                                                                     =======         =======
</TABLE>

<TABLE>
<CAPTION>

Domain assets held for sale consist of the following, in thousands:
                                                                                           December 31,

                                                                                       2003             2002
                                                                                       ----             ----

<S>                                                                                   <C>             <C>
              Domain names....................................................        $2,424          $2,424
              Less accumulated amortization...................................         2,210           2,210
                                                                                       -----           -----

              Domain assets, net..............................................          $214            $214
                                                                                        ====            ====
</TABLE>

<TABLE>
<CAPTION>

Accrued expenses consist of the following, in thousands:
                                                                                           December 31,

                                                                                       2003             2002
                                                                                       ----             ----

<S>                                                                                   <C>             <C>
              Carrier charges.................................................        $5,507          $7,020
              Payroll and related costs.......................................         2,532           3,072
              Sales/Use/VAT taxes payable.....................................         1,792           1,902
              Professional services, consulting fees and
              sales agents' commissions.......................................         1,295           1,649
              Interest........................................................           233           2,038
              Software and hardware maintenance...............................           168             551
              Other...........................................................         2,809           4,621
                                                                                       -----           -----

              Total...........................................................       $14,336         $20,853
                                                                                     =======         =======
</TABLE>


(5)      Investments

The Company assesses the need to record impairment losses on investments and
records such losses when the impairment of an investment is determined to be
other-than-temporary.

On July 25, 2000, EasyLink entered into a strategic relationship with
BulletN.net, Inc. The investment has been accounted for under the cost method of
accounting, as EasyLink owns less than 20% of the outstanding stock of
BulletN.net. As part of this agreement BulletN.net issued 666,667 shares of its
common stock and a warrant to purchase up to an additional 666,667 shares at
$3.75 per share to EasyLink in exchange for 36,443 shares of EasyLink Class A
common stock valued at approximately $3.1 million. The Company concluded that
the carrying value of this cost-based investment was permanently impaired based
on the inability to achieve business plan objectives and milestones and the fair
value of the investment relative to its carrying value. During 2002 and 2001,
the Company recorded impairment charges of $0.5 million and $2.6 million,
respectively, due to other-than-temporary declines in the value of this
investment. Such amounts are included in impairment of investments within other
income (expense) in the statement of operations. On March 1, 2001, in
consideration of the exchange and cancellation of the 666,667 warrants and the
waiver of certain anti-dilution rights, the Company received a new warrant to
purchase 266,667 shares of BulletN.net common stock at $1 per share.


                                      -61-
<PAGE>

During 1999, the Company acquired an equity interest in 3Cube, Inc. ("3Cube"),
which was accounted for under the cost method. During the first quarter of 2001,
the Company recorded an impariment charge related to its investment in 3Cube of
$59,000 reducing the carrying value to $2 million, representing the value the
Company received in August 2001 upon the liquidation of its investment.

On April 17, 2000, in exchange for $500,000 in cash, the Company acquired
certain source code technologies, trademarks and related contracts relating to
the InTandem collaboration product ("InTandem") from IntraACTIVE, Inc., a
Delaware corporation (now named Bantu, Inc., "Bantu"). On the same date, the
Company also paid Bantu an upfront fee of $500,000 for further development and
support of the InTandem product. On the same date, pursuant to a Common Stock
Purchase Agreement, the Company acquired shares of common stock of Bantu
representing approximately 4.6% of Bantu's outstanding capital stock in exchange
for $1 million in cash and 46,296 shares of its Class A common stock, valued at
approximately $3.6 million. Pursuant to the Common Stock Purchase Agreement, the
Company also agreed to invest up to an additional $8 million in the form of
shares of its Class A common stock in Bantu in three separate increments of $4
million, $2 million and $2 million, respectively, based upon the achievement of
certain milestones in exchange for additional shares of Bantu common stock
representing 3.7%, 1.85% and 1.85%, respectively, of the outstanding common
stock of Bantu as of April 17, 2000. The number of shares of the Company's Class
A common stock issuable at each closing will be based on the greater of $90 per
share and the average of the closing prices of the Company's Class A common
stock over the five trading days prior to such closing date. In July 2000, the
Company issued an additional 9,259 shares of its Class A common stock valued at
approximately $590,000 to Bantu in accordance with a true-up provision in the
Common Stock Purchase Agreement. In September 2000, the Company issued an
additional 44,444 shares of its Class A common stock valued at approximately
$2.9 million as payment for the achievement of a milestone indicated above. In
January 2001, the Company issued an additional 22,222 shares of its Class A
common stock valued at approximately $285,000 as payment for the achieved
milestone indicated above. The Company accounts for this investment under the
cost method. During 2002 and 2001, management made assessments of the carrying
value of its investment, based upon incremental investments made by third
parties, and determined that the carrying value of this cost-based investment
was permanently impaired as it was in excess of its estimated fair value.
Accordingly, EasyLink wrote down the value of its investment in Bantu by $1.0
million and $7.3 million in 2002 and 2001, respectively, as it determined that
the decline in its value was other-than-temporary.

On June 30, 2000, the Company received 35,714 shares of common stock of
Onview.com valued at $125,000 as payment for the Company's advertising services.
During the second quarter of 2001, the Company determined that the value of this
investment had become permanently impaired and recorded an impairment charge of
$125,000.

On July 25, 2000, the Company issued 10,222 shares of its Class A common stock
valued at approximately $872,000 as an investment in Madison Avenue Technology
Group, Inc. (CheetahMail). The investment has been accounted for under the cost
method of accounting as the Company owns less than 20% of the outstanding stock
of CheetahMail. In consideration thereof, the Company received 750,000 shares of
Series B convertible preferred stock and a warrant to purchase 75,000 shares of
common stock of CheetahMail. The Company transferred these shares of preferred
stock and warrants to Net2Phone pursuant to the sale of the Company's
Advertising Network.

As of December 31, 2002, all of the Company's investments were written down to
minimal amounts due to other than temporary declines in the value of its
investments.


                                      -62-
<PAGE>

(6)      Goodwill and Intangible Assets

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141"),
and No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 141
requires that the purchase method of accounting be used for all business
combinations initiated or consummated after June 30, 2001. Statement 141 also
specifies criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, noting
that any purchase price allocable to an assembled workforce may not be accounted
for separately. SFAS 142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of Statement 142.
Statement 142 also requires that intangible assets with finite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" ("SFAS 144").

The Company adopted the provisions of SFAS 141 immediately and SFAS 142
effective January 1, 2002. Furthermore, any goodwill and any intangible asset
determined to have an indefinite useful life that are acquired in a purchase
business combination completed after June 30, 2001 were not amortized, and
continued to be evaluated for impairment in accordance with the appropriate
pre-SFAS 142 accounting literature until December 31, 2001. Goodwill and
intangible assets acquired in business combinations completed before July 1,
2001 were amortized prior to the adoption of SFAS 142.

SFAS 141 required, upon adoption of SFAS 142, that the Company evaluate its
existing intangible assets and goodwill that were acquired in a prior purchase
business combination, and to make any necessary reclassifications in order to
conform with the new criteria in SFAS 141 for recognition apart from goodwill.
Upon adoption of SFAS 142, the Company was required to reassess the useful lives
and residual values of all intangible assets acquired in purchase business
combinations, and make any necessary amortization period adjustments by the end
of the first interim period after adoption. In addition, to the extent an
intangible asset was identified as having an indefinite useful life, the Company
was required to test the intangible asset for impairment in accordance with the
provisions of SFAS 142 within the first interim period. Any impairment loss was
measured as of the date of adoption and recognized as the cumulative effect of a
change in accounting principle in the first interim period of 2002.

In connection with the transitional goodwill impairment evaluation, SFAS 142
required the Company to perform an assessment of whether there was an indication
that goodwill was impaired as of the date of adoption. To accomplish this the
Company identified its reporting units and determined the carrying value of
each reporting unit by assigning the assets and liabilities, including the
existing goodwill and intangible assets, to those reporting units as of the date
of adoption. To the extent a reporting unit's carrying amount exceeds
its fair value, an indication existed that the reporting unit's goodwill may be
impaired and the Company must perform the second step of the transitional
impairment test. In the second step, the Company must compare the implied fair
value of the reporting unit's goodwill, determined by allocating the reporting
unit's fair value to all of it assets (recognized and unrecognized) and
liabilities in a manner similar to a purchase price allocation in accordance
with SFAS 141, to its carrying amount, both of which were measured as of the
date of adoption. This second step was required to be completed as soon as
possible, but no later than the end of the year of adoption. Any transitional
impairment loss would have been recognized as the cumulative effect of a change
in accounting principle in the Company's statement of operations.

As of January 1, 2002, the date of adoption, the Company had unamortized
goodwill in the amount of $68.8 million, which was subject to the transition
provisions of SFAS 142. Amortization expense related to goodwill of continuing
operations was $40.4 million for the year ended December 31, 2001. During the
quarter ended June 30, 2002, the Company completed its assessment with the
assistance of an independent appraiser and determined that there was no
impairment as of January 1, 2002. During the quarter ended December 31, 2002,
the Company completed a new assessment with the assistance of an independent
appraiser and determined that there was an impairment. Accordingly, a fair value
analysis was performed on the Company's goodwill, intangible assets and other
long lived assets which resulted in an aggregate impairment charge of $78.8
million, allocated as follows: $7.5 million tradename, $7.6 million customer
base, $1.1 million technology, and $62.6 million goodwill.

During 2002, economic and market conditions led to forecasts with lower growth
rates and a significantly lower market value of the Company. The methodology
used to determine the business enterprise of the Company was the income
approach, a discounted cash flow valuation method. The discount rate was
determined by using a weighted average cost of capital analysis which was
developed using a capital structure which reflects the representative historical
mix of debt and equity of a group of guideline companies in this business.
Assumptions for normal working capital levels and taxes were also incorporated
in the analysis. The value of the tradename and developed technology was based
on the relief-from-royalty method. This determines the value by quantifying the
cost savings a company enjoys by owning, as opposed to licensing, the intangible
asset. The value of the Company's customer base was also determined through an
income approach.

During the quarter ended December 31, 2003, the Company completed its 2003
assessment of its goodwill and indefinite-lived intangible assets with the
assistance of an independent appraiser and determined that there was no further
impairment of these assets. The evaluation employed the same methodology as that
used in the 2002 evaluation.


                                      -63-
<PAGE>

In 2001, in accordance with the Company's policy of continually evaluating the
carrying value of its long-lived assets, the Company determined that the
carrying values of certain of its assets required adjustments. Accordingly,
impairment charges of $60.0 million related to goodwill associated with the
Company's 2000 acquisition of NetMoves Corporation and $2.2 million related
to other acquisitions in 2000 and 1999 were recorded.

The following unaudited pro forma disclosure presents the adoption of Statement
142 as if it had occurred at the beginning of all periods presented:

<TABLE>
<CAPTION>

                                                                                                Year Ended December 31,

(In thousands, except per share amounts)                                                2003             2002              2001
                                                                                        ----             ----              ----

<S>                                                                                   <C>            <C>              <C>
Income(loss) from continuing operations
  attributable to discontinued operations..............................               $51,886        $(85,845)        $(144,038)
Add back: Goodwill amortization........................................                    --               --            40,376
Adjusted income(loss) from continuing operations.......................                51,886         (85,845)         (103,662)
Loss from discontinued operations......................................                 (938)               --          (63,027)
Add back: Goodwill amortization
  attributable to discontinued operations..............................                    --               --             3,851
Adjusted loss from discontinued operations.............................                 (938)               --          (59,176)
Extraordinary gain.....................................................                    --               --               782
                                                                                       ------           ------          --------

Adjusted  net income(loss).............................................               $50,948        $(85,845)        $(162,056)
                                                                                      =======        =========        ==========

Basic net income(loss) per share:
Income(loss) from continuing operations................................                 $1.47          $(5.13)          $(15.26)
Goodwill amortization from continuing operations.......................                   ---               --              4.28
                                                                                       ------           ------          --------
Adjusted income(loss) from continuing operations.......................                 $1.47          $(5.13)          $(10.98)

Loss from discontinued operations......................................               $(0.03)               --            (6.68)
Goodwill amortization from discontinued operations.....................                    --               --              0.41
                                                                                      -------           ------          --------
Adjusted loss from discontinued operations.............................               $(0.03)               --            (6.27)

Extraordinary gain.....................................................                    --               --              0.08
                                                                                       ------           ------          --------

Adjusted  net income( loss)............................................                 $1.44          $(5.13)          $(17.17)
                                                                                        =====          =======          ========

Weighted average basic shares outstanding..............................                35,402           16,733             9,442

Diluted net income(loss) per share:
Income(loss) from continuing operations................................                 $1.46          $(5.13)          $(15.26)
Goodwill amortization from continuing operations.......................                    --               --              4.28
                                                                                       ------           ------          --------
Adjusted income(loss) from continuing operations.......................                 $1.46           $5.13)          $(10.98)

Loss from discontinued operations......................................               $(0.03)               --           $(6.68)
Goodwill amortization from discontinued operations.....................                    --               --              0.41
                                                                                       ------           ------          --------
Adjusted loss from discontinued operations.............................               $(0.03)               --           $(6.27)

Extraordinary gain.....................................................                    --               --              0.09
                                                                                       ------           ------          --------

Adjusted net income(loss)..............................................                $ 1.43           $(5.13)         $ (17.17)
                                                                                       ======           =======         ========
Weighted average diluted shares outstanding............................                35,654           16,733             9,442
</TABLE>


In connection with the adoption of SFAS 142 on January 1, 2002, the Company
reclassified $3.6 million in net book value associated with assembled workforce
to goodwill. In addition, during the first quarter of 2002, goodwill was reduced
by $0.3 million as a result of a final reconciliation related to the STI
acquisition (See Note 2).

Although SFAS 142 requires disclosure of these amounts to reflect the impact of
adoption on the Company's results for the year ended December 31, 2001, had
goodwill not been amortized and been added back, the effect would have resulted
in additional impairment charges being recorded.



                                      -64-
<PAGE>

Included in the Company's balance sheet as of December 31, 2003 and 2002 are the
following (in thousands):

<TABLE>
<CAPTION>

                                                                                      As of December 31, 2003

                                                                                            Accumulated
                                                                             Gross Cost    Amortization       Net
                                                                             ----------    ------------       ---

<S>                                                                          <C>             <C>             <C>
Goodwill............................................................         $152,659        $(146,393)      $6,266
                                                                             ========        =========       ======
Trademarks..........................................................         $ 16,000        $ (10,400)      $5,600
                                                                             ========        =========       ======
Intangibles with finite lives:
Technology..........................................................         $ 16,550        $ (12,445)      $4,105
Customer lists......................................................           11,000           (9,771)       1,229
Software development and licenses...................................            4,580           (3,885)         695
                                                                             --------         --------      -------

                                                                             $ 32,130        $ (26,101)      $6,029
                                                                             ========        =========      =======
</TABLE>

<TABLE>
<CAPTION>

                                                                                      As of December 31, 2002

                                                                                            Accumulated
                                                                             Gross Cost    Amortization       Net
                                                                             ----------    ------------       ---

<S>                                                                          <C>              <C>           <C>
Goodwill...........................................................          $152,659         $(146,393)    $ 6,266
                                                                             ========         =========     =======
Trademarks                                                                   $ 16,000         $(10,400)     $ 5,600
                                                                             ========         =========     =======
Intangibles with finite lives:
Technology.........................................................          $ 16,550         $(10,550)     $ 6,000
Customer lists.....................................................            11,000           (9,600)       1,400
Software development and licenses..................................             4,580           (3,032)       1,548
                                                                             --------         --------       ------

                                                                             $ 32,130         $(23,182)      $8,948
                                                                             ========         ========       ======
</TABLE>

The Company's estimated amortization expense is $2.6 million, $2.2 million, $0.5
million, $0.2 million and $0.2 million in 2004, 2005, 2006, 2007 and 2008,
respectively. In accordance with Statement 142, the Company reassessed the
useful lives of all other intangible assets. There were no changes to such lives
and there are no expected residual values associated with these intangible
assets. Customer lists are being amortized on a straight-line basis over ten
years. Technology and software development and licenses are being amortized on a
straight-line basis over their estimated useful lives from two to five years.

(7)      Notes Payable

7% Convertible Subordinated Notes

On January 26, 2000, the Company issued $100 million of 7% Convertible
Subordinated Notes ("the Notes") with interest payable on February 1 and August
1 of each year. The Notes are convertible by holders into shares of EasyLink
Class A common stock at a conversion price of $189.50 per share (subject to
adjustment in certain events). As of December 31, 2003, the balance of the Notes
outstanding was $1.4 million as a result of the exchange transactions and debt
restructurings described below.

Senior Convertible Notes issued in Exchange for 7% Convertible Subordinated
Notes

On February 1, 2001, the Company entered into a note exchange agreement (the
"Note Exchange Agreement"). Under the terms of the agreement, EasyLink issued
$11,694,000 principal amount of a new series of 10% Senior Convertible Notes due
January 8, 2006 in exchange for the cancellation of $38,980,000 principal amount
of its 7% Convertible Subordinated Notes due February 1, 2005. The new notes
were convertible at any time at the option of the holder into Class A common
stock at an initial conversion price equal to $13.00 per share, subject to
anti-dilution adjustments.

On February 8, 2001, the Company entered into an additional note exchange
agreement. Under the terms of the agreement, EasyLink issued $4,665,000
principal amount of a new series of 10% Senior Convertible Notes due January 8,
2006 in exchange for the cancellation of $15,550,000 principal amount of its 7%
Convertible Subordinated Notes due February 1, 2005. The new notes were
convertible at any time at the option of the holder into Class A common stock at
an initial conversion price equal to $17.50 per share, subject to anti-dilution
adjustments.

On February 14, 2001, the Company entered into an additional note exchange
agreement. Under the terms of the agreement, EasyLink issued $7,481,250
principal amount of a new series of 10% Senior Convertible Notes due January 8,
2006 in exchange for the cancellation of $21,375,000 principal amount of its 7%
Convertible Subordinated Notes due February 1, 2005 (the "Subordinated Notes").
Pursuant to this note exchange agreement, on or about May 23, 2001, $2,531,250
in principal amount of these Senior Convertible Notes were exchanged for 142,071
shares of Class A common stock (the "Exchange Shares"). The new notes were
convertible at any time at the option of the holder into Class A common stock at
an initial conversion price equal to $15.00 per share, subject to anti-dilution
adjustments.


                                      -65-
<PAGE>

The Senior Convertible Notes issuable under the February 1, February 8 and
February 14 note exchange agreements (the "Exchange Notes") were unsecured,
joint and several obligations of EasyLink and its subsidiary EasyLink Services
USA, Inc (collectively, the "Companies").

The Exchange Notes accrued interest, payable semi-annually, at the rate of 10%
per annum. One half of each interest payment was payable in cash and one half
was payable in shares of EasyLink Class A common stock, par value $.01 per share
("Class A common stock"), until 18 months after the closing date of the
financing. Thereafter, one half of each interest payment was payable in shares
of Class A common stock at the option of the Companies. For purposes of
determining the number of shares issuable upon payment of interest in shares of
Class A common stock, such shares were deemed to have a value equal to the
applicable conversion price at the time of payment.

The above exchange transactions were accounted for in accordance with Financial
Accounting Standards Board Statement No. 15 ("FASB No.15"), "Accounting by
Debtors and Creditors for Troubled Debt Restructurings." As a result of these
exchanges, the Company recorded a $40.4 million gain on debt restructuring and
settlements during the first quarter of 2001.

Because the total future cash payments specified by the new terms of the
Exchange Notes, including both payments designated as interest and those
designated as face amount, were less than the carrying amount of the Notes, the
Company was required to reduce the carrying amount of the Notes, to an amount
equal to the total future cash payments specified by the new terms and
recognized a gain on exchange of payables equal to the amount of the reduction,
less the applicable deferred financing costs associated with the original $100
million 7% Convertible Subordinated Notes of $2.2 million and new financing
costs of $40,000.

In periods subsequent to the exchange transactions, all payments under the terms
of the Exchange Notes are accounted for as reductions of the carrying amount of
the Exchange Notes, and no interest expense is recognized on the Exchange Notes
for any period between the exchange dates and maturity dates of the Exchange
Notes.

As of December 31, 2003, none of the Exchange Notes was outstanding as a result
of the debt restructuring and settlement transactions described below under
"Restructuring and Settlements of Certain Debt and Lease Obligations."


Other Senior Convertible Notes

On January 8, 2001, the Company issued $10 million (subsequently increased to
$10.26 million) of 10% Senior Convertible Notes due January 8, 2006 to an
investor group. On March 19, 2001, the Company completed the issuance of $3.9
million principal amount of 10% Senior Convertible Notes due January 8, 2006
(together with the notes issued pursuant to the January 8, 2001 agreement, (the
"Notes") to certain private investors. The Notes were unsecured, joint and
several obligations of EasyLink and its subsidiary EasyLink Services USA, Inc.
(collectively, the "Companies").

The Notes accrued interest, payable semi-annually, at the rate of 10% per annum.
One half of each interest payment was payable in cash and one half was payable
in shares of EasyLink Class A common stock ("Class A common stock"), until 18
months after the closing date of the financing. Thereafter, one half of each
interest payment was payable in shares of Class A common stock at the option of
the Companies. For purposes of determining the number of shares issuable upon
payment of interest in shares of Class A common stock, such shares were deemed
to have a value equal to the applicable conversion price at the time of payment.

Each of the Notes was convertible at any time at the option of the holder into
Class A common stock at an initial conversion price equal to $10.00 per share,
subject to anti-dilution adjustments.

The net proceeds of the issuance of the $10.26 million principal amount of Notes
issued pursuant to the January 8, 2001 agreement were used to fund a portion of
the purchase price payable by Swift Telecommunications, Inc. for the acquisition
of the AT&T EasyLink Services business and for working capital and other general
corporate purposes.

In connection with the issuance of the Notes, the Company granted to the
investor group the right to designate one director to the Board of Directors for
so long as the investor group and certain other parties associated with it own a
specified number of shares of Class A common stock on a fully diluted basis (the
"Designation Agreement"). Pursuant to the Designation Agreement, the Board of
Directors appointed a director to the Board of EasyLink effective upon the
closing of the financing.


                                      -66-
<PAGE>

During the second quarter of 2001, the Company issued an aggregate of $550,000,
10% Senior Convertible Notes Due January 8, 2006 to certain vendors in exchange
for settlement of its obligations to those vendors. Terms of the notes were
similar to those notes that were issued on January 8, 2001.

As of December 31, 2003, none of the Notes was outstanding as a result of the
debt restructuring and settlement transactions described below under
"Restructuring and Settlements of Certain Debt and Lease Obligations."


Notes issued in STI/EasyLink Acquisition

In connection with the acquisition of STI, the Company assumed a $35 million
note payable to AT&T from STI and issued a $9.2 million unsecured note to the
former shareholder of STI as partial payment (see Note 2 for additional
information). AT&T subsequently entered into an agreement with the Company to
restructure the note. On November 27, 2001, the note was converted into a
package of securities consisting of a promissory note in the principal amount of
$10 million, 1 million shares of Class A common stock and warrants to purchase 1
million shares of Class A common stock at an exercise price of $6.10 per share,
subject to adjustment. The $10 million note is secured by the same security
interests that secured the original $35 million note. In the first quarter of
2003, AT&T entered into an agreement to sell the $10 million note and 1,423,980
shares of outstanding EasyLink Class A common stock held by AT&T to PTEK
Holdings, Inc ("PTEK"), one of the Company's principal competitors. Following
the announcement of the agreement, the Company commenced legal proceedings to
enjoin AT&T from selling the note and to assert claims for damages against AT&T
and PTEK. On October 20, 2003 the legal dispute was settled. Under the
settlement, the Company agreed to consent to the transfer of the shares and the
note from AT&T to PTEK in exchange for a revised amortization schedule on the
note and return of the warrant to the Company for cancellation. Under the terms
of the Amended and Restated Promissory Note payable to PTEK, the Company will
repay the $10,975,082 remaining outstanding balance of principal of and interest
on the Note as of September 1, 2003 and all future accrued interest by making
equal quarterly installment payments of principal and interest in the amount of
$800,000 and a final payment of approximately $5.75 million on the June 1, 2006
maturity date.

In November 2001, the $9.2 million note issued to the former sole shareholder of
STI was exchanged for a new note in the principal amount of $2.7 million,
268,296 shares of the Company's Class A common stock and warrants to purchase
268,296 shares of stock. In May 2003, the $2.7 million note was further
exchanged for a new note in principal amount of $284,000 payable in 12 monthly
installments with interest.

Restructuring and Settlements of Certain Debt and Lease Obligations

During the third quarter of 2001, pending the completion of the subsequent
restructuring, the Company issued $16.3 million of interim notes, bearing
interest at a rate of 12% per annum, in exchange for present and future lease
obligations in the amount of $15.1 million. These notes were cancelled upon
completion of the fourth quarter 2001 debt restructuring. This interim
transaction resulted in a loss of $1.1 million in accordance with SFAS No. 15.

On November 27, 2001, the Company completed the restructuring of approximately
$63 million of debt and lease obligations and a related financing in the amount
of approximately $10 million.

Under the terms of the debt restructuring, the Company exchanged an aggregate of
approximately $63 million of debt and equipment lease obligations for an
aggregate of approximately $20 million of restructure notes and obligations due
in installments commencing June 2003 through June 2006, 1.97 million shares of
Class A Common Stock and warrants to purchase 1.8 million shares of Class A
Common Stock. In addition, the Company purchased certain leased equipment for an
aggregate purchase price of $3.5 million.

The restructure notes accrued interest at a rate of 12% per annum and were
scheduled to mature five years from the date of the debt restructuring. The
Company was able to elect to defer payment of accrued interest on a portion of
the restructure notes until various dates commencing June 2003 and may elect to
pay accrued interest on other restructure notes in shares of Class A common
stock having a market value at the time of payment equal to 120% of the interest
payment due. $9.1 million in principal amount of the restructure notes are
convertible, at the option of the holder, into shares of Class A Common Stock of
the Company at a conversion price of $10.00 per share, subject to adjustment in
certain events. The Company was not required to make scheduled principal
payments on any of the notes until June 2003. All of the notes were callable at
any time for cash. The warrants allowed the holders to purchase shares of Class
A Common Stock of the Company at an exercise price equal to $6.10 per share. The
number of shares issuable upon exercise and the exercise price of the warrants
were subject to adjustment in certain events. The warrants were exercisable for
ten years after the date of the grant.


                                      -67-
<PAGE>

The restructure notes issued to AT&T Corp. and the former shareholder of STI
have been accounted for in accordance with Financial Accounting Standards Board
Statement No. 15, "Accounting by Debtors and Creditors for Troubled Debt
Restructurings." Because the total future cash or share payments specified by
the terms of these restructure notes, including both payments designated as
interest and those designated as principal, are less than the carrying amount of
these restructure notes, the Company was required to reduce the carrying amount
of the original notes exchanged for the restructure notes issued to AT&T and
such former STI shareholder to an amount equal to the total future cash payments
specified by the new terms. In future periods, all payments under the terms of
the restructure notes for which future interest was included in the carrying
amounts of such notes shall be accounted for as reductions of such carrying
amounts, and no interest expense shall be recognized on such notes for any
period between the respective dates of commencement of the accrual of interest
on such notes and the maturity dates of such notes.

The Company recognized a gain on the debt restructuring in the amount of $8.6
million. This gain was calculated based on the amount of the total reduction in
carrying values of the original restructure obligations as compared to the
carrying values of the restructure notes minus the amount of the contingent
share issuance obligation of $1.1 million recorded by the Company due to the
assumed payment of interest on a portion of the restructure notes in shares of
Class A common stock as described above.

$5.9 million of the financing was represented by cash proceeds from the sale of
1,468,750 shares of Class A common stock. Approximately $1.3 million of this
financing was represented by the investment of cash in exchange for senior
convertible notes that were convertible into approximately 520,000 shares of
Class A common stock, subject to adjustment in certain events. These notes are
convertible at $2.50 per share. The beneficial conversion feature of $1.1
million was being amortized over a period of 5 years. Approximately $3.0 million
of this financing was represented by the exchange of $1.4 million of cash
equipment purchase obligations held by lessors and $1.6 million of other cash
obligations held by AT&T for an aggregate of 820,000 shares of Class A common
stock.

During 2002, the Company entered into two separate transactions repurchasing
$5.0 million in 10% Senior Convertible Notes and a 12% Senior Restructure Note
and a restructure balloon liability in the amount of $0.5 million for a total of
$0.6 million in cash and 5,415 shares in Class A common stock, valued at
approximately $6,000. The Company recorded a $6.6 million in gains on the
transactions including the reversal of $1.7 million of capitalized interest
related to the repurchased debt.

During 2003, the Company entered into a series of transactions with debt holders
to eliminate a total of $63.0 million of indebtedness in exchange for cash
payments of $3.1 million and, the issuance of 23.9 million shares of Class A
common stock valued at $13.6 million. The eliminated debt included $22.7 million
of 7% Convertible Subordinated Notes, due February 2005, $31.1 million of 10%
Senior Convertible Notes, due January 2006, a $2.7 million note payable to the
former shareholder of STI (who is an officer and director of the Company), $6.0
million of Restructure notes and $0.5 million in other indebtedness. The Company
also entered into agreements to repay an outstanding note in the principal
amount of $115,000 and accrued interest obligations in the aggregate amount of
$959,000 over the next three years, which accrued interest includes $284,000 due
to George Abi Zeid, a director and officer of the Company and the former sole
shareholder of STI. In addition, after eliminating $6.5 million of previously
capitalized interest, $2.7 million of accrued interest, and $0.3 million of debt
issuance costs on the eliminated notes, these transactions resulted in a gain of
$54.1 million or $1.52 per share on a basic and diluted basis. Also, the
transactions relating to the previous $115,000 note and $959,000 of accrued
interest have been accounted for in accordance with SFAS 15.

Notes payable include the following, in thousands

<TABLE>
<CAPTION>

                                                                     December 31, 2003                  December 31, 2002
                                                                     -----------------                  -----------------
                                                              Capitalized Interest  Principal     Capitalized Interest  Principal
                                                              --------------------  ---------     --------------------  ---------

<S>                                                                   <C>           <C>                <C>             <C>
2000 7% Convertible Subordinated Notes due February 2005              $   --         $ 1,425           $   --           $24,095
2001 10% Senior Convertible Notes due January 2006                        --              --            5,528            31,059
2001 12% restructure note , as amended and restated
  effective September 2003                                             1,884          10,504            5,160            10,000
2001 12% note payable to former shareholder of STI 13 quarterly
          payments beginning June 2003                                     3             118              997             2,683
2001 12% Restructure notes 13 quarterly payments beginning June 2003     109           1,025               --             6,132
2001 Restructuring balloon payments due October 2004                      --             396               --               795
Other                                                                     --              --               --               786
                                                                       -----           -----            -----           -------
Total notes payable and capitalized interest                           1,996          13,468           11,685            75,550

Less current portion                                                   1,040           2,957            4,283             4,152
                                                                       -----         -------           ------           -------

Non current portion                                                    $ 956         $10,511           $7,402           $71,398
                                                                       =====         =======           ======           =======
</TABLE>



                                      -68-
<PAGE>

(8)      Revenues

The following are the components of revenues, in thousands:

<TABLE>
<CAPTION>

                                                                                    For the year ended December 31,
                                                                                    -------------------------------
                                                                         2003                    2002                    2001
                                                                         ----                    ----                    ----

<S>                                                                     <C>                    <C>                     <C>
Business messaging........................................              $100,872               $113,874                $121,716
Advertising...............................................                    --                    ---                   1,616
Other.....................................................                   475                    480                     597
                                                                             ---                    ---                     ---

Total revenues............................................              $101,347               $114,354                $123,929
                                                                        ========               ========                ========
</TABLE>

Other revenues consist of revenues generated principally from the sale or lease
of domain names.

(9)        Discontinued Operations

In March 2000, the Company formed World.com, Inc. in order to develop the
Company's portfolio of domain names into independent web properties and
subsequently acquired or formed its subsidiaries Asia.com, Inc. and India.com,
Inc., in which World.com was the majority owner. On November 2, 2000, the
Company announced its intention to sell all assets not related to its core
outsourced messaging business including Asia.com, Inc., India.com, Inc. and its
portfolio of domain names. Accordingly, World.com has been reflected as a
discontinued operation. Revenues, costs and expenses, assets, liabilities and
cash flows of World.com have been excluded from the respective captions in the
consolidated statement of operations, consolidated balance sheets and
consolidated statements of cash flows and have been reported as "Loss from
discontinued operations," "Net liabilities of discontinued operations," and "Net
cash used in discontinued operations," for all periods presented.

During 2001, the Company recognized a loss of $63 million on discontinued
operations. This loss included a write-down of $56.4 million of assets,
primarily goodwill, to net realizable value, operating losses of $4.5 million,
net of a gain of $8.3 million, severance and related benefits of $1.3 million,
and other related cost and expenses including the closure of facilities of $0.8
million.

Summarized financial information (In thousands) for the discontinued operation
is as follows:

                          Statements of Operations Data
                             Year Ended December 31,
<TABLE>
<CAPTION>

                                                                           2003             2002             2001
                                                                           ----             ----             ----

<S>                                                                      <C>              <C>               <C>
Revenues...................................................              $   ---          $   ---           $ 6,247
                                                                         =======          =======           =======

Loss from discontinued operations..........................              $   938          $   ---           $63,027
                                                                         =======          =======           =======
</TABLE>


                               Balance Sheet Data
                               As of December 31,
<TABLE>
<CAPTION>

                                                                           2003             2002
                                                                           ----             ----

<S>                                                                        <C>             <C>
Current assets.................................................              $17             $57
Total assets...................................................              404             444
Current liabilities............................................            1,040             579
Long-term liabilities and minority interest....................              193             225
Net liabilities of discontinued operations....................             (828)           (360)
</TABLE>


                                      -69-
<PAGE>

The information below pertains to certain events and activities associated with
the operations of World.com and include: financings in connection with
India.com, domain names included in discontinued operations, the acquisition and
subsequent disposition of eLong.com, which was renamed to Asia.com, Inc., and
other acquisitions made by World.com.

India.com Financing

During the third quarter of 2000, India.com, Inc., a wholly-owned subsidiary,
issued 1,365,769 shares of Series A convertible exchangeable preferred stock to
private investors valued at $14.2 million. These shares were convertible into
India.com Class A common stock at the initial purchase price of the preferred
shares, subject to certain anti dilution and other adjustments. The holders of
the Series A convertible exchangeable preferred stock were entitled to a one
time right exercisable during the 60 days after September 13, 2001 to exchange
these shares for the number of shares of EasyLink Class A common stock equal to
the original purchase price of such shares divided by the lesser of the market
price of EasyLink's Class A common stock on September 13, 2001 (but not less
than $45.00) and $60.00. This exchange right was since modified as described
below.

The Company entered into a Bridge Funding and Amendment Agreement with
India.com, Inc. (the "Bridge Funding Agreement"). Under the Bridge Funding
Agreement, the Company borrowed approximately $5 million from its majority-owned
subsidiary India.com and issued to India.com bridge notes evidencing these
borrowings (the "Bridge Notes"). Under the Bridge Funding Agreement, the Company
issued to India.com warrants to purchase 20,000 shares of EasyLink's Class A
common stock at an exercise price of $13.00 per share in consideration of the
commitment under the Bridge Funding Agreement. In addition, India.com received
warrants to purchase an additional 16,000 shares of EasyLink Class A common
stock for each $1 million drawn down by the Company under the Bridge Funding
Agreement. As a result of the drawings under the Bridge Funding Agreement, the
Company issued an additional 80,000 warrants at exercise prices ranging from
$6.20 to $14.00 per warrant.

In consideration of the commitments under the Bridge Funding Agreement, the
period during which the one-time exchange right of the holders of India.com
preferred stock was changed from the 60-day period immediately after September
13, 2001 to the 60-day period immediately after December 31, 2001. In addition,
the floor price at which shares of EasyLink Class A common stock may be issued
upon the exchange was reduced from $45.0 per share to $30.00 per share
immediately upon execution and delivery of the Bridge Funding Agreement and was
subject to further reduction to $12.50 per share for a percentage of the total
number of shares of India Preferred Stock that is equal to the percentage of the
Bridge Notes drawn down.

Pursuant to an Exchange Agreement Amendment entered into on July 17, 2001 (the
"Exchange Agreement Amendment") between the Company and the holders of India.com
preferred stock, all of the holders of the outstanding shares of India.com
preferred stock exercised their right to exchange their shares of India.com
preferred stock for shares of the Company's Class A common stock based on the
average of the closing market prices of the Company's stock over the five
trading days ending on September 13, 2001, subject to a floor on the exchange
price of $10.00 and a cap of $30.00 and subject to adjustment in certain
circumstances. Based on the average of the closing prices of the Company's
stock, the exchange price was $10.00 per share and 1,420,400 became issuable
upon consummation of the exchange. As of September 30, 2001, the closing of the
exchange transaction was subject to compliance with the requirements of the
NASDAQ stock market. The Company entered into the Exchange Agreement Amendment
in connection with the elimination of its obligations under the $5 million
aggregate principal amount of bridge notes and the warrants to purchase an
aggregate of 100,000 shares of the Company's Class A common stock issued to
India.com.

On October 17, 2001, the Company and the holders of India.com preferred stock
completed the exchange of India.com preferred stock for 1,420,400 shares of the
Company's Class A common stock.

eLong.com, Inc.

On March 14, 2000, the Company acquired eLong.com, Inc., a Delaware corporation
("eLong.com"), for approximately $62 million including acquisition costs of
$365,000. eLong.com, through its wholly owned subsidiary in the People's
Republic of China ("PRC"), operated the Web Site www.eLong.com, a provider of
local content and other internet services. Concurrently with the merger,
eLong.com changed its name to Asia.com, Inc. ("Asia.com"). In the merger, the
Company issued to the former stockholders of eLong.com an aggregate of 359,949
shares of EasyLink Class A common stock valued at approximately $57.2 million,
based upon the Company's average trading price at the date of acquisition. All
outstanding options to purchase eLong.com common stock were converted into
options to purchase an aggregate of 27,929 shares of EasyLink Class A common
stock. The value of the options was approximately $4.4 million based on the
Black-Scholes pricing model with a 110% volatility factor, a term of 10 years,
an weighted average exercise price of $12.40 per share and a weighted average
fair value of $156.90 per share.


                                      -70-
<PAGE>

The acquisition was accounted for as a purchase business combination. The excess
of the purchase price over the fair market value of the acquired assets and
assumed liabilities of Asia.com was allocated to goodwill ($62 million).
Goodwill was being amortized over a period of 3 years, the expected estimated
period of benefit. During the fourth quarter of 2000, approximately $7.8 million
of goodwill was written off as it was determined that the carrying value had
become permanently impaired as a result of the November 2, 2000 decision, as
approved by the Board of Directors, to sell all assets not related to its core
messaging business, including its Asia-based businesses. After giving effect to
the write off, the net goodwill balance at December 31, 2000 was $38.2 million.

In addition, the Company was obligated to issue up to an additional 71,990
shares of Mail.com Class A common stock in the aggregate to the former
stockholders of eLong.com if EasyLink or Asia.com acquired less than $50.0
million in value of businesses engaged in developing, marketing or providing
consumer or business internet portals and related services focused on the Asian
market or a portion thereof, or businesses in furtherance of such a business,
prior to March 14, 2001. In May 2001, the Company issued 7,500 shares of Class A
common stock in settlement of this contingency.

In the merger, certain former stockholders of eLong.com retained shares of Class
A common stock of Asia.com, representing approximately 4.0% of the outstanding
common stock of Asia.com. Under a Contribution Agreement with Asia.com, these
stockholders contributed an aggregate of $2.0 million in cash to Asia.com in
exchange for additional shares of Class A common stock of Asia.com, representing
approximately 1.9% of the outstanding common stock of Asia.com. Pursuant to the
Contribution Agreement, EasyLink (1) contributed to Asia.com the domain names
Asia.com and Singapore.com and $10.0 million in cash and (2) agreed to
contribute to Asia.com up to an additional $10.0 million in cash over the next
12 months and to issue, at the request of Asia.com, up to an aggregate of 24,242
shares of EasyLink Class A common stock for future acquisitions. As of June 30,
2000, the Company had fulfilled this obligation. See also "Asia.com
Acquisitions", below. As a result of the transactions effected pursuant to the
Merger Agreement and the Contribution Agreement, EasyLink initially owned shares
of Class B common stock of Asia.com representing approximately 94.1% of the
outstanding common stock of Asia.com. The company's ownership percentage
decreased to 92% as of December 31, 2000. Asia.com granted to management
employees of Asia.com options to purchase Class A common stock of Asia.com
representing, as of December 31, 2000, 9% of the outstanding shares of common
stock after giving effect to the exercise of such options.

Sale of eLong.com Inc.

On May 3, 2001, the Company's majority owned subsidiary Asia.com, Inc. sold its
business to an investor group. Under the terms of the sale, the buyer paid
Asia.com $1.5 million and assumed eLong.com liabilities of approximately $1.5
million. The consideration paid was determined as a result of negotiations
between the buyer and EasyLink. In addition, the Company issued 20,000 shares of
its Class A common stock valued at $138,000 in exchange for the cancellation of
certain options granted to the former owners of eLong.com. The Company accounted
for this transaction as part of the sale of the business of Asia.com. As a
result of the sale, the Company recorded a loss on the sale of eLong.com, Inc.
of $264,000. After the closing of the sale, the Company issued 36,232 shares in
January 2002 to eLong.com, Inc. in full satisfaction of an indemnity obligation.
The indemnity obligation arose out of eLong.com's settlement of a claim brought
by former Lohoo shareholders for a contingent payment. Lohoo was previously
acquired by eLong.com, Inc.

Mauritius Entity

On March 31, 2000, the Company acquired 100% of a Mauritius entity, which in
turn owned 80% of an Indian subsidiary. The terms were $400,000 in cash and a $1
million 7% note payable one year from closing. The acquisition was accounted for
as a purchase business combination. The excess of the purchase price over the
fair market value of the assets acquired and assumed liabilities of the
Mauritius entity was allocated to goodwill ($2.1 million). Prior to the
Company's adoption of SFAS 142 effective January 1, 2002, the goodwill was being
amortized over a period of five years, the expected estimated period of benefit.

In June 2000, the Company acquired, through the Mauritius entity, the remaining
20% of the Indian subsidiary for $2.2 million. The acquisition was accounted for
as a purchase business combination. The excess of the purchase price over the
fair market value of the assets acquired was allocated to goodwill ($2.2
million). Prior to the Company's adoption of SFAS 142 effective January 1, 2002,
the goodwill was being amortized over a period of five years, the expected
estimated period of benefit.

In connection with the Mauritius acquisition, the Company incurred a $1.8
million charge related to the issuance of 10,435 shares of Class A common stock,
as compensation for services performed, $200,000 cash and an additional $200,000
payable in EasyLink Class A common stock as compensation for employees.

On October 31, 2001, the Company's India.com, Inc. subsidiary sold 90% of the
share of its Multiple Zones Prvt. Ltd. Subsidiary. The Company recorded a
nominal gain on the transaction.


                                      -71-
<PAGE>

India Acquisition and Divestiture

During the second quarter of 2001, the Company acquired a US and India based
company for approximately $600,000, including acquisition costs. The terms were
$300,000 in cash and 19,600 shares of EasyLink Class A common stock valued at
approximately $272,000 based upon our average trading price surrounding the date
of acquisition. The acquisition was accounted for as a purchase business
combination. The excess of the purchase price over the fair market value of the
assets acquired and assumed liabilities has been allocated to goodwill
($831,000), which was being amortized over a period of three years, the expected
estimated period of benefit.

The Company subsequently transferred this acquired business to the former
management of its India.com subsidiary. As part of the transaction, the
transferred business assumed all of the liabilities of the transferred business
and certain liabilities of India.com. In consideration for the assumption of
these liabilities, the Company contributed to the transferred business
immediately prior to the sale in January 2002 56,075 shares of Class A common
stock valued at $0.3 million and $300,000 in cash.

(10)       Leases

Prior to 2001, the Company financed its equipment (hardware and software)
requirements under capital lease agreements with a number of leasing companies.
On November 27, 2001, the Company closed on the restructuring of the outstanding
lease payment balances related to most of these agreements. The obligations were
converted into a package of securities consisting of senior convertible notes
and other obligations. See Note 7 for a description of the debt restructuring.
In addition, the Company settled certain leased equipment obligations having an
original equipment cost of $22.5 million for an aggregate purchase price of
approximately $3.5 million.

In addition to capital leases, the Company leases facilities and certain
equipment under agreements accounted for as operating leases. These leases
generally require the Company to pay all executory costs such as maintenance and
insurance. Rent expense for operating leases for the years ending December 31,
2003, 2002 and 2001 was approximately $4.2 million, $3.4 million, and $4.3
million, respectively.

At December 31, 2003, the Company had $744,503 in gross amount of fixed assets
and $561,824 of related accumulated amortization under capital leases. Future
minimum lease payments under the remaining capital leases and non-cancellable
operating leases (with initial or remaining lease terms in excess of one year)
as of December 31, 2003 are as follows, in thousands:

<TABLE>
<CAPTION>

Year ending December 31,
                                                                                 Capital leases            Operating leases
                                                                                 --------------            ----------------

<C>                                                                                   <C>                      <C>
2004...................................................................               $146                     $4,321
2005...................................................................                 37                      2,836
2006...................................................................                  -                      2,130
2007...................................................................                  -                      1,868
2008...................................................................                  -                      2,183
2009 and later.........................................................                  -                      5,018
                                                                                      ----                      -----

           Total minimum lease payments................................               $183                    $18,356
                                                                                      ====                    =======

Less current portion of obligations under capital leases...............                146

Obligations under capital leases, excluding current portion............               $ 37
                                                                                      ====
</TABLE>


(11)       Related Party Transactions

Federal Partners, L.P. Financings

On January 8, 2001, the Company issued $5,000,000 principal amount of 10% Senior
Convertible Notes due January 8, 2006 to Federal Partners. Stephen Duff, a
director of the Company, is Chief Investment Officer of The Clark Estates, Inc.
and is Treasurer of the general partner of, and a limited partner of, Federal
Partners, L.P. The note accrued interest at the rate of 10% per annum and was
payable semi-annually one half in cash and, at the option of the Company, one
half in shares of Class A common stock valued at the conversion price of $10.00
per share. The Company issued shares to Federal Partners in payment of interest
on this note during 2003, 2002 and 2001. The Clark Estates, Inc. provides
management and administrative services to Federal Partners. On March 20, 2001,
the Company issued to Federal Partners 300,000 shares of our Class A common
stock for a purchase price of $3,000,000, and committed to issue to Federal
Partners an additional 100,000 shares of Class A common stock if the closing
price of our Class A common stock on the principal securities exchange on which
they are traded was not at or above $100 per share for 5 consecutive days. The
additional shares were issued in 2002. As part of the financing completed on
November 27, 2001 in connection with our debt restructuring, the Company issued
to Federal Partners an aggregate of 250,369 shares of Class A common stock for a
purchase price of $1,700,000, and we committed to issue to Federal Partners an
additional 173,632 shares of Class A common stock if the average of the closing
prices of our Class A common stock on Nasdaq was not at or above $16.00 per
share for the 10 consecutive trading days through year end 2001. The additional
shares were issued in 2002. Through his limited partnership interest in Federal
Partners, Mr. Duff has an indirect interest in 10,789 of the shares of Class A
common stock held by Federal Partners.


                                      -72-
<PAGE>

On May 1, 2003, Federal Partners exchanged the $5 million note for 2.5 million
shares of Class A common stock value of approximately $1.4 million. In addition,
on April 30, 2003, Federal Partners purchased 1,923,077 shares of Class A common
stock of EasyLink at a purchase price of $.52 per share or $1 million in the
aggregate. Federal Partners and accounts for which The Clark Estates, Inc.
provides management and administrative services, were beneficial holders as of
May 1, 2003 of 13.02% of the Company's common stock.

Acquisition of Swift Telecommunications, Inc.

The Company acquired Swift Telecommunications, Inc. on February 23, 2001. George
Abi Zeid was the sole shareholder of Swift Telecommunications, Inc ("STI"). In
connection with the acquisition, Mr. Abi Zeid was elected to the Board of
Directors of the Company and was appointed President - International Operations.
EasyLink paid $835,294 in cash, issued 1,876,618 shares of Class A common stock
valued at $30.8 million and issued a promissory note in the original principal
amount of approximately $9.2 million to Mr. Abi Zeid in payment of the purchase
price for the acquisition payable at the closing. Under the merger agreement,
EasyLink also agreed to pay additional contingent consideration to Mr. Abi Zeid
equal to the amount of the net proceeds, after satisfaction of certain
liabilities of STI and its subsidiaries, from the sale or liquidation of the
assets of one of STI's subsidiaries. Pursuant to the debt restructuring
completed on November 27, 2001, EasyLink issued $2,682,964 principal amount of
restructure notes, 268,295 shares of Class A common stock valued at
approximately $1.6 million and warrants to purchase 268,295 shares of Class A
common stock in exchange for Mr. Abi Zeid's $9.2 million note. In connection
with the acquisition by STI on January 31, 2001 of the EasyLink Services
business from AT&T Corp., Mr. Abi Zeid pledged to AT&T Corp. under a Pledge
Agreement dated January 31, 2001 all of the shares of EasyLink Class A Common
Stock that he was entitled to receive pursuant to the acquisition to secure a
$35 million note issued to AT&T Corp. by STI and assumed by EasyLink as part of
the purchase price for the EasyLink Services business. As a result of the debt
restructuring completed on November 27, 2001, these shares now secure the $10
million principal amount of restructure notes issued to AT&T Corp. in exchange
for the $35 million note held by it. In connection with the acquisition of STI
on February 23, 2001, EasyLink also entered into a conditional commitment to
acquire the 25% minority interests in two STI subsidiaries for $47,059 in cash,
promissory notes in the aggregate principal amount of approximately $517,647 and
106,826 shares of Class A common stock. This transaction is subject to certain
conditions, including satisfactory completion of due diligence, receipt of
regulatory approvals and other customary conditions. On May 1, 2003 in
connection with the Company's debt restructuring, Mr. Abi Zeid exchanged the
promissory note in the principal amount of $2,682,964 for 1,341,482 shares of
Class A common stock valued at approximately $765,000 and agreed to defer
interest payments due to him in the amount of $283,504. See Note 7 - Notes
Payable.

Mr. Abi Zeid also agreed to contribute up to approximately 1.2 million shares of
Class A common stock issuable to him in connection with the November 2001 debt
restructuring in order to permit the grant of shares or options to employees.
Shares awarded from this commitment were valued at $0.5 million and were
accounted for as compensation expense in the fourth quarter of 2001.

Fax-2 Acquisition and Divestiture

Under an Exclusivity and Royalty Agreement among Daniel Kuehler, Kurt Winter and
EasyLink Services dated May 30, 2000, EasyLink Services acquired from Messrs.
Kuehler and Winter the rights to develop, market and deploy the Fax-2 business
concept. Fax-2 allows users to send faxes to any email address. Mr. Kuehler is
the son of Jack Kuehler, a director of EasyLink Services until September 30,
2002. Each of Messrs. Kuehler and Winter received 1,000 shares of EasyLink
Services Class A common stock upon execution of the agreement and were entitled
to a 10% royalty up to $100,000 on all revenue generated by Fax-2 and thereafter
a 1% royalty on such revenue so long as specified performance and operating
conditions were maintained. Mr. Kuehler also entered into an employment
agreement which entitled him to receive full compensation and benefits through
June 15, 2001 if his employment is terminated for any reason other than cause
before then. Mr. Kuehler also received on June 15, 2000 a grant of 3,000 options
at an exercise equal to fair market value at the time of grant. These options
were to vest over four years. The Fax-2 service was re-named the FaxMail Service
while owned by the Company.

                                      -73-
<PAGE>

On October 4, 2001, the Company and Messrs. Kuehler and Winter entered into a
Divestiture Agreement which superceded the Exclusivity and Royalty Agreement.
Under the Divestiture Agreement, the Company transferred to an entity formed by
Messrs. Kuehler and Winter and to be named FaxMail exclusive permanent rights to
develop, market and deploy the FaxMail Service. Under the Divestiture Agreement,
the Company would own 10% of FaxMail. Under the arrangement, the parties agreed
that the Company would also be entitled to receive a royalty on all business
referred by it to FaxMail equal to 20% of the gross revenues of the business
referred. The parties also agreed that each party would have independent
ownership of certain technology underlying the FaxMail Service as of the date of
the Divestiture Agreement and the Company would have the right to license future
modifications, enhancements or replacements to the FaxMail Service developed by
FaxMail.

(12)       Capital Stock

Reverse Stock Split


Effective January 23, 2002, the Company authorized and implemented a 1 for 10
reverse stock split. Accordingly, all share and per share amounts in the
accompanying consolidated financial statements have been retroactively restated
to reflect the reverse stock split.

Authorized Shares

In 2001, the Company amended its amended and restated certificate of
incorporation, as amended, in order to increase the number of authorized shares
up to 570,000,000 consisting of 500,000,000 and 10,000,000 shares of Class A and
Class B common stock, respectively; and 60,000,000 undesignated shares of
preferred stock, all classes with a par value of $0.01 per share. These amounts
continue to represent the respective numbers of authorized shares of the Company
as of the date hereof.

Common Stock

Voting Rights

Each share of Class A common stock has one vote per share. Each share of Class B
common stock, which is owned by the Chairman, shall have ten votes per share,
and may convert into one share of Class A common stock.

Liquidation Preference

In the event the Company is liquidated, dissolved or wound up, the holders of
Class A and Class B common stock will be entitled to receive distributions only
after satisfaction of all liabilities and the prior rights of any outstanding
class of preferred stock. If the Company is liquidated, dissolved or wound up,
its legally available assets after satisfaction of all liabilities shall be
distributed to the holders of Class A and Class B common stock pro rata based on
the respective numbers of shares of Class A common stock held by these holders
or issuable to them upon conversion of Class B common stock.

Private Placements of Common Stock

On March 20, 2001, the Company completed a private placement of 300,000 shares
of Class A common stock (the "Common Shares") with a private investor for an
aggregate price of $3,000,000. Pursuant to the Common Stock Purchase Agreement
dated as of March 13, 2001 between the Company and the private investor and
subject to the effectiveness of a registration statement covering shares of
Class A common stock issuable upon conversion of certain convertible notes,
EasyLink was obligated to issue an additional 100,000 shares of Class A common
stock to the private investor if the closing price of the Company's Class A
common stock was not at or above $100 per share for at least five consecutive
trading days during 2001. These shares were issued in January 2002.

On April 30, 2003, the Company completed a private placement of 1,923,077 shares
of Class A common stock for an aggregate price of $1,000,000 to Federal
Partners.


                                      -74-
<PAGE>

India.com, Inc. Preferred Stock Exchange

On October 17, 2001, the Company and the holders of India.com preferred stock
completed the exchange of India.com preferred stock for approximately 1.4
million shares of the Company's Class A common stock valued at approximately
$6.1 million. See Note 9 Discontinued Operations.

Settlements

During 2002 and 2001, the Company issued 226,391 and 878,838 shares of Class A
common stock, respectively, in connection with various settlements of certain
obligations and for payment of services rendered valued at $706,000 and $6.6
million, respectively, in the aggregate. The 2002 issuance is comprised of
106,534 shares in connection with vendor settlement, 21,016 shares in connection
with third party vendors, 36,232 in connection with Lohoo settlement, 56,075
shares in connection with MyIndia.com sale, 6,534 shares in connection with
MyIndia.com contingent liability. The 2001 issuance is comprised of 196,604
shares in connection with vendor settlements, 300,000 shares in connection with
the TII settlement, 162,083 shares in connection with the TCOM settlement,
103,359 shares in connection with payment of a promissory note, 53,319 shares in
connection with merger agreements and 33,292 shares in connection with Asia.com
settlements, 10,590 shares in connection with India.com settlements, and 19,591
shares in connection with New Millenium settlement. In addition, 888,810 and
294,533 shares of Class A common stock were issued during 2002 and 2001,
respectively, in lieu of cash interest payments on Senior Convertible Notes and
subordinated debentures valued at $1.8 and $0.6 million, respectively, in the
aggregate.

Common Stock and Warrants issued in Debt Restructuring and Related Financing

Under the terms of the Company's debt restructuring completed on November 27,
2001, the Company exchanged an aggregate of approximately $63 million of debt
and equipment lease obligations for an aggregate of approximately $20 million of
restructure notes and obligations due in installments commencing June 2003
through June 2006, 1.97 million shares of Class A Common Stock valued at $12.0
million and warrants to purchase 1.8 million shares of Class A Common Stock
valued at $0.5 million. $9.1 million in principal amount of the restructure
notes are convertible into shares of Class A common stock at a conversion price
of $10.00 per share, subject to adjustment.

As a condition to the debt restructuring, the Company completed a financing.
$5.875 million of this financing was represented by the investment of cash in
exchange for 1,468,750 shares of Class A common stock. Approximately $3.0
million of this financing was represented by the exchange of $1.4 million of
cash equipment purchase obligations held by lessors and $1.6 million of other
cash obligations held by AT&T for an aggregate of 820,000 shares of Class A
common stock.

Undesignated Preferred Shares

The Company is authorized, without further stockholder approval; to issue
authorized but unissued shares of preferred stock in one or more classes or
series. At December 31, 2003 and 2002, 60,000,000 authorized shares of
undesignated preferred stock were available for creation and issuance in this
manner.

 (13)      Stock Options

In 2001, the Company recorded compensation expense of approximately 0.5 million
for a transfer of common stock and stock options from an officer to certain
employees. (See Note 11, Related Party Transactions -- Acquisition of Swift
Telecommunications Inc.)

During 2001, the Company granted to its employees and directors under its stock
option plans a total of 973,017 options to purchase shares of Class A common
stock with an average exercise price of $4.64 per share. As of December 31,
2002, the Company had a total of options outstanding with an average exercise
price of $13.50 per share.

In connection with the Company's debt restructuring, the Company issued upon the
closing of the restructuring, warrants to purchase 1.8 million shares of Class A
common stock at $6.10 per share. See Note 7 for a description of the
restructuring and the warrants.


                                      -75-
<PAGE>

A summary of the Company's stock option activity and weighted average exercise
prices is as follows:

<TABLE>
<CAPTION>

                                                                         For the Year Ended December 31,
                                                                         -------------------------------

                                                          2003                        2002                         2001
                                                          ----                        ----                         ----

                                                              Weighted                    Weighted                     Weighted
                                                               Average                     Average                      Average
                                                              Exercise                    Exercise                     Exercise
                                                  Options       Price         Options       Price         Options        Price
                                                  -------       -----         -------       -----         -------        -----

<S>                                            <C>              <C>        <C>            <C>          <C>             <C>

Options outstanding at
beginning of period........................    2,773,446       $ 6.64      1,855,781      $13.51       1,334,429       $28.60

Options granted............................    2,465,131       $ 1.10      1,285,300       $1.04         973,017       $ 4.64
Options canceled...........................     (290,047)      $20.44       (367,732)     $20.44        (449,665)      $40.49
Options exercised..........................      (71,550)      $14.73             97           -          (2,000)      $ 5.00
                                               ---------       ------      ---------      ------       ---------       ------

Options outstanding at
end of period..............................    4,876,980       $ 2.90      2,773,446       $0.67       1,855,781       $13.50
                                               =========       ======      =========       =====       =========       ======

Options exercisable at period end..........    2,200,787                   1,174,560                     810,483
                                               =========                   =========                     =======

Weighted average fair value of
options granted during the
period.....................................        $0.90                      $0.93                        $3.92
                                                   =====                      =====                        =====
</TABLE>

The following table summarizes information about stock options outstanding and
exercisable at December 31, 2003:

<TABLE>
<CAPTION>

                                                                  Options Outstanding                 Options Exercisable
                                                                  -------------------                 -------------------

                                                          Weighted
                                                           Average        Weighted        Weighted
                                                          Remaining        Average         Average
                 Range of Exercise                         Number        Contractual      Exercise       Number      Exercise
                      Prices                             Outstanding        Life            Price      Exercisable     Price
                      ------                             -----------        ----            -----      -----------     -----

<C>                                                     <C>              <C>             <C>           <C>         <C>
$.53-.70......................................             526,400          9.40            $.54          3,750       $0.63
$.98-1.25.....................................           2,921,064          9.00           $1.15      1,006,356       $0.98
$1.58-2.30....................................             676,410          7.50           $2.14        530,981       $2.18
$2.69-4.00....................................              67,690          7.20           $3.59         53,839       $3.77
$4.20-6.30....................................              88,597          4.20           $5.07         73,798       $5.11
$6.60-9.06....................................              10,380          7.00           $7.84          7,002       $7.86
$10.00-14.69..................................             217,968          6.30          $12.38        173,727      $12.26
$16.56-23.36..................................             275,210          5.00          $17.13        259,930      $17.15
$32.44-40.00..................................              42,728          4.20          $35.00         42,705      $35.00
$50.00-74.61..................................              31,039          5.40          $52.28         29,949      $52.03
$118.6-175.00.................................              18,269          6.10         $155.74         17,543     $155.73
$190.00-200.00................................                 957          5.20         $192.71            957     $192.71
$294.80-294.80................................                 268          1.20         $294.80            250     $294.80
                                                               ---          ----         -------            ---     -------

                                                         4,876,980          8.30           $4.00      2,200,787       $7.01
                                                         =========          ====           =====      =========       =====
</TABLE>


On May 31, 2000, the Board of Directors approved the cancellation and
re-issuance of 50,000 options to an executive at an exercise price of $55.30 per
share based on the closing price of the Company's Class A common stock on May
31, 2000. The options had an original exercise price of $124.40. The new options
vest at the same rate that they would have vested under previous plans. Pursuant
to FIN 44, stock options re-priced after December 15, 1998 are subject to
variable plan accounting. To date, the Company has not recorded any compensation
charge as the fair market value of the Company's common stock has been below the
new exercise price.

On November 14, 2000, the Company offered to certain employees, officers and
directors, including the executive mentioned above, other than the chairman, the
right to re-price certain outstanding stock options to an exercise price equal
to $16.90, the closing price of the Company's Class A common stock on NASDAQ on
November 14, 2000. Options to purchase an aggregate of up to 632,799 shares were
repriced. As of December 31, 2001 options to purchase 532,595 shares were
outstanding. The re-priced options will vest at the same rate that they would
have vested under their original terms except that shares issuable upon exercise
of these options were not able to be sold until after November 14, 2001.
Pursuant to FIN 44, since the new exercise price was equal to the fair market
value of the Company's common stock on the new measurement date, the Company did
not record any compensation cost in connection with this program. However,
depending upon movements in the market value of the Company's Class A common
stock, this accounting treatment may result in significant non-cash compensation
charges in future periods. To date, the Company has not recorded any
compensation charge as the fair market value of the Company's common stock has
been below the new exercise price.


                                      -76-
<PAGE>

(14)      Employee Stock and Savings Plans

401(k) Plan

On January 3, 2000, the Company established a 401(k) Plan ("the plan"). Subject
to Internal Revenue Service Code limitations, participants may contribute from
1% to 15% of pay each pay period on a before tax basis, subject to statutory
limits. Such contributions are fully and immediately vested. The Company will
match 50% of the first 6% of an employee's contribution with shares of Class A
common stock. Vesting of the Company's matching contributions begins at 20%
after the first anniversary of date of hire or plan commencement date, whichever
is later, increasing by 20% each year thereafter through the fifth year until
full vesting occurs. The Company's matching contributions of 531,545, 314,642,
and 75,209 shares of Class A common stock, for the years ended December 31,
2003, 2002 and 2001 resulted in compensation expense of $492,000, $437,000, and
$412,000, respectively.

Due to the acquisition of STI, the Company has various pension plans in other
countries. The participants may contribute from 2.5% to 10.5% of pay each period
on a before tax basis, subject to statutory limits. Such contributions are fully
and immediately vested. The Company will match 4.5% up to 20% of a participant's
contribution. Vesting of the Company's matching contribution is immediate. The
Company's matching contributions for the years ended December 31, 2003, 2002 and
2001 amounted to $210,000, $454,000 and $220,000, respectively.

Employee Stock Purchase Plan

On March 14, 2000, the Board of Directors adopted, and on May 18, 2000, the
shareholders approved the EasyLink Employee Stock Purchase Plan (the "ESPP").
Eligible employees can contribute, through a payroll deduction in 1% increments,
from a minimum of 1% to a maximum of 10% of base salary or wages. Each purchase
period lasts for six months beginning on the first day of January and the first
day of July. The purchase price is set at 85% of the lower of the fair market
value of EasyLink Class A common stock on the first day of the purchase period
or on the last day of the purchase period. The fair market value will be
determined based on the closing sales price on the NASDAQ National Market. If
EasyLink shares cease to be traded on the NASDAQ National Market, a committee of
at least two members of the board of directors will determine the fair market
value in the manner prescribed by the plan. During 2001, employees purchased
3,869 shares at an average price of $4.91 per share. At December 31, 2001,
approximately 94,000 shares were reserved for future issuances.

During 2001, the Company decided to discontinue any active participation in the
ESPP. This resulted in freezing the plan effective June 30, 2001. The Company
has the option of reinstating the plan at a later date.

(15)       Restructuring Charges

During 2003, 2002 and 2001, restructuring charges of $1.5 million, $2.3 million
and $25.3 million, respectively, were recorded by the Company. During 2003 and
2002, the Company's restructuring initiatives are related to the relocation and
consolidation of its New Jersey-based office facilities into one location and a
similar consolidation of its office facilities in England. The relocation
process was completed in the first 6 months of 2003. The restructuring charges
are comprised of abandonment costs with respect to leases, including the
write-off of leasehold improvements. During 2001, the Company's restructuring
initiatives are related to our strategic decisions to exit the consumer
messaging business and to focus on the Company's outsourced messaging business.
The Company's restructuring program included an incremental reduction in the
workforce of approximately 150 employees. Employees affected by the
restructuring were notified by direct personal contact and by written
notification. The remaining employee benefit termination amounts were paid out
in 2002. In addition, asset disposals of $24.1 million reflect write-downs of
excess fixed assets and other assets to their net realizable values.

The lease abandonments represent the cost to exit the facility leases. The
remaining amounts are to be paid out over the next 3 years which corresponds to
the terms of the lease.


                                      -77-
<PAGE>

The following sets forth the activity in the Company's restructuring reserve (in
thousands):

<TABLE>
<CAPTION>

                                                                         For the year ended December 31, 2003
                                                                         ------------------------------------

                                                             Beginning        Current year-    Current year-          Ending
                                                              balance     provision (reversal)  utilization           balance
                                                              -------     --------------------  -----------           -------

<S>                                                         <C>                 <C>                            <C>
Employee termination benefits                               $     140           $  (129)        $    (11)                --
Lease abandonments                                              2,175             1,607           (1,035)             2,747
Other exit costs                                                   47                --              (47)                --
                                                            ---------           -------         --------            -------

                                                            $   2,362           $ 1,478         $ (1,093)           $ 2,747
                                                            =========           =======         ========            =======
</TABLE>

<TABLE>
<CAPTION>

                                                                            For the year ended December 31, 2002
                                                                            ------------------------------------

                                                             Beginning       Current year-     Current year-          Ending
                                                              balance          provision        utilization           balance
                                                              -------          ---------        -----------           -------

<S>                                                              <C>             <C>                <C>                 <C>
Employee termination benefits                                    $228                --              $(88)                 $140
Lease abandonments                                                539             2,143              (507)                2,175
Asset disposals                                                    --               162              (162)                   --
Other exit costs                                                   32                15                --                    47
                                                                 ----            ------             -----                ------

                                                                 $799            $2,320             $(757)               $2,362
                                                                 ====            ======             =====                ======
</TABLE>

(16) Income Taxes

There is no provision for federal, state or local, and foreign income taxes for
all periods presented, since the Company has incurred losses for tax purposes
since inception. At December 31, 2003 and 2002, the Company had approximately
$164.0 and $188.4 million, respectively, of federal net operating loss
carryforwards available to offset future taxable income. Such carryforwards
expire in various years through 2023. The Company has recorded a full valuation
allowance against its deferred tax assets since management believes that, after
considering all the available objective evidence, it is not more likely than not
that these assets will be realized. Accordingly, for the year ended December 31,
2003 the valuation allowance decreased by $15.8 million and for the year ended
Dcember 31, 2002 the valuation allowance increased by $448,000. The tax effect
of temporary differences that give rise to significant portions of federal
deferred tax assets principally consists of the Company's net operating loss
carryforwards.

Under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"),
the utilization of net operating loss carryforwards may be limited under the
change in stock ownership rules of the Code. As a result of numerous historical
equity transactions, the Company has experienced "ownership changes," as defined
by Section 382.0. As a result of a study of its equity transactions, the Company
has determined that there exists significant limitations on its ability to
offset future taxable income with its existing net operating loss carryforwards.

The elimination of outstanding debt in 2003 will result in substantial income
from cancellation of debt for income tax purposes. The Company intends to
minimize its income tax payable as a result of the restructuring by, among other
things, offsetting the income with its historical net operating losses and
otherwise reducing the income in accordance with applicable income tax rules. As
a result, the Company does not expect to incur any material current income tax
liability from the elimination of this debt. However, the relevant tax
authorities may challenge the Company's income tax positions. See Note 18.

The effects of temporary differences and tax loss carryforwards that give rise
to significant portions of federal deferred tax assets and deferred tax
liabilities at December 31, 2003 and 2002 are presented below, in thousands.


                                      -78-
<PAGE>

<TABLE>
<CAPTION>

                                                                                               December 31,
                                                                                            2003           2002
                                                                                            ----           ----

<S>                                                                                       <C>            <C>

           Deferred tax assets:
           Net operating loss carryforwards............................                   $65,588        $79,548
           Accounts receivable principally due to
             allowance for doubtful accounts...........................                     1,624          2,277
           Non-cash compensation.......................................                        --            398
           Plant and equipment, principally due to
             differences in depreciation...............................                       817          1,416
           Write down of assets and investments........................                     6,703          7,038
           Accrued expenses............................................                       577            590
           Restructuring reserve.......................................                       790            801
           Other.......................................................                       235            112
                                                                                         --------       --------

           Gross deferred tax assets...................................                    76,334         92,180
           Less: valuation allowance...................................                   (76,334)       (92,180)
                                                                                         --------       --------

                    Net deferred tax assets............................                  $    --        $     --
                                                                                         ========       ========
</TABLE>

Of the total deferred tax assets of $76.3 million existing on December 31, 2003,
subsequently recognized tax benefits, if any, in the amount of approximately
$5.6 million will be applied directly to contributed capital when realized. This
amount relates to the tax effect of deductions for stock options included in the
Company's net operating loss carryforward.

 (17)      Valuation and Qualifying Accounts


Additions and write-offs charged to the allowance for doubtful accounts is
presented below, in thousands.

<TABLE>
<CAPTION>

                                                              Additions
                                               Balance at     charged to                                      Balance
                                              beginning of    costs and     Additions from    Deductions/     at end
Allowance for doubtful accounts                   year         expenses      acquisitions      write-offs    of period
                                                  ----         --------      ------------      ----------    ---------

<S>                                              <C>           <C>          <C>               <C>           <C>
For the year ended
December 31, 2001.........................         $   777       $ 7,224      $  8,731          $ 2,185       $14,547
For the year ended
December 31, 2002.........................         $14,547       $ 2,596      $      -          $ 9,091       $ 8,052
For the year ended
December 31, 2003.........................         $ 8,052       $     1      $      -          $ 3,229       $ 4,824
</TABLE>


(18)       Commitments and Contingencies

Master Carrier Agreement


In connection with the acquisition of the EasyLink Services business from AT&T
Corp., the Company entered into a Master Carrier Agreement with AT&T. Under this
agreement, AT&T has provided the Company with a variety of telecommunications
services that are required in connection with the provision of the Company's
services. The term of the agreement for network connection services is for 36
months through May 2005 and the term of the agreement for private line and
satellite services expired in March, 2004. The Company is negotiating with AT&T
to extend the private line and satellite services agreement for a period of 18
to 24 months. Under the agreement, the Company has a minimum purchase commitment
for network connection services equal to $3 million for each of the three years
of the contract. If the Company terminates the network connection services or
the private line and satellite services prior to the end of the term or AT&T
terminates the services for the Company's breach, the Company must pay to AT&T a
termination charge equal to 50% of the unsatisfied minimum purchase commitment
for these services for the period in which termination occurs plus 50% of the
minimum purchase commitment for each remaining commitment period in the term.
During 2003, the Company entered into a separate agreement for a term of 36
months ending in September 2006 for switched services from AT&T which includes a
minimum revenue commitment of $120,000 per year.

Other Telecommunications Services



                                      -79-
<PAGE>

The Company has committed to purchase from MCI Worldcom a minimum of $75,000 per
month in other telecommunications services through January 2005 and to purchase
from XO Communications, Inc., a minimum of $35,000 per month in services through
November 2004. The Company also has one year commitments to purchase internet
bandwidth services from various providers that aggregate approximately $43,000
per month.


Legal Proceedings

From time to time the Company has been, and expects to continue to be, subject
to legal proceedings and claims in the ordinary course of business. These
include claims of alleged infringement of third-party patents, trademarks,
copyrights, domain names and other similar proprietary rights; employment
claims; and contract claims. These claims include pending claims that some of
our services employ technology covered by third party patents. These claims,
even if not meritorious, could require the Company to expend significant
financial and managerial resources. No assurance can be given as to the outcome
of one or more claims of this nature. If an infringement claim were determined
in a manner adverse to the Company, the Company may be required to discontinue
use of any infringing technology, to pay damages and/or to pay ongoing license
fees which would increase the Company's costs of providing the service.

The Company has also received notices or claims from certain third parties for
disputed and unpaid accounts payable. The Company believes that it has
appropriately reserved for the amount of any liability that may arise out of
these matters, and management believes that these matters will be resolved
without a material effect on the Company's financial position or results of
operations.

In connection with the termination of an agreement to sell the portal operations
of the Company's discontinued India.com business, the Company brought suit
against a broker that it had engaged in connection with the proposed sale of the
portal operations alleging, among other things, breach of contract and
misrepresentation. The broker brought a counterclaim against the Company for a
brokerage fee that would have been payable on the closing of the proposed sale.
The court entered a judgment in the amount of $931,000 against the Company. In
response to the judgment, the Company filed a motion to alter the judgment in
which the Company, among other things, requested that the Court vacate the
judgment or reduce the amount of damages. On February 20, 2003, the Court
vacated the original judgment and entered a declaratory judgment in the
Company's favor that the Company does not owe the broker any fee or other
compensation arising from the failed sale of the portal operations. On March 13,
2003, the broker filed a motion to amend the judgment or for a new trial
requesting, among other things, re-instatement of the original judgment or, in
the alternative, a new trial. On September 10, 2003, the Court reinstated the
previously vacated judgment in favor of the broker in the original amount of
$931,000. The Company has filed for an appeal. The Court has permitted the
Company, in lieu of posting an appeal bond, to place $50,000 per month for eight
months commencing November 7, 2003, for a total of $400,000, into a trust
account to provide funds for the payment of the judgment if upheld on appeal.
The broker appealed the Court's order permitting the Company to place funds in
the trust account in lieu of posting an appeal bond. Although the Company
intends to pursue its appeal vigorously, no assurance can be given as to the
Company's likelihood of success or its ultimate liability, if any, in connection
with this matter. Although the Company intends to defend vigorously this matter,
it can provide no assurance that its ultimate liability, if any, in connection
with the claim will not have a material adverse effect on its cash flows.

On November 19, 2003, Depository Trust Company or DTC instituted suit against
the Company in the United States District Court for the District of New Jersey
for moneys allegedly due under a sublease entered into by the Company in
September 1999 for premises located in Jersey City, New Jersey. DTC seeks
additional moneys from the Company to compensate DTC for alleged damages
resulting from the Company's alleged breach of the Sublease and the resulting
termination thereof by DTC in October 2001. The original sublease term was
through December 30, 2005. The Company's obligations under the sublease
consisted of annual fixed rent of approximately $500,000 and additional rent
based on expenses relating to the building allocated to the Company under the
sublease. The Company has filed an Answer and Counterclaim against DTC, seeking
the return of all or a substantial portion of the proceeds of a $1 million
letter of credit procured by the Company to secure its obligations under the
sublease and drawn upon in full by DTC and alleging that DTC failed to mitigate
damages by not re-renting the space. The Company believes that it has
meritorious defenses to the claim filed by DTC and believes that the Company's
counterclaim is meritorious. Although the Company intends to defend vigorously
this matter, the Company can give no assurance that its ultimate liability, if
any, in connection with the claim will not have a material adverse effect on our
results of operations, financial condition or cash flows.

Other
-----

The Company's tax filings may be subject to challenge by various tax
authorities. See Note 16. Although the Company believes its tax positions are in
accordance with the relevant laws and regulations, they may be subject to
interpretation by such authorities. The Company cannot predict whether any
changes to its anticipated tax positions and filings could impact its results of
operations, financial condition or cash flows.

An Indian-based subsiidiary of the Company's discontinued India.com Inc.
subsidiary has received notices of tax assessment from the Indian tax
authorities for approximately $650,000 in tax assessments. The subsidiary, which
ceased operations in December 2001, intends to defend the assessments. The
Company has established what it believes to be appropriate reserves for any
liability of the subsidiary for these assessments.

(19) Quarterly Financial Information - Unaudited

Condensed Quarterly Consolidated Statements of Operations (in thousands, except
per share data)


                                      -80-
<PAGE>

<TABLE>
<CAPTION>

                                                            2003                                          2002
                                                            ----                                          ----

                                        Fourth       Third      Second      First     Fourth       Third       Second      First
                                        Quarter     Quarter     Quarter    Quarter    Quarter     Quarter      Quarter    Quarter
                                        -------     -------     -------    -------    -------     -------      -------    -------

<S>                                     <C>         <C>         <C>        <C>        <C>         <C>         <C>        <C>
Revenues.............................   $24,738     $25,065     $25,802    $25,742    $26,003     $28,017     $30,029    $30,305
Cost of revenues.....................    11,622      10,863      13,361     13,707     13,434      14,012      14,282     15,872
                                         ------      ------      ------     ------     ------      ------      ------     ------

Gross profit.........................    13,116      14,202      12,441     12,035     12,569      14,005      15,747     14,433
Operating expenses(1)................    12,571      12,760      12,787     14,595     93,926      18,009      15,706     16,046
                                         ------      ------      ------     ------     ------      ------      ------     ------

 Income(loss)  from operations.......       545       1,442        (346)    (2,560)   (81,357)     (4,004)         41     (1,613)
Gain/(loss) from debt restructuring         412          --      47,026      6,640         --       6,558          --         --
Other income/(expense), net(2).......      (116)        (75)       (304)      (778)    (2,315)       (796)     (1,320)    (1,039)
                                           -----        ----       -----      -----    -------       -----     -------    -------

Income(loss)  from continuing
operations...........................       841       1,367      46,376      3,302    (83,672)      1,758      (1,279)    (2,652)
                                            ---       -----      ------      -----    --------      -----      -------    -------

Loss  from discontinued
operations...........................      (100)       (838)         --         --         --          --          --         --
Extraordinary gain...................        --          --          --         --                                            --
                                             --          --          --         --                                            --

Net  income(loss)....................       741         529      46,376      3,302    (83,672)      1,758      (1,279)    (2,652)
                                            ===         ===      ======      =====    ========      =====      =======    =======

Basic and diluted income(loss)
per share:
Income(loss)  from continuing
operations...........................     $0.02      $0.03       $1.28       $0.19    $(4.86)      $0.10     $(0.08)     $(0.16)
Loss  from discontinued
operations...........................       --       (0.02)        --          --         --          --          --          --
Extraordinary gain...................       --          --         --          --         --          --          --          --
                                                                                          --          --          --          --

Net  income(loss)....................     $0.02      $0.01       $1.28       $0.19    $(4.86)      $0.10     $(0.08)     $(0.16)
                                          =====      =====       =====       =====    =======      =====     =======     =======
</TABLE>

Due to changes in the number of shares outstanding, quarterly loss per share
amounts do not necessarily add to the totals for the years.

         (1)      Included in operating expenses are impairment and
                  restructuring charges of $79,394 in Q4 2002.

         (2)      Included in other income/(expense) are impairment of
                  investment charges of $1,515 in Q4 2002.


                                      -81-
<PAGE>

 (20)  Geographic Disclosure

<TABLE>
<CAPTION>

                                                                                             Geographic Information
                                                                                               For the Years Ended
                                                                                   2003              2002            2001

<S>                                                                             <C>               <C>             <C>

United States:
Revenues...............................................................         $ 77,019          $ 89,356        $ 100,442
Operating income (loss)................................................             (175)          (84,543)        (168,019)
Total assets...........................................................           49,408            58,704          161,366
Long lived assets......................................................           27,585            34,317          129,331

All other regions:
Revenues...............................................................           24,328            24,998           23,487
Operating income (loss)................................................             (742)           (2,390)          (4,222)
Total assets...........................................................                4             2,307            8,876
Long lived assets......................................................              951             1,544            2,311
-----------------------------------------------------------------------------------------------------------------------------

Significant country included in all other regions

United Kingdom:
Revenues...............................................................           20,463            20,940           19,032
Operating income (loss)................................................              172            (1,798)          (3,755)
Total assets...........................................................            1,176             2,453            7,758
Long lived assets......................................................              541               938            1,599
</TABLE>

Geographic data is classified based on the location of the Company's operation
that provides selling and general account maintenance of the customer's
accounts.



                                      -82-
<PAGE>

Item 9     Changes in and Disagreements With Accountants on Accounting and
           Financial Disclosure

Not applicable.

Item 9A.   Controls and Procedures

As of the end of the period covered by this report, the Company's management,
with the participation of our Chief Executive Officer and President (principal
executive officer) and Vice President and Chief Financial Officer (principal
financial officer), carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934). Based upon that evaluation, our Chief
Executive Officer and President (principal executive officer) and Vice President
and Chief Financial Officer (principal financial officer) concluded that these
disclosure controls and procedures were effective as of the end of the period
covered in this report. In addition, no change in our internal control over
financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange
Act of 1934) occurred during the fourth quarter of our fiscal year ended
December 31, 2003 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

                                    Part III

The information required by Items 10 through 14 in this part is omitted pursuant
to Instruction G of Form 10-K, and will be included in an amendment to this Form
10-K or in a definitive Proxy Statement, pursuant to Regulation 14A, not later
than 120 days after December 31, 2003.

                                     Part IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

Exhibits.

Some of the exhibits referenced below are incorporated by reference to filings
made by EasyLink Services Corporation before the date hereof.

2.1+     Agreement and Plan of Merger dated as of December 11, 1999 by and among
         Mail.com, Inc., Mast Acquisition Corp. and NetMoves Corporation.
         (Incorporated by reference to Exhibit 2.1 of Mail.com, Inc.'s Current
         Report on Form 8-K filed December 16, 1999)

2.2      Form of Company Voting Agreement dated as of December 11, 1999 by and
         between Mail.com, Inc. and certain directors and officers of NetMoves
         Corporation. (Incorporated by reference to Exhibit 2.2 of Mail.com,
         Inc.'s Current Report on Form 8-K filed on December 16, 1999)

2.3+     Agreement and Plan of Merger dated as of March 14, 2000 by and among
         Mail.com, Inc., Asia.com, Inc., eLong.com, Inc. and the Stockholders of
         eLong.com, Inc. (Incorporated by reference to Exhibit 2.1 of Mail.com,
         Inc.'s Current Report on Form 8-K filed on March 28, 2000)

2.4+     Agreement and Plan of Merger by and among Mail.com, Inc., ML
         Acquisition Corp., Swift Telecommunications, Inc. ("STI") and George
         Abi Zeid, as sole shareholder of STI, dated as of January 31, 2001.
         (Incorporated by reference to Exhibit 2.1 of Mail.com, Inc.'s Current
         Report on Form 8-K filed February 8, 2001)

2.5      Letter Agreement dated January 31, 2001 between Mail.com, Inc. and
         George Abi Zeid relating to Telecom International, Inc. (Incorporated
         by reference to Exhibit 2.2 of Mail.com, Inc.'s Current Report on Form
         8-K filed February 8, 2001)

2.6      Letter Agreement dated January 31, 2001 between Mail.com, Inc. and
         George Abi Zeid relating to the 25% minority interests in Xtreme Global
         Communications (S) Pte Ltd. and Xtreme Global Communications Sdn Bhd.
         (Incorporated by reference to Exhibit 2.3 of Mail.com, Inc.'s Current
         Report on Form 8-K filed February 8, 2001)

2.7+     Asset Purchase dated December 14, 2000 between AT&T Corp. and Swift
         Telecommunications, Inc. (Incorporated by reference to Exhibit 2.1 of
         Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

2.8+     Asset Purchase Agreement dated as of March 30, 2001 by and among
         Mail.com, Inc. and Net2Phone EMail, Inc. (Incorporated by reference to
         Exhibit 2.8 of EasyLink Services Corporation's Annual Report on Form
         10-K for the year ended December 31, 2001)

                                      -83-
<PAGE>

3.1      Amended and Restated Certificate of Incorporation (Incorporated by
         reference to Exhibit 4.1 of Mail.com, Inc.'s Registration Statement on
         Form S-8 filed June 19, 2000)

3.2      Certificate of Amendment of Amended and Restated Certificate of
         Incorporation (Incorporated by reference to Exhibit 4.2 of Mail.com,
         Inc.'s Registration Statement on Form S-8 filed June 19, 2000)

3.3      Certificate of Ownership and Merger (Incorporated by reference to
         Exhibit 3.3 of EasyLink Services Corporation's Annual Report on Form
         10-K for the year ended December 31, 2001)

3.4      Certificate of Amendment of Amended and Restated Certificate of
         Incorporation (Incorporated by reference to Exhibit 4.1 of EasyLink
         Services Corporation's Current Report on Form 8-K filed January 22,
         2002)

3.5      By-Laws. (Incorporated by reference to Exhibit 3(ii) to the Company's
         Quarterly Report on Form 10-Q filed with the Securities and Exchange
         Commission on May 15, 2003)

4.1      Specimen Class A common stock certificate (Incorporated by reference to
         Exhibit 10.9 to EasyLink Services Corporation's Annual Report on Form
         10-K for the year ended December 31, 2001)

10.1     Employment Agreement between EasyLink Services Corporation and Thomas
         Murawski dated February 1, 2002. (Incorporated by reference to Exhibit
         10 to Amendment No. 1 to EasyLink Service Corporation's Registration
         Statement on Form S-3, Registration No. 333-76578)

10.2     Amendment No. 1 dated as of August 8, 2003 to Employment Agreement
         between Thomas Murawski and the Company (Incorporated by reference to
         Exhibit 10.1 of EasyLink Services Corporation's Current Report on Form
         10-Q filed August 14, 2003)

10.1A    Employment Agreement between EasyLink Services Corporation and Gerald
         Gorman dated November 12, 2002. (Incorporated by reference to Exhibit
         10 to EasyLink Services Corporation's Quarterly Report on Form 10-Q for
         the quarterly period ended September 30, 2002)

10.2A    Amendment No. 1 dated November 12, 2003 to Employment Agreement between
         EasyLink Services Corporation and Gerald Gorman (Incorporated by
         reference to Exhibit 10.1 to EasyLink Services Corporation's Quarterly
         Report on Form 10-Q for the quarterly period ended September 30, 2003)

10.3     Employment Agreement dated February 23, 2001 between Mail.com and
         George Abi Zeid. (Incorporated by reference to Exhibit 10.1 of
         Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

10.4     Amendment dated June 1, 2003 to Employment Agreement between EasyLink
         Services Corporation and George Abi Zeid

10.5     Employment Agreement between EasyLink Services Corporation and Michael
         A. Doyle dated March 22, 2004

10.6     Employment Agreement between Mail.com, Inc. and Debra McClister dated
         April 1, 1999. (Incorporated by reference to Exhibit 10.4 to the IPO
         Registration Statement)

10.7     Employment Agreement between Mail.com, Inc. and David Ambrosia dated
         May 19, 1999 (Incorporated by reference to Exhibit 10.6 to the IPO
         Registration Statement)

10.8     2004 Executive Incentive Plan - Level 1 (applicable to Chief Executive
         Officer)

10.9     2004 Executive Incentive Plan - Level 1 International (applicable to
         President - International Operations)

10.10    2004 Executive Incentive Plan - Level 2 (applicable to other named
         executive officers)

10.11    2004 Executive Incentive Plan - Vice President of Sales

10.12    Stock Option Agreement between Mail.com, Inc. and Gerald Gorman dated
         December 31, 1996. (Incorporated by reference to Exhibit 10.11 to the
         IPO Registration Statement)


                                      -84-
<PAGE>

10.13    Stock Option Agreement between Mail.com, Inc. and Gerald Gorman dated
         June 1, 1996. (Incorporated by reference to Exhibit 10.12 to the IPO
         Registration Statement)

10.14    1996 Employee Stock Option Plan (Incorporated by reference to Exhibit
         10.14 to the IPO Registration Statement)

10.15    1997 Employee Stock Option Plan. (Incorporated by reference to Exhibit
         10.15 to the IPO Registration Statement)

10.16    1998 Employee Stock Option Plan. (Incorporated by reference to Exhibit
         10.16 to the IPO Registration Statement)

10.17    1999 Employee Stock Option Plan. (Incorporated by reference to Exhibit
         10.17 to the IPO Registration Statement)

10.18    Mail.com, Inc. Supplemental 1999 Stock Option Plan. (Incorporated by
         reference to Exhibit 10.2 of Mail.com, Inc.'s Registration Statement on
         Form S-8 filed June 19, 2000)

10.19    Mail.com, Inc. Allegro Group Stock Option Plan. (Incorporated by
         reference to Exhibit 10.iii(A)(1) of Mail.com, Inc.'s Quarterly Report
         on Form 10-Q for the quarterly period ended September 30, 1999)

10.20    Mail.com, Inc. TCOM Stock Option Plan. (Incorporated by reference to
         Exhibit 10.iii(A)(2) of Mail.com, Inc.'s Quarterly Report on Form 10-Q
         for the quarterly period ended September 30, 1999)

10.21    Mail.com, Inc. 2000 Stock Option Plan. (Incorporated by reference to
         Exhibit 10.1 of Mail.com, Inc.'s Registration Statement on Form S-8
         filed June 19, 2000)

10.22    Mail.com, Inc. Supplemental 2000 Stock Option Plan. (Incorporated by
         reference to Exhibit 10.3 of Mail.com, Inc.'s Registration Statement on
         Form S-8 filed June 19, 2000)

10.23    EasyLink Services Corporation 2001 Stock Option Plan. (Incorporated by
         reference to Appendix B to Definitive Proxy Statement of EasyLink
         Services Corporation filed on April 27, 2001)

10.24    EasyLink Services Corporation 2002 Stock Option Plan. (Incorporated by
         reference to Appendix A to Definitive Proxy Statement of EasyLink
         Services Corporation's filed on April 23, 2002)

10.25    EasyLink Services Corporation 2003 Stock Option Plan. (Incorporated by
         reference to Appendix A to Definitive Proxy Statement of EasyLink
         Services Corporation's filed on July 1, 2003)

10.26    1990 Stock Option Plan (Incorporated by reference to Exhibit 10.3 to
         NetMoves Corporation's Registration Statement on Form S-1, Registration
         No. 333-09613 ("NetMoves Registration Statement"))

10.27    1996 Stock Option/Stock Issuance Plan (Incorporated by reference to
         Exhibit 10.4 to the NetMoves Registration Statement)

10.28    Description of Stock Option Issued to Thomas Murawski (Incorporated by
         reference to Form of Notice To Record Shareholders of Mail.com, Inc.
         contained in Exhibit 99.1 of Mail.com, Inc.'s Current Report on Form
         8-K filed January 17, 2001)

10.29    Form of Indemnification Agreement for Directors and Officers
         (Incorporated by reference to Exhibit 10.1 of the Company's Quarterly
         Report on Form 10-Q filed May 15, 2003)

10.30    Class A Preferred Stock Purchase Agreement dated May 27, 1997
         (Incorporated by reference to Exhibit 10.25 to the IPO Registration
         Statement)

10.31    Waiver, Consent and Amendment to Class A Preferred Stock Purchase
         Agreement and Investors' Rights Agreement, dated July 31, 1998.
         (Incorporated by reference to Exhibit 10.26 to the IPO Registration
         Statement)

10.32    Sublease Agreement between Mail.com, Inc. and Depository Trust Company
         (Incorporated by reference to Exhibit 10.ii(D)(1) of Mail.com, Inc.'s
         Quarterly Report on Form 10-Q for the quarterly period ended September
         30, 1999)

10.33    Lease Agreement between EasyLink Services Corporation and BT
         Piscataway, LLC dated July 23, 2003 relating to leased premises at the
         Company's headquarters located at 33 Knightsbridge Road, Piscataway,
         New Jersey


                                      -85-
<PAGE>

10.34    Indenture dated as of January 26, 2000 by and between Mail.com, Inc.
         and American Stock Transfer & Trust Company, as Trustee. (Incorporated
         by reference to Exhibit 10.55 of Mail.com, Inc.'s Post-Effective
         Amendment No. 1 to Form S-4 registration Statement (File No. 333-94807)
         filed on February 3, 2000)

10.35    Designation Letter dated January 8, 2001 from Mail.com, Inc. to Federal
         Partners, L.P. (Incorporated by reference to Exhibit 99.4 of Mail.com,
         Inc.'s Current Report on Form 8-K filed January 10, 2001)

10.36    Amended and Restated Promissory Note in the original principal amount
         of $10,975,082 effective September 1, 2003 (incorporated by reference
         to Exhibit 99 contained in EasyLink Services Corporation's Current
         Report on Form 8-K filed October 22, 2003)

10.37    Pledge Agreement between Mail.com, Inc. and AT&T Corp. dated January
         31, 2001 originally securing promissory note in original principal
         amount of $35 million and now securing promissory note referenced in
         Exhibit 10.36 of the filing (Incorporated by reference to Exhibit 99.2
         of Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

10.38    Pledge Agreement between Swift Telecommunications, Inc. and AT&T Corp.
         dated January 31, 2001 securing promissory note in original principal
         amount of $35 million and now securing promissory note referenced in
         Exhibit 10.36 of the filing (Incorporated by reference to Exhibit 99.3
         of Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

10.39    Security Agreement between Swift Telecommunications, Inc. and AT&T
         Corp. dated January 31, 2001 securing promissory note in original
         principal amount of $35 million and now securing promissory note
         referenced in Exhibit 10.36 of the filing (Incorporated by reference to
         Exhibit 99.4 of Mail.com, Inc.'s Current Report on Form 8-K filed March
         9, 2001)

10.40    Security Agreement between Swift EasyLink Co., Inc. and AT&T Corp.
         dated January 31, 2001 securing promissory note in original principal
         amount of $35 million and now securing promissory note referenced in
         Exhibit 10.36 of the filing (Incorporated by reference to Exhibit 99.5
         of Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

10.41    Debt Exchange Agreement between George Abi Zeid and the Company
         (Incorporated by reference to Exhibit 10.2 of the Company's Quarterly
         Report on Form 10-Q filed May 15, 2003)

10.42    Letter Agreement relating to payment of accrued interest between George
         Abi Zeid and the Company and the promissory note referenced therein
         (Incorporated by reference to Exhibit 10.3 of the Company's Quarterly
         Report on Form 10-Q filed May 15, 2003)

10.43    Promissory Note in the original principal amount of $790,052.93
         effective April 1, 2003 issued to GATX Financial Corporation

10.44    Convertible Promissory Note in the original principal amount of
         $519,000 effective June 1, 2001 issued to Pentech Financial Services,
         Inc.

10.45    Security Agreement dated as of November 27, 2001 made by EasyLink
         Services Corporation in favor of The Bank of New York acting in its
         capacity as the collateral agent

10.46    Common Stock Purchase Agreement dated as of March 13, 2001, by and
         between Mail.com, Inc., and the purchaser listed therein. (Incorporated
         by reference to Exhibit 99.3 of Mail.com, Inc.'s Current Report on Form
         8-K filed March 26, 2001)

10.47    Registration Rights Agreement dated as of March 13, 2001, by and
         between Mail.com, Inc. and the investor listed therein. (Incorporated
         by reference to Exhibit 99.4 of Mail.com, Inc.'s Current Report on Form
         8-K filed March 26, 2001)

10.48

         10.48.1  Amended and Restated Master Carrier Agreement between EasyLink
                  Services Corporation and AT&T Corp. dated September 30, 2003
                  (including General Terms & Conditions) ("MCA")

         10.48.2  MCA Supplemental Terms & Conditions (incorporated by reference
                  to MCA Supplemental Terms & Conditions attached to Master
                  Carrier Agreement contained in Exhibit 2.3 to Current Report
                  on Form 8-K of EasyLink Services Corporation filed on March 9,
                  2001)


                                      -86-
<PAGE>

         10.48.3*    AT&T Network Connection Service Terms and Pricing
                     Attachments (incorporated by reference to MCA
                     Supplemental Terms & Conditions attached to Master
                     Carrier Agreement contained in Exhibit 2.3 to Current
                     Report on Form 8-K of EasyLink Services Corporation
                     filed on March 9, 2001)

         10.48.4**   AT&T MEGACOM Service & AT&T MEGACOM 800 Service Terms
                     and Pricing Attachment


         10.48.5**   AT&T Managed Internet Service Terms and Pricing Attachment

         10.48.6**   AT&T Private Line and Satellite Service Terms and
                     Pricing Attachment

         10.48.7**   AT&T Uniplan Service Terms and Pricing Attachment

10.49    Warrant dated November 27, 2001 issued to GATX Financial Corporation to
         purchase 251,000 shares of Class A common stock at an exercise price of
         $6.10 per share (after giving effect to January 2002 reverse stock
         split)

10.50    Warrant dated November 27, 2001 issued to GATX Financial Corporation to
         purchase 11,500 shares of Class A common stock at an exercise price of
         $6.10 per share (after giving effect to January 2002 reverse stock
         split)

10.51    Warrant dated November 27, 2001 issued to CitiCapital Commercial
         Leasing Corporation to purchase 48,611 shares of Class A common stock
         at an exercise price of $6.10 per share (after giving effect to January
         2002 reverse stock split)

10.52    Warrant dated November 27, 2001 issued to Forsythe/McArthur Associates,
         Inc. to purchase 64,351 shares of Class A common stock at an exercise
         price of $6.10 per share (after giving effect to January 2002 reverse
         stock split)

10.53    Warrant dated November 27, 2001 issued to Pentech Financial Services,
         Inc. to purchase 51,860 shares of Class A common stock at an exercise
         price of $6.10 per share (after giving effect to January 2002 reverse
         stock split)

10.54    Warrant dated November 27, 2001 issued to Phoenix Leasing Incorporated
         to purchase 34,289 shares of Class A common stock at an exercise price
         of $6.10 per share (after giving effect to January 2002 reverse stock
         split)

10.55    Warrant dated November 27, 2001 issued to George Abi Zeid to purchase
         268,297 shares of Class A common stock at an exercise price of $6.10
         per share (after giving effect to January 2002 reverse stock split)

10.56    Warrant dated November 27, 2001 issued to Fleet Business Credit, LLC to
         purchase 66,3172 shares of Class A common stock at an exercise price of
         $6.10 per share (after giving effect to January 2002 reverse stock
         split)

21       Subsidiaries of EasyLink Services Corporation

23       Consent of KPMG LLP

31.1     Certification of Chief Executive Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002

31.2     Certification of Chief Financial Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002

32.1     Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
         1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002.

32.2     Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
         1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002.

*        Confidential treatment granted.

**       Confidential treatment has been requested for portions of this exhibit.

+        Disclosure schedules and other attachments are omitted, but will be
         furnished supplementally to the Commission upon request.


                                      -87-
<PAGE>

Financial Statement Schedules

None

Reports on Form 8-K-

EasyLink Services Corporation filed the following reports on Form 8-K during the
three months ended December 31, 2003:

On October 22, the Company filed a Form 8-K to announce that announce the
settlement of its legal dispute with AT&T Corp. and PTEK Holdings, Inc. and to
update its disclosure on the status of its legal dispute with a broker regarding
the payment of a fee.

On November 7, 2003, the Company submitted a Form 8-K to furnish its quarterly
earnings announcement pursuant to Item 12 of Form 8-K.


                                      -88-
<PAGE>


Signatures

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 30, 2004.

                                   EasyLink Services Corporation
                                  (Registrant)

                                   By /s/ THOMAS F. MURAWSKI
                                   ---------------------------------------
                                  (Thomas F. Murawski, Chief Executive Officer
                                   and President)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on March 30, 2004.

/s/      GERALD GORMAN           Chairman, Director

(Gerald Gorman)

/s/      THOMAS F. MURAWSKI      Chief Executive Officer and President, Director
---------------------------      (Principal Executive Officer)
(Thomas F. Murawski)

/s/      GEORGE ABI ZEID         Executive Vice President, President -
---------------------------      International Operations, Director
(George Abi Zeid)

/s/      MICHAEL A. DOYLE        Vice President and Chief Financial
---------------------------      Officer
(Michael A. Doyle)               (Principal Accounting and Financial Officer)

/s/      DAVID W. AMBROSIA       Executive Vice President, General Counsel
---------------------------         and Secretary
(David Ambrosia)

/s/      DEBRA L. McCLISTER      Executive Vice President
---------------------------
(Debra L. McClister)

/s/      ROBERT J. CASALE        Director
---------------------------
(Robert J. Casale)

/s/      STEPHEN M. DUFF         Director
---------------------------
(Stephen M. Duff)

/s/      GEORGE F. KNAPP         Director
---------------------------
(George F. Knapp)

/s/      DENNIS R. RANEY         Director
---------------------------
(Dennis R. Raney)

                                      -89-
<PAGE>

                                  EXHIBIT INDEX

Some of the exhibits referenced below are incorporated by reference to filings
made by EasyLink Services Corporation before the date hereof.

2.1      Agreement and Plan of Merger dated as of December 11, 1999 by and among
         Mail.com, Inc., Mast Acquisition Corp. and NetMoves Corporation.
         (Incorporated by reference to Exhibit 2.1 of Mail.com, Inc.'s Current
         Report on Form 8-K filed December 16, 1999)

2.2      Form of Company Voting Agreement dated as of December 11, 1999 by and
         between Mail.com, Inc. and certain directors and officers of NetMoves
         Corporation. (Incorporated by reference to Exhibit 2.2 of Mail.com,
         Inc.'s Current Report on Form 8-K filed on December 16, 1999)

2.3      Agreement and Plan of Merger dated as of March 14, 2000 by and among
         Mail.com, Inc., Asia.com, Inc., eLong.com, Inc. and the Stockholders of
         eLong.com, Inc. (Incorporated by reference to Exhibit 2.1 of Mail.com,
         Inc.'s Current Report on Form 8-K filed on March 28, 2000)

2.4      Agreement and Plan of Merger by and among Mail.com, Inc., ML
         Acquisition Corp., Swift Telecommunications, Inc. ("STI") and George
         Abi Zeid, as sole shareholder of STI, dated as of January 31, 2001.
         (Incorporated by reference to Exhibit 2.1 of Mail.com, Inc.'s Current
         Report on Form 8-K filed February 8, 2001)

2.5      Letter Agreement dated January 31, 2001 between Mail.com, Inc. and
         George Abi Zeid relating to Telecom International, Inc. (Incorporated
         by reference to Exhibit 2.2 of Mail.com, Inc.'s Current Report on Form
         8-K filed February 8, 2001)

2.6      Letter Agreement dated January 31, 2001 between Mail.com, Inc. and
         George Abi Zeid relating to the 25% minority interests in Xtreme Global
         Communications (S) Pte Ltd. and Xtreme Global Communications Sdn Bhd.
         (Incorporated by reference to Exhibit 2.3 of Mail.com, Inc.'s Current
         Report on Form 8-K filed February 8, 2001)

2.7      Asset Purchase dated December 14, 2000 between AT&T Corp. and Swift
         Telecommunications, Inc. (Incorporated by reference to Exhibit 2.1 of
         Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

2.8+     Asset Purchase Agreement dated as of March 30, 2001 by and among
         Mail.com, Inc. and Net2Phone EMail, Inc. (Incorporated by reference to
         Exhibit 2.8 of EasyLink Services Corporation's Annual Report on Form
         10-K for the year ended December 31, 2001)

3.1      Amended and Restated Certificate of Incorporation (Incorporated by
         reference to Exhibit 4.1 of Mail.com, Inc.'s Registration Statement on
         Form S-8 filed June 19, 2000)

3.2      Certificate of Amendment of Amended and Restated Certificate of
         Incorporation (Incorporated by reference to Exhibit 4.2 of Mail.com,
         Inc.'s Registration Statement on Form S-8 filed June 19, 2000)

3.3      Certificate of Ownership and Merger (Incorporated by reference to
         Exhibit 3.3 of EasyLink Services Corporation's Annual Report on Form
         10-K for the year ended December 31, 2001)

3.4      Certificate of Amendment of Amended and Restated Certificate of
         Incorporation (Incorporated by reference to Exhibit 4.1 of EasyLink
         Services Corporation's Current Report on Form 8-K filed January 22,
         2002)

3.5      By-Laws. (Incorporated by reference to Exhibit 3(ii) to the Company's
         Quarterly Report on Form 10-Q filed with the Securities and Exchange
         Commission on May 15, 2003)

4.1      Specimen Class A common stock certificate (Incorporated by reference to
         Exhibit 10.9 to EasyLink Services Corporation's Annual Report on Form
         10-K for the year ended December 31, 2001)

10.1     Employment Agreement between EasyLink Services Corporation and Thomas
         Murawski dated February 1, 2002. (Incorporated by reference to Exhibit
         10 to Amendment No. 1 to EasyLink Service Corporation's Registration
         Statement on Form S-3, Registration No. 333-76578)


                                      -90-
<PAGE>

10.2     Amendment No. 1 dated as of August 8, 2003 to Employment Agreement
         between Thomas Murawski and the Company (Incorporated by reference to
         Exhibit 10.1 of EasyLink Services Corporation's Current Report on Form
         10-Q filed August 14, 2003)

10.1A    Employment Agreement between EasyLink Services Corporation and Gerald
         Gorman dated November 12, 2002. (Incorporated by reference to Exhibit
         10 to EasyLink Services Corporation's Quarterly Report on Form 10-Q for
         the quarterly period ended September 30, 2002)

10.2A    Amendment No. 1 dated November 12, 2003 to Employment Agreement between
         EasyLink Services Corporation and Gerald Gorman (Incorporated by
         reference to Exhibit 10.1 to EasyLink Services Corporation's Quarterly
         Report on Form 10-Q for the quarterly period ended September 30, 2003)

10.3     Employment Agreement dated February 23, 2001 between Mail.com and
         George Abi Zeid. (Incorporated by reference to Exhibit 10.1 of
         Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

10.4     Amendment dated as of June 1, 2001 to Employment Agreement between
         EasyLink Services Corporation and George Abi Zeid

10.5     Employment Agreement between EasyLink Services Corporation and Michael
         A. Doyle dated as of March 22, 2004

10.6     Employment Agreement between Mail.com, Inc. and Debra McClister dated
         April 1, 1999. (Incorporated by reference to Exhibit 10.4 to the IPO
         Registration Statement)

10.7     Employment Agreement between Mail.com, Inc. and David Ambrosia dated
         May 19, 1999 (Incorporated by reference to Exhibit 10.6 to the IPO
         Registration Statement)

10.8     2004 Executive Incentive Plan - Level 1 (applicable to Chief Executive
         Officer)

10.9     2004 Executive Incentive Plan - Level 1 International (applicable to
         President - International Operations)

10.10    2004 Executive Incentive Plan - Level 2 (applicable to other named
         executive officers)

10.11    2004 Executive Incentive Plan - Vice President of Sales

10.12    Stock Option Agreement between Mail.com, Inc. and Gerald Gorman dated
         December 31, 1996. (Incorporated by reference to Exhibit 10.11 to the
         IPO Registration Statement)

10.13    Stock Option Agreement between Mail.com, Inc. and Gerald Gorman dated
         June 1, 1996. (Incorporated by reference to Exhibit 10.12 to the IPO
         Registration Statement)

10.14    1996 Employee Stock Option Plan (Incorporated by reference to Exhibit
         10.14 to the IPO Registration Statement)

10.15    1997 Employee Stock Option Plan. (Incorporated by reference to Exhibit
         10.15 to the IPO Registration Statement)

10.16    1998 Employee Stock Option Plan. (Incorporated by reference to Exhibit
         10.16 to the IPO Registration Statement)

10.17    1999 Employee Stock Option Plan. (Incorporated by reference to Exhibit
         10.17 to the IPO Registration Statement)

10.18    Mail.com, Inc. Supplemental 1999 Stock Option Plan. (Incorporated by
         reference to Exhibit 10.2 of Mail.com, Inc.'s Registration Statement on
         Form S-8 filed June 19, 2000)

10.19    Mail.com, Inc. Allegro Group Stock Option Plan. (Incorporated by
         reference to Exhibit 10.iii(A)(1) of Mail.com, Inc.'s Quarterly Report
         on Form 10-Q for the quarterly period ended September 30, 1999)

10.20    Mail.com, Inc. TCOM Stock Option Plan. (Incorporated by reference to
         Exhibit 10.iii(A)(2) of Mail.com, Inc.'s Quarterly Report on Form 10-Q
         for the quarterly period ended September 30, 1999)

10.21    Mail.com, Inc. 2000 Stock Option Plan. (Incorporated by reference to
         Exhibit 10.1 of Mail.com, Inc.'s Registration Statement on Form S-8
         filed June 19, 2000)


                                      -91-
<PAGE>

10.22    Mail.com, Inc. Supplemental 2000 Stock Option Plan. (Incorporated by
         reference to Exhibit 10.3 of Mail.com, Inc.'s Registration Statement on
         Form S-8 filed June 19, 2000)

10.23    EasyLink Services Corporation 2001 Stock Option Plan. (Incorporated by
         reference to Appendix B to Definitive Proxy Statement of EasyLink
         Services Corporation filed on April 27, 2001)

10.24    EasyLink Services Corporation 2002 Stock Option Plan. (Incorporated by
         reference to Appendix A to Definitive Proxy Statement of EasyLink
         Services Corporation's filed on April 23, 2002)

10.25    EasyLink Services Corporation 2003 Stock Option Plan. (Incorporated by
         reference to Appendix A to Definitive Proxy Statement of EasyLink
         Services Corporation's filed on July 1, 2003)

10.26    1990 Stock Option Plan (Incorporated by reference to Exhibit 10.3 to
         NetMoves Corporation's Registration Statement on Form S-1, Registration
         No. 333-09613 ("NetMoves Registration Statement"))

10.27    1996 Stock Option/Stock Issuance Plan (Incorporated by reference to
         Exhibit 10.4 to the NetMoves Registration Statement)

10.28    Description of Stock Option Issued to Thomas Murawski (Incorporated by
         reference to Form of Notice To Record Shareholders of Mail.com, Inc.
         contained in Exhibit 99.1 of Mail.com, Inc.'s Current Report on Form
         8-K filed January 17, 2001)

10.29    Form of Indemnification Agreement for Directors and Officers
         (Incorporated by reference to Exhibit 10.1 of the Company's Quarterly
         Report on Form 10-Q filed May 15, 2003)

10.30    Class A Preferred Stock Purchase Agreement dated May 27, 1997
         (Incorporated by reference to Exhibit 10.25 to the IPO Registration
         Statement)

10.31    Waiver, Consent and Amendment to Class A Preferred Stock Purchase
         Agreement and Investors' Rights Agreement, dated July 31, 1998.
         (Incorporated by reference to Exhibit 10.26 to the IPO Registration
         Statement)

10.32    Sublease Agreement between Mail.com, Inc. and Depository Trust Company
         (Incorporated by reference to Exhibit 10.ii(D)(1) of Mail.com, Inc.'s
         Quarterly Report on Form 10-Q for the quarterly period ended September
         30, 1999)

10.33    Lease Agreement between EasyLink Services Corporation and BT
         Piscataway, LLC dated as of July 23, 2002 relating to leased premises
         at the Company's headquarters located at 33 Knightsbridge Road,
         Piscataway, New Jersey

10.34    Indenture dated as of January 26, 2000 by and between Mail.com, Inc.
         and American Stock Transfer & Trust Company, as Trustee. (Incorporated
         by reference to Exhibit 10.55 of Mail.com, Inc.'s Post-Effective
         Amendment No. 1 to Form S-4 registration Statement (File No. 333-94807)
         filed on February 3, 2000)

10.35    Designation Letter dated January 8, 2001 from Mail.com, Inc. to Federal
         Partners, L.P. (Incorporated by reference to Exhibit 99.4 of Mail.com,
         Inc.'s Current Report on Form 8-K filed January 10, 2001)

10.36    Amended and Restated Promissory Note in the original principal amount
         of $10,975,082 effective September 1, 2003 (Incorporated by reference
         to Exhibit 99 contained in EasyLink Services Corporation's Current
         Report on Form 8-K filed October 22, 2003)

10.37    Pledge Agreement between Mail.com, Inc. and AT&T Corp. dated January
         31, 2001 originally securing promissory note in original principal
         amount of $35 million and now securing promissory note referenced in
         Exhibit 10.36 of the filing (Incorporated by reference to Exhibit 99.2
         of Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

10.38    Pledge Agreement between Swift Telecommunications, Inc. and AT&T Corp.
         dated January 31, 2001 securing promissory note in original principal
         amount of $35 million and now securing promissory note referenced in
         Exhibit 10.36 of the filing (Incorporated by reference to Exhibit 99.3
         of Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)


                                      -92-
<PAGE>

10.39    Security Agreement between Swift Telecommunications, Inc. and AT&T
         Corp. dated January 31, 2001 securing promissory note in original
         principal amount of $35 million and now securing promissory note
         referenced in Exhibit 10.36 of the filing (Incorporated by reference to
         Exhibit 99.4 of Mail.com, Inc.'s Current Report on Form 8-K filed March
         9, 2001)

10.40    Security Agreement between Swift EasyLink Co., Inc. and AT&T Corp.
         dated January 31, 2001 securing promissory note in original principal
         amount of $35 million and now securing promissory note referenced in
         Exhibit 10.36 of the filing (Incorporated by reference to Exhibit 99.5
         of Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

10.41    Debt Exchange Agreement between George Abi Zeid and the Company
         (Incorporated by reference to Exhibit 10.2 of the Company's Quarterly
         Report on Form 10-Q filed May 15, 2003)

10.42    Letter Agreement relating to payment of accrued interest between George
         Abi Zeid and the Company and the promissory note referenced therein
         (Incorporated by reference to Exhibit 10.3 of the Company's Quarterly
         Report on Form 10-Q filed May 15, 2003)

10.43    Promissory Note in the original principal amount of $790,052.93
         effective April 1, 2003 issued to GATX Financial Corporation

10.44    Convertible Promissory Note in the original principal amount of
         $519,000 effective June 1, 2001 issued to Pentech Financial Services,
         Inc.

10.45    Security Agreement dated as of November 27, 2001 made by EasyLink
         Services Corporation in favor of The Bank of New York acting in its
         capacity as the collateral agent

10.46    Common Stock Purchase Agreement dated as of March 13, 2001, by and
         between Mail.com, Inc., and the purchaser listed therein. (Incorporated
         by reference to Exhibit 99.3 of Mail.com, Inc.'s Current Report on Form
         8-K filed March 26, 2001)

10.47    Registration Rights Agreement dated as of March 13, 2001, by and
         between Mail.com, Inc. and the investor listed therein. (Incorporated
         by reference to Exhibit 99.4 of Mail.com, Inc.'s Current Report on Form
         8-K filed March 26, 2001)

10.48

         10.48.1     Amended and Restated AT&T Master Carrier Agreement between
                     EasyLink Services Corporation and AT&T Corp. dated
                     September 30, 2003 (including General Terms &
                     Conditions) ("MCA")

         10.48.2     MCA Supplemental Terms & Conditions (Incorporated by
                     reference to MCA Supplemental Terms & Conditions
                     attached to Master Carrier Agreement contained in
                     Exhibit 2.3 to Current Report on Form 8-K of EasyLink
                     Services Corporation filed on March 9, 2001)

         10.48.3*    AT&T Network Connection Service Terms and Pricing
                     Attachment (Incorporated by reference to MCA
                     Supplemental Terms & Conditions attached to Master
                     Carrier Agreement contained in Exhibit 2.3 to Current
                     Report on Form 8-K of EasyLink Services Corporation
                     filed on March 9, 2001)

         10.48.4**   AT&T WorldNet MEGACOM Service & AT&T MEGACOM 800 Service
                     Terms and Pricing Attachment


         10.48.5**   AT&T Managed Internet Service Terms and Pricing
                     Attachment

         10.48.6**   AT&T Private Line and Satellite Service Terms and
                     Pricing Attachment

         10.48.7**   AT&T Uniplan Service Terms and Pricing Attachment

10.49    Warrant dated November 27, 2001 issued to GATX Financial Corporation to
         purchase 251,000 shares of Class A common stock at an exercise price of
         $6.10 per share (after giving effect to January 2002 reverse stock
         split)

10.50    Warrant dated November 27, 2001 issued to GATX Financial Corporation to
         purchase 11,500 shares of Class A common stock at an exercise price of
         $6.10 per share (after giving effect to January 2002 reverse stock
         split)


                                      -93-
<PAGE>

10.51    Warrant dated November 27, 2001 issued to CitiCapital Commercial
         Leasing Corporation to purchase 48,611 shares of Class A common stock
         at an exercise price of $6.10 per share (after giving effect to January
         2002 reverse stock split)

10.52    Warrant dated November 27, 2001 issued to Forsythe/McArthur Associates,
         Inc. to purchase 64,351 shares of Class A common stock at an exercise
         price of $6.10 per share (after giving effect to January 2002 reverse
         stock split)

10.53    Warrant dated November 27, 2001 issued to Pentech Financial Services,
         Inc. to purchase 51,860 shares of Class A common stock at an exercise
         price of $6.10 per share (after giving effect to January 2002 reverse
         stock split)

10.54    Warrant dated November 27, 2001 issued to Phoenix Leasing Incorporated
         to purchase 34,289 shares of Class A common stock at an exercise price
         of $6.10 per share (after giving effect to January 2002 reverse stock
         split)

10.55    Warrant dated November 27, 2001 issued to George Abi Zeid to purchase
         268,297 shares of Class A common stock at an exercise price of $6.10
         per share (after giving effect to January 2002 reverse stock split)

10.56    Warrant dated November 27, 2001 issued to Fleet Business Credit, LLC to
         purchase 66,316 shares of Class A common stock at an exercise price of
         $6.10 per share (after giving effect to January 2002 reverse stock
         split)

21       Subsidiaries of EasyLink Services Corporation

23       Consent of Independent Accountants -- KPMG LLP

31.1     Certification of Chief Executive Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002

31.2     Certification of Chief Financial Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002

32.1     Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
         1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002.

32.2     Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
         1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002.

*        Confidential treatment granted.

**       Confidential treatment has been requested for portions of this exhibit.

+        Disclosure schedules and other attachments are omitted, but will be
         furnished supplementally to the Commission upon request.



                                      -94-