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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, 2004

                                       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, 2004 was $54,532,432. 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 28, 2005: Class A common stock, 44,244,884 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2005 Annual Meeting of Shareholders are
incorporated by reference into Part III of this Form 10-K.

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FORM 10-K INDEX

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Item No.                                                                                               Page No.

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Part I

1.   Business.......................................................................................         3

2.   Properties......................................................................................       10

3.   Legal Proceedings...............................................................................       10

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............................................................       25

7.   Management's Discussion and Analysis of Financial Condition
     and Results of Operations.......................................................................       28

7A.  Quantitative and Qualitative Disclosures About Market Risk......................................       35

8.   Consolidated Financial Statements and Supplementary Data........................................       36

9.   Changes in and Disagreements with Accountants on Accounting and
     Financial Disclosure............................................................................       65

9A.  Controls and Procedures.........................................................................       65

9B.  Other Information...............................................................................       65

</TABLE>


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, 2004.



Part IV

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15.  Exhibits and Financial Statement Schedules......................................................       66

(a) Consolidated Financial Statements and Financial Statement Schedules

     (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.

(b)  Exhibits .......................................................................................       66

Signatures...........................................................................................       72

Exhibits.............................................................................................       73

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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 involving primarily the
electronic delivery of messages and transactions for our customers via EDI, fax,
email and telex; and transaction management services, which integrate a range of
services and capabilities that help customers better manage a business process
in addition to delivering a transaction.

We offer our services to thousands of business customers worldwide including
many of the Fortune Global 500. In 2004, approximately 74% of EasyLink's revenue
was attributable to our United States business and 26% 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, Korea, Malaysia, Saudi Arabia, Singapore, 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. See Note 19 to
Consolidated Financial Statements contained in Item 8 of this report for
additional information relating to our geographical operations.

Our strategy is to expand our position in the information exchange segment of
the electronic commerce market by offering to our large customer base as well as
new customers a tailored set of transaction delivery and transaction management
services that will make our customers more competitive by reducing their costs,
the time it takes them to process transactions, and the error rates associated
with manual business processes. We believe that growth of our business will
result from continued investment by existing and prospective customers 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. We expect that 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 and transaction
management 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, labor and paper-intensive methods that are
in wide use today. We derive revenue from per-message charges, per-page charges,
per-minute charges, per-character set charges, monthly per-user fees, license
fees 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 transaction management services provide a broad range of
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:
     EDI, fax, e-mail and telex;

-    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

-    transform 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 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 management and transaction delivery services to
a customer base composed predominantly of business enterprises. The following
chart describes our major service offerings in each category:

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               SERVICE                                                  DESCRIPTION

TRANSACTION MANAGEMENT SERVICES:
--------------------------------------------
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INTEGRATED DESKTOP MESSAGING SERVICES            EasyLink Integrated Desktop Messaging allows our customers to integrate fax
                                                 sending and receiving with their existing corporate email systems and associated
                                                 administrative systems. Offered on an outsourced basis, this service helps align
                                                 fax communications with existing electronic workflow systems and procedures,
                                                 including employee administration, security and compliance. In addition to
                                                 providing user faxing functionality, the service offers several key
                                                 administrative management features including user administration (including
                                                 integration with back office personnel systems), call detail reporting for
                                                 internal accounting support, and private label branding services.
</TABLE>

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EASYLINK DOCUMENT CAPTURE
 AND  MANAGEMENT SERVICES:                      EasyLink Document Capture and Management Services are a family of services 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.

                                                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.


EASYLINK PRODUCTION MESSAGING PM2.0
 SERVICE:                                       EasyLink Production Messaging PM2.0 Service is an enhanced production messaging
                                                service that enables our customers to automate and personalize outbound
                                                communications with their global business partners. This service allows
                                                customers to use Internet-based protocols (SMTP, TLS, FTP, and Secure FTP) and
                                                document structures (HTML, XML and Rich Text Format). PM2.0 supports multiple
                                                delivery options, including email, fax and file transfer, and provides
                                                network-based document transformation services including password protection and
                                                encryption of outbound transactions. Easylink's customers are able to integrate
                                                their own enterprise applications with our PM2.0 services using application
                                                programming interfaces (or APIs) and are able to administer their use of PM2.0
                                                services securely over the web. Outbound transactions delivered via PM2.0
                                                include electronic brokerage statements, newsletters, invoices, travel
                                                reservations, price notifications, trade confirmations and other business
                                                critical documents.
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                                                               5
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TRANSACTION DELIVERY SERVICES:
--------------------------------------------
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EDI SERVICES

   EASYLINK EDI SERVICE                         EasyLink EDI (Electronic Data Interchange) Service 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                      IP-EDI SERVICE The EasyLink IP (Internet Protocol) EDI Service 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.

   EASYLINK WEB EDI SERVICE                     EasyLink Web EDI Service provides an intelligent, browser-based data entry
                                                interface for trading partners to easily and efficiently exchange business
                                                documents electronically. EasyLink typically custom-develops this interface and
                                                associated back-end processing capabilities to meet the specific application
                                                needs and operating environment of our customer.

EASYLINK PRODUCTION MESSAGING SERVICES:         EasyLink Production Messaging Services allow our customers to deliver high
                                                volumes of mission-critical documents such as invoices, purchase orders,
                                                shipping notices, or bank wire transfers from virtually any enterprise
                                                environment to global business partners through various non-EDI message delivery
                                                modes including e-mail, fax, and telex. Typical applications include on-net
                                                conversion of text files to email, fax and telex formats with supporting
                                                notification of delivery status to the transaction originator.
</TABLE>

REVENUES

We derive revenue from per-message charges, per-page charges, per-minute
charges, per-character set charges, monthly per-user fees, license fees and
consulting fees.

Our 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.


WORLDWIDE SALES AND MARKETING

Our primary marketing objectives are to:

-    promote higher usage of our services

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

-    grow our new customer and distribution base; and

-    build our brand.

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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.

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.

Telephone 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,
and 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 SERVICES NETWORK

The EasyLink Services Network is a distributed, managed Internet Protocol
(IP)-based global network that supports all of our Transaction Management and
Transaction Delivery services. 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 to ensure continuous reliability for EasyLink Services
customers' business critical applications.

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 premises leased from
AT&T.

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.

                                       7
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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. However, the network for the portion of
this business relating to EDI, fax and email services continues to reside on
AT&T's premises under an agreement with AT&T, but is being operated and
maintained by EasyLink. This agreement expires on January 31, 2006, and AT&T has
informed us that they do not wish to extend the agreement beyond this date. 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. As a result, we have begun the build out of a new
network center at our corporate headquarters located in Piscataway, New Jersey
and have commenced the planning process for the migration of these operations to
this center. Effective February 1, 2003, the Company entered into a Professional
Services Agreement with AT&T providing for technical support at the AT&T
facility. The original agreement was for a term of six months but, as provided
in the agreement, has been renewed for additional six month periods at
EasyLink's request although generally at reduced levels of service.

TELECOMMUNICATIONS SERVICES

In connection with the acquisition of the EasyLink Services business from AT&T
Corporation in 2001, 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. In April, 2004, the Company entered into a Data
Service Terms and Pricing attachment (the "MCA Attachment") to the Master
Carrier Agreement for the renewed purchase of private line and satellite
services for a minimum term of 18 months with an option by the Company to extend
the term up to an additional 12 months. Under the MCA Attachment, the Company
has a minimum purchase commitment for services equal to $3.6 million over the
initial contract period of 18 months. If the Company terminates the network
connection services or the private line and satellite services prior to the end
of the applicable 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. If the Company decides to exercise the
option at the end of the initial contract period, there is no minimum purchase
commitment and the service term is on a month-to-month basis. 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. The Company has complied with the annual
minimum revenue commitment for switched services through the annual period
ending September 2004.

We have committed to purchase from MCI Worldcom a minimum of $900,000 per
12-month period in other telecommunications services through March 2007.

COMPETITION

Depending on the particular service that we offer, we compete with a range of
companies in the transaction delivery services and transaction management
services markets, 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 and transaction management sectors
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.

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Many of these competitors have greater market presence, engineering and
marketing capabilities, and/or technological, financial 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.

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.

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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
a sales office in New York City under a lease expiring in 2007. In connection
with the acquisition of the EasyLink Services business from AT&T we also lease
approximately 4,000 square feet under an Equipment Space Sublease Agreement with
AT&T, as amended, for the operation of the network equipment for this business
through January 31, 2006.

While we believe that these facilities meet our anticipated needs at least
through the end of 2005, we continually review our needs and may add facilities
in the future.

INTERNATIONAL

We lease approximately 11,000 square feet of office space in two locations in
England. One lease for the United Kingdom headquarters in London expires in June
2017, with cancellation allowable, 10 years prior to expiration in 2007. The
second lease expires in May 2005.

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 at various dates through 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.

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; claims alleging
unsolicited commercial faxes sent on behalf of our customers; and contract
claims. These claims include 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.

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
filed for an appeal. The Court has permitted the Company, in lieu of posting an
appeal bond, to place $400,000 into a trust account to provide funds for the
payment of the judgment if upheld on appeal. The Company has paid in full the
$400,000 into the trust account. Oral arguments on the appeal occurred on
September 22, 2004, and the parties await the decision of the Court of Appeals.
No assurance can be given as to the Company's likelihood of success or its
ultimate liability, if any, in connection with 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 financial condition or cash flows.

                                       10
<PAGE>

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 sought
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 Company 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. During
the fourth quarter of 2004, the Company and DTC settled the lawsuit. Under the
settlement, the Company paid DTC $30,000 in partial reimbursement for DTC's
legal expenses and the parties agreed to exchange mutual releases with respect
to all claims under the lease and the lawsuit. The court has entered an order
dismissing the case with prejudice.

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 sold
its indirect interest in the subsidiary through the disposition of India.com,
Inc. in December 2004. This indirect interest in the subsidiary was sold in
December 2004 to Gerald Gorman, the former Chairman of the board of directors.

The Company previously reported that the staff of the US Securities and Exchange
Commission was reviewing certain transactions accounting for approximately $4.8
million of revenue generated by its former advertising network business in 2000,
a year in which the Company reported $61.2 million in total revenue. The Company
announced that it has reached a settlement of the matter with the SEC. Under the
settlement, the Company agreed to the entry of an SEC order requiring that it
cease and desist from violations of certain reporting, record keeping and
internal control provisions of the federal securities laws. The Company settled
without admitting or denying the statements made in the SEC's findings. The
order does not impose any fine or other penalty upon EasyLink and does not
require restatement of any of EasyLink's historical financial statements.


On January 28, 2005, Steven Brin instituted a third party complaint against the
Company and four other companies and two individuals for implied indemnification
and/or contribution. The case was filed in the Circuit Court of Cook County,
Illinois, County Department, Chancery Division, Case No. 03 CH 13062. In the
underlying action against Mr. Brin in the same case, titled Jerold Rawson et al.
v. Steven Brin et al.,the plaintiffs filed a putative class action against Mr.
Brin and the other defendants for allegedly sending or causing to be sent
unsolicited advertisements to telephone facsimile machines in violation of the
federal Telephone Consumer Protection Act, 47 U.S.C. ss. 227, the Illinois
Consumer Fraud and Deceptive Business Practices Act and common law conversion
and trespass. Mr. Brin has denied liability to the plaintiffs. Mr. Brin alleges
in the third party complaint filed against the Company and the other third-party
defendants, however, that, if he is found liable to the plaintiffs in the
underlying complaint, then the Company and the other third party defendants
should be held liable to Mr. Brin for implied indemnification and/or
contribution. The Company has until April 13, 2005 to file its answer or
otherwise plead to the third-party complaint, absent an extension. The plaintiff
in the underlying lawsuit made an offer to the defendant to settle the claim for
$30,000. Although we intend to defend this lawsuit vigorously, we cannot assure
you that our ultimate liability, if any, in connection with this matter will not
have a material adverse effect on our results of operations, financial condition
or cash flows.

                                       11
<PAGE>

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the fiscal year covered by this report, no matters
were submitted 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

MARKET PRICE
<TABLE>
<CAPTION>
                                                                                         2004
                                                       FOURTH QUARTER      THIRD QUARTER       SECOND QUARTER       FIRST QUARTER
                                                       --------------      -------------       --------------       -------------
<S>                                                    <C>                 <C>                 <C>                  <C>
High............................................           $1.66              $1.50                $2.17               $1.90
Low.............................................           $1.12              $1.15                $1.09               $1.35
MARKET PRICE
                                                                                         2003
                                                       FOURTH QUARTER      THIRD QUARTER       SECOND QUARTER       FIRST QUARTER
                                                       --------------      -------------       --------------       ------------
High............................................           $1.96              $2.65                $0.88               $1.00
Low.............................................           $1.11              $0.63                $0.45               $0.40

</TABLE>


The Nasdaq closing market price at February 28, 2005 was $1.08.

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. The
Company's credit agreement with Wells Fargo Foothill, Inc. contains a
prohibition on any distribution or any declaration or payment of any dividends
(in cash or other property, other than common stock) on, or purchase,
acquisition, redemption, or retirement of any of any stock, of any class, of the
Company.

NUMBER OF SECURITY HOLDERS

At February 28, 2005, the approximate number of holders of record of Class A
common stock was 637, although there were many more beneficial owners.

STOCK LISTINGS

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


EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 31, 2004 with respect to
shares of our common stock that may be issued under our existing equity
compensation plans.


<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31, 2004
                                         ------------------------------------------------------------------------------------------
                                                                                                      NUMBER OF SECURITIES
                                         NUMBER OF SECURITES TO BE  WEIGHTED AVERAGE EXERCISE        REMAINING AVAILABLE FOR
                                          ISSUED UPON EXERCISE OF     PRICE OF OUTSTANDING         FUTURE ISSUANCE UNDER EQUITY
                                           OUTSTANDING OPTIONS,       OPTIONS, WARRANTS AND       COMPENSATION PLANS (EXCLUDING
                                            WARRANTS AND RIGHTS            RIGHTS               SECURITIES REFLECTED IN COLUMN (A))
PLAN CATEGORY                                     (A)                         (B)                            (C)
-------------                            -----------------------    ------------------------    -----------------------------------
<S>                                      <C>                        <C>                         <C>

Equity compensation plans approved by
security holders . . . . . . . . . . . .        4,403,478                  $   2.73                           721,465

Equity compensation plans not approved
by security holders (1) . . . . . . . .           688,785                  $  10.65                                 -
                                         -----------------------    ------------------------    -----------------------------------

Total:  . . . . . . . . . . . . . . . .         5,092,263                  $   3.80                           721,465

</TABLE>

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

(1) Includes options to purchase 77,028 shares of Class A common stock at a
weighted average exercise price of $13.20 per share under the Netmoves 1996
Stock Option Plan which were assumed in connection with the acquisition of
Netmoves Corporation by the Company in 2000.

                                       12
<PAGE>

NON-SECURITY HOLDER-APPROVED EQUITY COMPENSATION PLANS

       Each of the stock option plans listed in the table below under the
sub-heading "Plans Adopted in Acquisitions" were adopted or assumed in
connection with the acquisition by the Company of the entities after which the
plan is named. Except for the 1996 Netmoves Stock Option Plan, the plan terms
and conditions are substantially the same as the terms of the Company's plans
for which shareholder approval was obtained, except that incentive stock options
were not issuable under such plans. Options under each plan were initially
granted to employees of the acquired entity who became employees of the Company
after the acquisition or, in the case of the 1996 Netmoves Stock Option Plan,
were assumed by the Company. The plans are administered by a Committee of the
Board of Directors. The Plans may be amended by the Board of Directors. The
number of shares underlying outstanding options, the weighted average exercise
price and the number of shares underlying options available for future grant
under each plan are specified in the table below.

       The Mail.com 1999 Supplemental Stock Option Plan and the Mail.com 2000
Supplemental Stock Option Plan provide for the grant of options to the Company's
directors, employees and consultants and contain terms and conditions that are
substantially the same as the terms of the Company's plans for which shareholder
approval was obtained, except that incentive stock options are not issuable
under such plans. The plans are administered by the Compensation Committee of
the Board of Directors. The Plans may be amended by the Board of Directors.
Under the plans, options that expire unexercised may be re-granted by the
Company to other employees. The number of shares underlying outstanding options,
the weighted average exercise price and the number of shares underlying options
available for future grant under each of these plans are specified in the table
below.


<TABLE>
<CAPTION>

                                                                 YEAR ENDED DECEMBER 31, 2004
                                     --------------------------------------------------------------------------------------
                                                                                                  NUMBER OF SECURITIES
                                     NUMBER OF SECURITES TO BE  WEIGHTED AVERAGE EXERCISE        REMAINING AVAILABLE FOR
                                      ISSUED UPON EXERCISE OF      PRICE OF OUTSTANDING       FUTURE ISSUANCE UNDER EQUITY
                                       OUTSTANDING OPTIONS,       OPTIONS, WARRANTS AND      COMPENSATION PLANS (EXCLUDING
                                       WARRANTS AND RIGHTS              RIGHTS                  SECURITIES REFLECTED IN
                                                                                                     COLUMN (A))
PLAN                                          (A)                         (B)                            (C)
----                                 -----------------------    ------------------------     ------------------------------
<S>                                  <C>                        <C>                            <C>

Plans Adopted in Acquisitions:
The Allegro Group Stock Option
Plan .............................           1,139               $            7.84                     -
Lansoft Stock Option Plan ........             600               $           16.88                     -
Netmoves 2000 Stock Option Plan...          46,554               $           17.71                     -
Netmoves 1996 Stock Option Plan...          77,028               $           13.20                     -
Other Plans:
Mail.com 1999 Supplemental Stock
Option Plan.......................          94,226               $           8.71                      -
Mail.com 2000 Supplemental Stock
Option Plan.......................         138,260               $           5.59                      -

</TABLE>


       The Company granted non-qualified options under individual stock option
agreements to the persons and on the terms indicated in the following table:

<TABLE>
<CAPTION>
NAME                                      GRANT DATE       EXPIRATION DATE        SHARES         EXERCISE PRICE
----                                   --------------   -------------------  ------------   --------------------
<S>                                    <C>              <C>                  <C>            <C>
Gerald Gorman .......................         6/1/96                6/1/06        40,000                $1.0000
Gerald Gorman .......................       12/31/96              12/31/06         7,250                 5.0000
Gerald Gorman........................         2/1/97                2/1/07         2,000                10.0000
Frank Graziano ......................       11/14/00               1/31/09             4                16.8750
Frank Graziano.......................       11/14/00               3/31/09           165                16.8750
Frank Graziano.......................       11/14/00               2/28/09           338                16.8750
Dave Milligan........................         6/1/96                6/1/06        25,000                 1.0000
Gary Millin .........................         6/1/96                6/1/06        25,000                 1.0000
Gary Millin .........................       12/31/96              12/31/06         9,700                 5.0000
Gary Millin .........................         2/1/97                2/1/07         2,000                10.0000
Gary Millin .........................         2/1/97                2/1/07        10,000                10.0000
Thomas Murawski......................        1/26/01               1/26/11       170,000                12.8125
Charles Walden.......................        2/16/98               2/16/08        39,520                35.0000
                                                                             ------------
       Total ........................                                            330,978
                                                                             ============
</TABLE>

                                       13
<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES

During the three months ended December 31, 2004, EasyLink Services issued
99,992 shares of Class A common stock in reliance upon the exemption from
registration pursuant to Section 4(2) of the Securities Act of 1933 or otherwise
based on the inapplicability of the registration requirements of the Act as
follows:

During the three months ended December 31, 2004, we issued 83,684 shares of
Class A common stock to the Company's 401(k) plan for employees' accounts at a
weighted average price of $1.38 per share representing the Company's matching
contribution to the plan.

On December 1, 2004, we issued 7,508 shares valued at $10,677, in payment of
interest under the terms of a promissory note pursuant to the terms of the
note.

During the three months ended December 31, 2004 we issued 8,800 shares to
employees in connection with the exercise of employee stock options.

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 our Document Capture and Management Services which began to generate
revenues in 2003. Our success will depend in part upon our ability to maintain
or expand our sales of transaction delivery services, our ability to
successfully develop transaction management services, the development of a
viable market for fee-based 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 IN PRIOR YEARS.

We achieved income from operations for a full fiscal year for the first time in
2004, but we may not be able to sustain profitability. 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. For
years prior to 2003 and since our inception in 1999 we incurred net losses in
every year resulting in an accumulated deficit of $540.7 million as of December
31, 2004.

We intend to upgrade and enhance our technology and networks, increase our sales
and marketing expenditures 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 assets, including 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, 2004, 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 report on Form
10-K. If we do not succeed in maintaining or increasing our revenues, our losses
may recur.

                                       14
<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, 2004, we had $12.3
million of cash and cash equivalents. Our principal fixed commitments consist of
obligations under a credit agreement, 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 five years ended December 31, 2004,
2003, 2002, 2001 and 2000, we received a report from our independent accountants
containing an explanatory paragraph stating that we have a working capital
deficiency and an accumulated deficit 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, 2004, we had outstanding approximately $1.4 million in
subordinated convertible notes due in 2005; a term loan of $12 million payable
over 5 years; obligations under office space leases; and commitments for
telecommunications services. We currently have $4.1 million in principal
payments, including $1.4 in payments on the subordinated convertible notes which
was made on February 1, 2005, and additional amounts in interest payments due
during the twelve month period after December 31, 2004. Our credit facility with
Wells Fargo requires us to maintain minimum specified levels of EBITDA and
prohibits us from incurring capital expenditures in excess of specified amounts.
See "Management's Discussion and Analysis - Liquidity and Capital Resources"
contained in this filing on Form 10-K and subsequent filings with the SEC. We
recently received a waiver of the capital expenditures covenant for 2004.

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 such as the EBITDA or capital expenditures covenants, 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.

                                       15
<PAGE>

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 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, 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 in 1999. 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:

- 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 assets, including 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.

                                       16
<PAGE>

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. The Transition Services Agreement expired on
January 31, 2003. However, the network for the portion of this business relating
to EDI, fax and email services continues to reside on AT&T's premises under an
agreement with AT&T, but is being operated and maintained by EasyLink. This
agreement expires on January 31, 2006, and AT&T has informed us that they will
not extend the agreement beyond this date. 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. As a
result, we have begun the build out of a new network center at our corporate
headquarters located in Piscataway, New Jersey and have commenced the planning
process for the migration of these operations to this center.

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 MANAGEMENT SERVICES MAY NOT PROVE TO BE A VIABLE
BUSINESS.

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 development of viable markets for the outsourcing of
new transaction management services which is somewhat speculative.

There are significant obstacles to the full development of a sizable market for
the outsourcing of 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 service, however,
are likely to be of concern to enterprises and service providers deciding
whether to outsource their 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.

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:

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- 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;

- non-cash charges associated with the adoption of SFAS 123R, "Share-Based
Payment," which requires the recognition of compensation expense for all
share-based payments and employee stock options beginning in the third quarter
of 2005;

- 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.

WE MAY INCUR SIGNIFICANT STOCK BASED COMPENSATION CHARGES RELATED TO REPRICED
OPTIONS IF OUR STOCK PRICE RISES ABOVE $16.90.

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.

                                       18
<PAGE>

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.

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 Thomas F. Murawski, our President and Chief Executive
Officer, and Michael A. Doyle, our Vice President and Chief Financial Officer.
The loss of the services of Messrs. Murawski or of Mr. Doyle, or several other
key employees, would impede the operation and growth of our business.

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.

                                       19
<PAGE>

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. We plan to consolidate
over time an increasing portion of our computer systems and networks, including
the migration of the network equipment from the leased AT & T facility to our
corporate headquarters. 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 develop or 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.

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 or similar information relating
to our customer's customers. Our customers or their employees or customers may
assert claims for money damages for any breach in our security and any breach
could harm our reputation.

                                       20
<PAGE>

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 and 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, which are subject to
legal requirements governing the security and confidentiality of customer
information.

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 Internet fax services, billing processes and
databases. 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 Corporation, 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.

OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO SIGNIFICANT RISKS AND OUR OPERATING
RESULTS MAY SUFFER IF OUR REVENUES FROM INTERNATIONAL OPERATIONS DO NOT EXCEED
THE COSTS OF THOSE OPERATIONS.

We operate in international markets. We may not be able to compete effectively
in these markets. If our revenues from international operations do not exceed
the expense of establishing and maintaining these operations, 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;

                                       21
<PAGE>

- 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.

Currently, few laws or regulations specifically regulate activity on the
Internet. With some exceptions, online activity is not subject to laws and
regulations that differ from those applicable to offline activities. In cases
where online activity is subject to unique regulatory regimes, those regulatory
approaches currently tend to be less burdensome than their offline counterparts.

Laws and regulations may, however, be adopted in the future to address issues
such as user privacy, pricing, and the characteristics and quality of products
and services in the online context specifically, or to impose traditional
regulatory paradigms on online activity. The Federal Communications Commission
("FCC") is currently considering whether to impose certain regulations on some
entities that provide service using the Internet or Internet protocol ("IP"),
including but not limited to voice over Internet Protocol ("VoIP") telephony.
Such potential rules could include requirements to provide enhanced 911
capability, ensure access for disabled persons, cooperate with law enforcement,
contribute to universal service funds, and pay for using the public telephone
network. Any of these requirements, if applicable to a given service, could
increase the cost of providing that service. It cannot yet be predicted whether
those rules will be adopted at all and, if so, whether they would be applied to
our non-voice services.

The Company and its customers are subject to laws and regulations protecting
personal and other confidential information in connection with the exchange of
this information by these customers using the Company's services.

At present, in the United States, interactive Internet-based service providers
have substantial legal protection for the transmission of third-party content
that is infringing, defamatory, pornographic, or otherwise illegal. We cannot
guarantee that a U.S. court would not conclude that we do not qualify for these
protections as an interactive service provider. We do not and cannot screen all
of the content generated and received by users of our services or the recipients
of messages delivered through our services. Some foreign governments, such as
Germany and France, have enforced content-related laws and regulations against
Internet service providers.

We believe that our services are "information services" under the
Telecommunications Act of 1996 and related precedent and therefore would not
currently be subject to traditional U.S. telecommunication services regulation.
Although the FCC has indicated that it views Internet-based services as being
interstate and subject to the protection of federal laws that warrant preemption
of state efforts to impose traditional common carrier regulation on such
services, the FCC's efforts are currently under legal challenge and we cannot
predict the outcome of state efforts to regulate such services or the scope of
federal policy to preempt such efforts. While the FCC historically has refrained
from regulating IP-based communications, it has also sought comment about
whether and to what extent it should regulate such communications in the future.

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 of operations.

                                       22
<PAGE>

FCC regulations require providers of telecommunications services to contribute
to the Universal Service Fund, a fund established to subsidize
telecommunications service in rural areas in the United States. Such providers
are authorized to then pass those contribution costs on to their customers; our
costs for telecommunications services that we purchase thus reflect these
amounts. The contributions are currently calculated as a percentage of
telecommunications services revenues. Alternative contribution methodologies,
such as the imposition of a fee per telephone line, and other changes have been
proposed that could increase these amounts and thus our costs in purchasing such
telecommunications services. If adopted, these changes may in turn require us to
raise the price of one or more of our services to our customers. No assurance
can be given that we will be able to recover all or part of any increase in
costs that may result from these changes if adopted by the FCC or that such
changes will not otherwise adversely affect the demand for our services.

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 these countries, and the failure to satisfy
such requirements may prevent us from installing Internet-capable fax nodes in
such countries or require us to limit the functionality of such nodes. 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 telex switches utilize encryption technology. 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, Libya, Syria, Sudan 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 that could severely limit our ability
to conduct business in these countries. To the extent that we develop or offer
messaging or other services in foreign countries, we will be subject to the laws
and regulations of these countries. The laws and regulations relating to the
Internet and telecommunications services in many countries are evolving and in
many cases are more burdensome than U.S. law and/or 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 specified percentages of the entities through which
we propose to conduct any regulated activities. If these limitations apply to
our activities (including 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.

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.

                                       23
<PAGE>

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.

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 and subsequent filings with the Securities and Exchange
Commission. These proceedings include a broker's fee dispute in which the
Company is appealing a $931,000 judgment imposed on it and a claim for
indemnification and contribution by a defendant in an unsolicited commercial fax
lawsuit. 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 indemnification and contribution claim, it will be
required to pay the judgment in the broker's fee dispute or to pay any judgment
that may be rendered in such claim. The Company has already 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 28, 2005, we had an aggregate of 44,244,884 shares of Class A common
stock outstanding. As of February 28, 2005, we had options to purchase 4,935,677
shares of Class A common stock outstanding and warrants to purchase 798,523
shares of Class A common stock outstanding.

As of February 28, 2005, substantially all of the shares of our outstanding
Class A common stock were freely tradable, in some cases subject to the volume
and manner of sale limitations contained in Rule 144. 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 23.6 million of our
outstanding shares were issued in connection with the elimination of debt during
the nine 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.

The holders of approximately 8.2 million shares of outstanding Class A common
stock and the holders of 0.8 million shares of Class A common stock issuable
upon exercise of our outstanding warrants 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 30 consecutive business days. It would then be
afforded a 180-calendar day grace period in which to regain compliance. If a
National Market issuer does not regain compliance with the 180-day period, it
may transfer to The Nasdaq SmallCap Market, provided that it meets all
applicable requirements for initial inclusion on the SmallCap Market other than
the minimum bid price requirement, or it can request a hearing to remain on the
National Market. 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 prior to July 11, 2003 and from April 4, 2005
[through the date of the filing of this report on Form 10-K.] If we are unable
to maintain compliance with the minimum bid price, we may be subject to
delisting.

                                       24
<PAGE>

We had a total stockholders' equity in the amount of $13.0 million as of
December 31, 2004 in comparison to 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 minimum total stockholders' equity requirement
or the $15 million minimum market value of publicly held shares requirement.

EasyLink notified Nasdaq on October 13, 2004 that, if EasyLink did not appoint
another independent director to its board on or before November 12, 2004,
EasyLink would no longer be in compliance with Nasdaq Marketplace Rule 4350(c),
which requires that a majority of the board of directors be comprised of
independent directors as defined in Nasdaq Marketplace Rule 4200. Since that
time and through the first quarter of 2005, EasyLink appointed three additional
independent directors and two management directors have departed. Accordingly,
EasyLink now has six independent directors and one management director on its
board and has regained compliance with NASDAQ's independent director
requirements.

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.

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 an
explanatory paragraph in their audit report accompanying the 2004 consolidated
financial statements. The explanatory paragraph states that the Company has a
working capital deficiency and an accumulated deficit 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.

                                       25
<PAGE>

We believe that due to the many acquisitions and dispositions, goodwill and
intangibles impairment charges and debt restructuring gains that occurred during
the period from 2000 through 2004, the period to period comparisons for 2000
through 2004 are not meaningful and should not be relied upon as indicative of
future performance.

                                       26
<PAGE>

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

<TABLE>
<CAPTION>
                                                        2004       2003       2002        2001       2000
                                                       --------  --------    --------   --------   --------
<S>                                                    <C>        <C>         <C>        <C>        <C>
Consolidated Statement of Operations Data
for the Year Ended December 31,
Revenues............................................   $91,840    $101,347    $114,354   $123,929    $52,698
Total cost of revenues and operating expenses (a)...    83,163     102,264     201,287    296,170    204,196
Total other income (expense), net (b)...............       825      52,803       1,088     28,203     (7,405)
Income (loss) from operations.......................     8,677        (917)    (86,933)  (172,241)  (151,498)
Loss from discontinued operations...................        --        (938)         --    (63,027)   (70,624)
Extraordinary gain..................................        --          --          --        782         --
Net income (loss)...................................     7,602      50,948     (85,845)  (206,283)  (229,527)

Basic net income(loss) per common share:
Income(loss) from continuing operations.............     $0.17       $1.47       (5.13)    (15.26)    (27.79)
Loss from discontinued operations...................         --      (0.03)         --      (6.68)    (12.35)
Extraordinary gain..................................         --         --          --       0.09         --
                                                        --------  --------    --------   --------   --------
Basic net income (loss) per common share............      $0.17      $1.44      $(5.13)  $(21.85)   $(40.14)
                                                        ========  ========    ========   ========   ========
Diluted net income(loss) per common share:
Income(loss) from continuing operations.............      $0.17      $1.46       (5.13)   (15.26)    (27.79)
Loss from discontinued operations...................         --      (0.03)         --     (6.68)    (12.35)
Extraordinary gain..................................         --         --          --      0.09         --
                                                        --------  --------    --------   --------   --------
Diluted net income(loss) per common share...........      $0.17      $1.43      $(5.13)  $(21.85)    $(40.14)
                                                        ========  ========    ========   ========   ========
Weighted average basic shares outstanding...........     44,004     35,402      16,733     9,442      5,718
Weighted average diluted shares outstanding.........     44,891     35,654      16,733     9,442      5,718

Consolidated Balance Sheet Data at December 31,
Cash and cash equivalents...........................     12,300      6,623       9,554    13,278      4,331
Marketable securities...............................      2,023         --          --        --     12,595
Total current assets................................     26,525     19,813      23,511    36,900     86,490
Property and equipment, net.........................      8,125     10,641      14,833    21,956     38,997
Goodwill and other intangible assets, net...........     15,112     17,895      20,814   107,937    154,804
Total assets........................................     50,526     49,411      61,011   170,242    306,917

Total current liabilities...........................     26,783     31,575      43,126    54,494     54,242
Long-term capital lease obligations.................         43         37         196       566     12,638
Capitalized interest on notes payable, less current
portion                                                      --        956       7,402    13,750         --
Long-term notes payable.............................      9,600     10,511      71,398    80,923    100,321
Total stockholders' equity (deficit)................     13,048      4,412     (61,822)   20,503    138,935

Number of employees at December 31,.................        469        483         572       587      1,401
                                                        --------  --------    --------   --------   --------

(a) Included in operating expenses are:
                                                         2004       2003       2002        2001       2000
                                                        --------  --------    --------   --------   --------
Amortization of goodwill and other intangible
assets.(1) .........................................      2,686      2,919       6,751     52,068     39,977
Write-off of acquired in-process technology.........         --         --          --         --      7,650
Impairment of intangible assets.....................        500         --      78,784     62,200         --
Restructuring charges (credits).....................       (350)     1,478       2,320     25,337      5,338
(Gain) loss on sale of businesses/Mailwatch service
line................................................      (5,017)       --        (426)     1,804         --

(b) Included in other income (expense), net are:
                                                         2004       2003       2002        2001       2000
                                                        --------  --------    --------   --------   --------
Interest income.....................................         70         36         189        565      4,686
Interest expense....................................       (517)    (1,390)     (4,785)   (10,383)    (9,791)
Gain on debt restructuring and settlements..........        984     54,078       6,558     47,960         --
Impairment of investments...........................         --         --      (1,515)   (10,131)      (200)
Loss on equity investment...........................         --         --          --         --     (2,100)
Other, net..........................................        288         79         641        192         --

</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.

(1) The Company adopted SFAS No. 142 " Goodwill and Other Intangible Assets" as
    of January 1, 2002, as discussed in Note 5.

                                       27
<PAGE>



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 an explanatory paragraph in their
audit report accompanying the 2004 consolidated financial statements. The
explanatory paragraph states that the Company has a working capital deficiency
and an accumulated deficit that raise 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.

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 Management Services and Transaction
Delivery Services. Transaction Management Services consist of integrated desktop
messaging services and document capture and management services such as fax to
database, fax to data and data conversion services. Beginning in 2005, we will
also offer as a Transaction Management Service an enhanced production messaging
service that we call EasyLink Production Messaging PM2.0 Service. Transaction
Delivery Services consist of electronic data interchange or "EDI," and basic
production messaging services utilizing email, fax and telex. As part of our
strategy, we will seek to upgrade customers who are using our basic production
messaging service to our enhanced production messaging service known as EasyLink
Production Messaging PM2.0 Service. See Part I, Item 1, "Business - Company
Overview" contained in this Form 10-K. Until July 31, 2004, we also offered
MailWatch services to protect corporate e-mail systems, which included virus
protection, spam control and content filtering services.

REVENUES

For the year ended December 31, 2004 total revenues were $91.8 million in
comparison to $101.3 million in 2003 and $114.4 million in 2002. As detailed in
the schedule below the declines in revenue in 2004 and 2003 as compared to the
prior years were attributable to (1) lower revenues in our Transaction Delivery
Services amounting to $11.3 million or 13% in 2004 as compared to 2003 and $16.0
million or 15% in 2003 as compared to 2002; and (2) $2.2 million in lower
MailWatch revenues in 2004 as a result of the sale of this service line as of
July 31, 2004. These declines were partially offset by increased revenues in our
Transaction Management Services of $4.0 million in 2004 representing 48% growth
over 2003 and $2.5 million representing 42% growth in 2003 as compared to 2002.

<TABLE>
<CAPTION>
                                                                                     PERCENT CHANGE
                                                                                  ---------------------
                                                                                    2004         2003
                                             2004         2003         2002       VS. 2003     VS. 2002
                                             ----         ----         ----       --------     --------
<S>                                       <C>          <C>           <C>          <C>          <C>
Transaction Management Services             $12,304      $ 8,334       $5,852         48%          42%
Transaction Delivery Services                77,063       88,348      104,308        (13)%        (15)%
MailWatch                                     2,473        4,665        4,194        (47)%         11%
                                          ---------    ---------     --------        -----       -----
                                            $91,840     $101,347     $114,354         (9)%        (11)%
</TABLE>

Transaction Delivery Services have been continually impacted by pricing
pressures in the telecommunications market and by technological factors that
replace or reduce the deployment of such services by our customers. This has led
to lower volumes, negotiated individual customer price reductions at the time of
service contract renewals and the loss of certain customers. Although we have
focused efforts on stabilizing this revenue stream, we believe the trend will
continue throughout 2005. We will seek to expand our newer Transaction
Management Services and to upgrade customers who are using our basic production
messaging services to our enhanced production messaging service, EasyLink
Production Messaging PM2.0 Service, to offset the declines so that total Company
revenues can be positioned to grow beginning in 2006.

OPERATING RESULTS

Our operating results have continued to improve in 2004 and 2003 even though
revenues declined in comparison to prior years. Income from operations amounted
to $8.7 million (including $5.0 million of gains on the sale of our MailWatch
service line and our domain assets) in 2004 in comparison to losses from
operations of $(0.9) million in 2003 and $(86.9) million in 2002. The 2002 loss
included $78.8 million in impairment of intangible asset charges. Income from
continuing operations amounted to $7.6 million in 2004 in comparison to $51.9
million in 2003 but the prior year's results included $54.1 million in gains on
debt restructuring and settlements while 2004 included only $1.0 million in such
gains. Inclusive of the impairment charges, the net loss in 2002 amounted to
$(85.8) million.

                                       28
<PAGE>

We have heightened our efforts to increase revenues from Transaction Management
Services during the fourth quarter of 2004 and during 2005 to date by hiring
additional sales and marketing personnel and undertaking certain promotional
programs. While other costs have been reduced, we expect that our overall
results for 2005 will be negatively impacted by this effort and we expect that
results for the year will fall short of 2004's results. Furthermore, we will
record approximately $1.6 million of charges, net of taxes, in 2005 for the
separation agreement with our former President of the International division and
severance expenses related to restructuring certain operations.

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
accounts receivable, long-lived assets and intangible assets, contingencies and
litigation, and restructurings.

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 are accounted for in accordance with SFAS No. 146 and,
in 2003 and 2002, relate to the relocation and consolidation of our New Jersey
office facilities into one location and a similar consolidation of our office
facilities in England. The restructuring charges are comprised of abandonment
costs with respect to leases, including the write-off of leasehold improvements.
We continually evaluate the amounts established in the restructuring reserve so
that amounts originally recorded in 2002 were increased in 2003 based on market
conditions for subleasing the abandoned facilities. In 2004, mostly due to a
settlement of liability related to one of our abandoned locations, $350,000 of
restructuring charges was reversed. Our obligations for the remaining abandoned
locations terminate in September 2005 and February 2006.

RESULTS OF OPERATIONS - 2004, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                                        PERCENT CHANGE
                                                                                      -------------------
                                                                                        2004       2003
                                                        2004       2003       2002    VS. 2003   VS. 2002
                                                        ----       ----       ----    --------   --------
<S>                                                  <C>         <C>        <C>       <C>        <C>
Revenues............................................ $91,840     $101,347   $114,354    (9.4)%       (11.4)%

Cost of revenues ...................................  36,725       49,553     57,601   (25.9)%       (14.0)%
                                                     -------       ------     ------   -------       -------

   Gross Margin ....................................  55,115       51,794     56,753     6.4%         (8.7)%
     % of Revenue...................................     60%          51%        50%

Operating expenses:
Sales and marketing ................................  18,715       18,379     20,151     1.8%         (8.8)%
General and administrative..........................  23,794       24,405     28,694    (2.5)%       (14.9)%
Product development.................................   6,730        6,383      7,412     5.4%        (13.9)%
Amortization of intangible assets...................   2,066        2,066      6,751     ----        (69.4)%
Impairment of intangible assets ....................     500          ---     78,784
Restructuring charges (credits).....................    (350)       1,478      2,320
Gain on sale of businesses/MailWatch service line...  (5,017)         ---       (426)
                                                      -------      ------       ----
                                                      46,438       52,711    143,686
                                                      -------

INCOME (LOSS) FROM OPERATIONS.......................   8,677         (917)   (86,933)

Other income (expense), net:
Gain on debt restructuring and settlements..........     984       54,078      6,558
Interest income (expense), net .....................    (447)      (1,354)    (4,596)
Other...............................................     288           79       (874)
                                                     -------      -------    --------
                                                        825        52,803      1,088

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
 INCOME TAXES.......................................  9,502        51,886    (85,845)

Provision for income taxes..........................  1,900           ---        ---
                                                     ------       -------    -------

INCOME (LOSS) FROM CONTINUING OPERATIONS............  7,602        51,886    (85,845)
                                                     ======       =======    =======
</TABLE>

RESULTS OF OPERATIONS - 2004 AND 2003

REVENUES

Revenues in 2004 were $91.8 million as compared to $101.3 million in 2003. The
decrease of $9.5 million was due primarily to reduced revenues in our
Transaction Delivery services, as a result of lower volumes and negotiated
individual customer price reductions and loss of certain customers and $2.2
million in lower MailWatch revenues as a result of the sale of this service line
on July 31, 2004. The reduced revenues were partially offset by a $4.0 million
increase in Transaction Management services. We anticipate that our revenues
derived from our Transaction Delivery services will continue to decline, while
our Transaction Management services revenue is expected to increase in 2005.

                                       29
<PAGE>

COST OF REVENUES

Cost of revenues for 2004 decreased to $36.7 million from $49.6 million in 2003.
As a percentage of revenues these costs decreased to 40% in 2004 as compared to
49% in 2003. Cost of revenue reflects a decrease in costs as a percentage of
revenue equal to 3% due to depreciation charges and decrease in other costs as a
percentage of revenues equal to 8%. Reduction in other costs include savings
from continuing cost reduction programs in network operations, lower telecom
rates, favorable settlement dispute, reductions in facilities, including
reducing the number of circuits, and reduced variable telecom charges consistent
with reduced customer volumes.

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, software license costs, tele-housing costs, 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 increased to $18.7 million from $18.4 million in
2003. The increased expense relates to our increased staff and promotional
program spending particularly in the latter part of 2004, to expand Transaction
Management services. We expect these expenses to continue at the increased
levels throughout 2005 and for total sales and marketing costs to be higher than
that of 2004.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses were $23.8 million in 2004 as compared to
$24.4 million in 2003. While certain cost components may vary, we anticipate
general and administrative expenses in total to be comparable to 2004 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 $6.7 million for 2004 as compared to $6.4
million in 2003. We anticipate that spending for product development will
increase over 2004 in connection with the expansion of the development of the
new Transaction Management services and the continuing development of other
services.

RESTRUCTURING CHARGES

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. During 2004 these estimates were revised again,
largely due to a favorable negotiated settlement of liability on one lease,
resulting in the reversal of restructuring charges of $350,000.

AMORTIZATION OF 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, 2004 and 2003 respectively. We completed an impairment assessment in the 4th
quarter of 2004 with the assistance of an independent appraiser and determined
that an impairment of trademarks had occurred. Accordingly we recorded a
$500,000 charge in 2004. The value of the trademark is based upon the company's
ability to continue to generate revenues at comparable levels and based upon
certain other assumptions. Significant declines in revenues or changes in
assumptions could negatively impact the value of the trademark. Our annual
assessment for 2003 did not result in any impairment.

                                       30
<PAGE>

INTEREST INCOME (EXPENSE), NET

Interest income for 2004 was $70,000 as compared to $36,000 during 2003. The
increase was due to higher cash balances available for temporary investment.

Interest expense was $517,000 in 2004 as compared to $1.4 million in 2003. 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
principal amortization in 2004.

GAIN ON DEBT RESTRUCTURINGS AND SETTLEMENTS

In December 2004 we paid off all of the Company's previously existing secured
debt with part of the proceeds of a new $12 million Term Loan from Wells Fargo.
As a result, we recorded a gain of $1.0 million from the reversal of interest
previously capitalized related to the retired debt. 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.

The elimination of outstanding debt in 2003 resulted 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. We do not expect to incur
any material current income tax liability from the elimination of this debt,
although the relevant tax authorities may challenge our income tax positions.

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.

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.

                                       31
<PAGE>

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.

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.

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.

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

                                       32
<PAGE>

The elimination of outstanding debt resulted 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. We do not expect to incur
any material current income tax liability from the elimination of this debt,
although 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 2003
Consolidated Statement of Operations. See Note 17 - Commitments and
Contingencies - Legal Proceedings for additional information.

LIQUIDITY AND CAPITAL RESOURCES

We have significantly improved our financial condition in 2004 and 2003 by (1)
reducing operating costs by consolidating operations and other cost reduction
programs; (2) restructuring our debt obligations and entering into a new credit
financing with Wells Fargo; and (3) selling our non-core domain assets and our
MailWatch service line. At December 31, 2004 our cash and cash equivalents
amounted to $12.3 million, a $5.7 million increase in comparison to balances on
hand at December 31, 2003. Our working capital deficit at year end 2004 was
$378,000 in comparison to $11.8 million at December 31, 2003 and $19.6 million
at December 31, 2002. In addition, our stockholders equity reached $13.0 million
at December 31, 2004 from $4.4 million at December 31, 2003 and from a deficit
of $61.8 million at December 31, 2002.

In December 2004 we entered into an agreement with Wells Fargo Foothill, Inc., a
subsidiary of Wells Fargo, for a credit facility of $15 million, including a $12
million term loan. We used $9.5 million of the proceeds from the term loan to
pay off all our secured debt, which included a scheduled balloon payment of $5.8
million in June 2006, in December 2004 and we used an additional $1.4 million of
proceeds to pay off subordinated debt in February 2005. The Wells Fargo term
loan is repayable at $200,000 per month for 60 months although there are
mandatory prepayments under certain conditions. The credit facility also
provides for other advances of $3 million initially, but increasing to $7.5
million upon our meeting certain conditions. We borrowed approximately $1
million of advances in March 2005 for working capital purposes. See Note 7 -
Loans and Notes Payable for a description of the Wells Fargo Foothill credit
facility.

We believe our current cash and cash equivalent balances, the availability of
funds under the credit facility and cash from operations will provide adequate
funds for operating and other planned expenditures and debt service, including
the expansion of our sales and marketing force and our capital spending
programs, for at least the next twelve months.

Cash provided from operations amounted to $6.3 million and $7.7 million for the
years ended December 31, 2004 and 2003, respectively. Although we anticipate
that our operating results for 2005 will approximate these levels, we expect to
increase spending for capital expenditures requiring the use of available funds.
We estimate spending $6.0 million for capital expenditures in 2005, mostly
related to the build out of a new network center at our corporate office
location in Piscataway, NJ and the migration of customer messaging to the new
facility from a leased AT&T location. The new network installation is expected
to result in reduced network operating costs once the migration is completed in
the first quarter of 2006. Capital expenditures amounted to $3.6 million
(including $0.6 million under capital leases) in 2003 and $4.2 million in 2002.
Other major uses of cash in 2005 are approximately $4.0 million in payments of
principal on our outstanding debt. The 2005 principal payments consist of the
payment of $1.4 million on February 1, 2005 for the maturity of the remaining 7%
convertible subordinated notes and the monthly amortization of the new $12
million term loan from Wells Fargo. The covenants of the credit facility
restrict the amount of our capital expenditures to $6.0 million in 2005 and $4.0
million per year thereafter. The Company did not meet the $3 million limitation
on capital expenditures in 2004; however, Wells Fargo granted a waiver of the
covenant. The credit facility also requires that our operations have minimum
EBITDA results on a quarterly and annual basis. On March 31, 2005, the Company
and Wells Fargo reached an agreement to modify the EBITDA covenant calculation
to exclude from the calculation the amount of the George Abi Zeid settlement
charges of $2.475 million. Failure to comply with these minimum requirements
could result in the acceleration of the payment of the term loan as well as any
future revolving credit advances made under the agreement. The credit facility
also restricts the incurrence of indebtedness. The Company currently expects to
be in compliance with its covenant requirements, as revised, during the year
ending December 31, 2005.

For each of the years ended December 31, 2004, 2003 and 2002, we received a
report from our independent auditors containing an explanatory paragraph stating
that we have a working capital deficiency and an accumulated deficit that raises
substantial doubt about our ability to continue as a going concern. Management's
plans in regard to this matter are described in Note 1(b). 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 maintain
profitable operations. Throughout 2002, 2003 and 2004, management improved the
Company's operations through cost reductions resulting in net cash from
operations of $2.2 million, $7.7 million and $6.3 million, respectively, for
those years. During those years, the Company reduced its working capital deficit
to $19.6 million at year end 2002, to $11.8 million at year end 2003 and to
$378,000 at year end 2004. During 2003, the Company reduced its debt by $63.0
million. In December, 2004, the Company refinanced its remaining secured debt
through a new credit facility with Wells Fargo Foothill, Inc. 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.

CONTRACTUAL OBLIGATIONS

Below is a table that presents our contractual obligations and commitments at
December 31, 2004:

                                       33
<PAGE>

<TABLE>
<CAPTION>
                                                      Payments due by period (in thousands)

                                                       LESS THAN                                AFTER
                                             TOTAL     ONE YEAR    1-3 YEARS    4-5 YEARS     5 YEARS
                                          ---------    ---------   ---------    ---------     -------
<S>                                       <C>          <C>         <C>          <C>    <C>    <C>

Long-term debt obligations                  $13,425      $ 3,825   $  4,800      $ 4,800            -
Operating lease obligations                  12,917        2,917      3,760        2,476      $ 3,764
Purchase obligations mostly consisting of
 telecommunication contract commitments       4,521        4,080        441            -            -
Other long term liabilities                     211            -        211            -            -
                                          ---------    ---------   --------      -------      -------
                                           $ 31,074    $  10,822   $  9,212      $ 7,276      $ 3,764
</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 position, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
123 (revised 2004), "Share-Based Payment" (SFAS 123(R)) which replaces SFAS 123,
"Accounting for Stock-Based Compensation," and supersedes APB Opinion No. 25,
"Accounting for Stock Issued to Employees. Among other items, SFAS 123(R)
eliminates the use of APB 25 and the intrinsic method of accounting, and
requires all share-based payments, including grants of employee stock options,
to be recognized in the financial statements based on their fair values. SFAS
123(R) is effective for public companies beginning with the first interim period
that begins after June 15, 2005. The Company will adopt SFAS 123(R) in 2005 and
in accordance with its provisions will recognize compensation expense for all
share-based payments and employee stock options based on the grant-date fair
value of those awards. The Company is currently evaluating the impact of the
statement on its financial statements. See Note 1 (p) for the proforma effect of
SFAS 123.

In December 2004, the FASB issued FSP FAS 109-2, "Accounting and Disclosure
Guidance for the Foreign Earnings Repatriation Provision within the American
Jobs Creation Act of 2004". The American Jobs Creation Act of 2004 introduces a
special one-time dividends received deduction on the repatriation of certain
foreign earnings to a U.S. taxpayer (repatriation provision), provided certain
criteria are met. FSP FAS 109-2 gives a company additional time to evaluate the
effects of the legislation on any plan for reinvestment or repatriation of
foreign earnings for purposes of applying SFAS No. 109, Accounting for Income
Taxes. The deduction is subject to a number of limitations, and uncertainty
remains as to how to interpret numerous provisions in the Act. As such, the
Company is not in a position to decide on whether, and to what extent, it might
repatriate foreign earnings that have not yet been remitted to the U.S. based on
its analysis to date. The Company expects to be in a position to finalize its
assessment by December 31, 2005.

                                       34
<PAGE>

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.

                                       35
<PAGE>

ITEM 8   CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          EASYLINK SERVICES CORPORATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

<S>                                                                                                     <C>
                                                                                                         PAGE
Independent Registered Public Accountants' Report....................................................      37
Consolidated Balance Sheets as of December 31, 2004 and 2003.........................................      38
Consolidated Statements of Operations for the years ended December 31, 2004, 2003, and 2002..........      39
Consolidated Statements of Stockholders' Equity (Deficit) and Comprehensive Income
    (Loss) for the years ended December 31, 2004, 2003 and 2002......................................      40
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002...........      44
Notes to Consolidated Financial Statements...........................................................      46

</TABLE>


                                       36
<PAGE>

                INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS' 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, 2004 and 2003, and the
related consolidated statements of operations, stockholders' equity (deficit)
and comprehensive income (loss), and cash flows for each of the years in the
three-year period ended December 31, 2004. 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 the auditing standards of the Public
Company Accounting Oversight Board (United States). 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, 2004 and 2003, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 2004 in conformity with US generally accepted
accounting principles.

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 a working capital
deficiency and an accumulated deficit 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.


                                   /s/KPMG LLP

New York, New York
April 11, 2005


                                       37
<PAGE>

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

                                                                                            DECEMBER 31,
                                                                                          2004         2003
                                                                                        ---------    ---------
<S>                                                                                     <C>          <C>
                              ASSETS
Current assets:
Cash and cash equivalents..........................................................      $12,300      $ 6,623
Marketable securities..............................................................        2,023           --
Accounts receivable, net of allowance for doubtful accounts of $3,950 and
    $4,824 as of December 31, 2004 and 2003, respectively..........................        9,624       11,430
Prepaid expenses and other current assets..........................................        2,578        1,760
                                                                                        ---------    ---------
Total current assets...............................................................       26,525       19,813
                                                                                        ---------    ---------
Property and equipment, net........................................................        8,125       10,641
Goodwill, net......................................................................        6,266        6,266
Other intangible assets, net.......................................................        8,846       11,629
Other assets.......................................................................          764        1,062
                                                                                        ---------    ---------
Total assets.......................................................................      $50,526      $49,411
                                                                                        =========    =========
                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable...................................................................      $ 6,523      $ 9,082
Accrued expenses...................................................................       13,891       14,336
Restructuring reserves payable.....................................................          728        1,894
Current portion of notes payable...................................................        3,825        2,957
Current portion of capitalized interest on notes payable...........................           --        1,040
Other current liabilities..........................................................        1,408        1,438
Net liabilities of discontinued operations.........................................          528          828
                                                                                        ---------    ---------
Total current liabilities..........................................................       26,903       31,575
                                                                                        ---------    ---------
Notes payable, less current portion................................................        9,600       10,511
Capitalized interest on notes payable, less current portion........................           --          956
Other long term liabilities........................................................          975        1,957
                                                                                        ---------    ---------
Total liabilities..................................................................       37,478       44,999
                                                                                        ---------    ---------
Stockholders' equity:
Common stock, $0.01 par value; 510,000,000 shares authorized at December 31,
    2004 and 2003:
    Class A--500,000,000 shares authorized at December 31, 2004 and 2003,
       44,174,459 and 42,821,500 shares issued and outstanding at
       December 31, 2004 and 2003, respectively....................................          441          428
    Class B--10,000,000 shares authorized at December 31, 2004 and 2003,
       0 and 1,000,000 issued and outstanding at
       December 31, 2004 and 2003, respectively ...................................           --           10
Additional paid-in capital.........................................................      553,420      552,589
Accumulated other comprehensive loss...............................................          (72)        (272)
Accumulated deficit................................................................     (540,741)    (548,343)
                                                                                        ---------    ---------
Total stockholders' equity.........................................................       13,048        4,412
                                                                                        ---------    ---------
Commitments and contingencies

Total liabilities and stockholders' equity.........................................      $50,526      $49,411
                                                                                        =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       38
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                        --------------------------------------
                                                                           2004           2003         2002
                                                                        ----------      --------     ---------
<S>                                                                     <C>             <C>          <C>
Revenues..........................................................         $91,840      $101,347     $114,354

Operating expenses:
    Cost of revenues..............................................          36,725        49,553       57,601
                                                                        ----------      --------     ---------
Gross profit......................................................          55,115        51,794       56,753
                                                                        ----------      --------     ---------
Sales and marketing...............................................          18,715        18,379       20,151
General and administrative........................................          23,794        24,405       28,694
Product development...............................................           6,730         6,383        7,412
Amortization of intangible assets.................................           2,066         2,066        6,751
Impairment of intangible assets...................................             500            --       78,784
Restructuring charges (credits)...................................            (350)        1,478        2,320
Gain on sale of businesses/Mailwatch service line.................          (5,017)           --         (426)
                                                                        ----------      --------     ---------
                                                                            46,438        52,711      143,686
                                                                        ----------      --------     ---------
Income (loss) from operations.....................................           8,677          (917)     (86,933)
                                                                         ---------      --------     ---------
Other income (expense):
    Interest income...............................................              70            36          189
    Interest expense..............................................            (517)       (1,390)      (4,785)
    Gain on debt restructuring and settlements....................             984        54,078        6,558
    Impairment of investments.....................................              --            --       (1,515)
    Other, net....................................................             288            79          641
                                                                         ----------     --------     ---------
Total other income, net...........................................             825        52,803        1,088
                                                                         ----------     --------     ---------
Income from continuing operations before income taxes.............           9,502        51,886      (85,845)

Provision for income taxes........................................           1,900            --           --
                                                                         ----------     ---------    ---------
Income (loss) from continuing operations..........................           7,602        51,886      (85,845)
                                                                         ----------     ---------    ---------
Loss from discontinued operations.................................              --          (938)          --
                                                                         ----------     --------     ---------
Net income (loss).................................................          $7,602       $50,948     $(85,845)
                                                                         ==========     ========     =========

Basic net income (loss) per share:
Income (loss) from continuing operations..........................           $0.17         $1.47       $(5.13)
Loss from discontinued operations.................................              --         (0.03)          --
                                                                         ----------     --------     ---------
Basic net income (loss) per share.................................           $0.17         $1.44       $(5.13)
                                                                         ==========     ========     =========
Diluted net income (loss) per share:
Income (loss) from continuing operations..........................           $0.17         $1.46       $(5.13)
Loss from discontinued operations.................................              --         (0.03)          --
                                                                         ----------     --------     ---------
Diluted net income (loss) per share...............................           $0.17         $1.43       $(5.13)
                                                                         ==========     ========     =========
Weighted-average basic shares outstanding                                44,004,271   35,401,809   16,732,793
                                                                         ==========   ==========   ==========
Weighted-average diluted shares outstanding.......................       44,891,039   35,653,336   16,732,793
                                                                         ==========   ==========   ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       39
<PAGE>

                          EasyLink Services Corporation

   Consolidated Statement of Stockholders' Equity (Deficit) and Comprehensive
                                 Income (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, 2001                         14,580,211       $146    1,000,000       $10     $533,878
Net loss                                                      -          -            -         -            -
Cumulative foreign 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.

                                       40
<PAGE>

<TABLE>
<CAPTION>

                                                                           ACCUMULATED                     TOTAL
                                                                              OTHER                    STOCKHOLDERS'
                                                             DEFERRED     COMPREHENSIVE  ACCUMULATED    (DEFICIT)/
                                                           COMPENSATION       LOSS         DEFICIT        EQUITY
                                                           ------------   ------------   -----------   ------------
<S>                                                        <C>            <C>            <C>           <C>
Balance at December 31, 2001                                   $(42)          $(37)      $(513,446)      $20,509
Net loss                                                          -              -         (85,845)      (85,845)
Cumulative foreign currency translation                           -           (209)              -          (208)
                                                           ------------   ------------   -----------   ------------
Comprehensive loss                                                -           (209)        (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              -               -            42
Issuance of Class A common stock in connection with
     employee termination                                         -              -               -            84
Issuance of Class A common stock in connection with
     MyIndia.com contingent liability                             -              -               -             6
Issuance 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 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                                      -          $(246)      $(599,291)     $(61,822)
                                                           ============   ============   ===========   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       41
<PAGE>

                          EasyLink Services Corporation

   Consolidated Statement of Stockholders' Equity (Deficit) and Comprehensive
                                 Income (Loss)
                  (in thousands, except share data) (continued)

<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
     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 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
Proceeds from the exercise of stock
     options                                     71,550           1              -             -            69

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

Balance at December 31, 2003                 42,821,500       $428       1,000,000           $10      $552,589
Net income                                            -          -               -             -             -
Unrealized holding gains on marketable
     securities                                       -          -               -             -             -
Cumulative foreign currency
     translation                                      -          -               -             -             -

Comprehensive income                                  -          -               -             -             -

Issuance of Class A common stock in
     connection with 401(k) plan                273,129          3               -             -           397
Issuance of Class A common stock in
     connection with employee terminations            -          -               -             -           150
Issuance of Class A common stock in
     lieu of cash interest on debt               35,530          -               -             -            48
Proceeds from the exercise of stock
     options                                     44,300          -               -             -            32
Conversion of Class B common stock
     to Class A common stock                  1,000,000         10      (1,000,000)          (10)            -
Other                                                 -          -               -             -           204
                                             ----------      ------      ---------       -------    ----------
Balance at December 31, 2004                 44,174,459       $441               -         $   -      $553,420
                                             ==========      ======      =========       =======    ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       42
<PAGE>

<TABLE>
<CAPTION>
                                                                           ACCUMULATED                       TOTAL
                                                                              OTHER                      STOCKHOLDERS'
                                                          DEFERRED        COMPREHENSIVE    ACCUMULATED    (DEFICIT)/
                                                        COMPENSATION          LOSS           DEFICIT        EQUITY
                                                        ------------      -------------    -----------   -------------
<S>                                                     <C>               <C>              <C>           <C>
Balance at December 31, 2002                            $      -              $(246)       $(599,291)        $(61,822)
Net income                                                     -                  -           50,948           50,948
Cumulative foreign currency translation                        -                (26)               -              (20)
                                                        ------------      -------------    -----------   -------------
Comprehensive income                                           -                (26)          50,948           50,928
                                                        ------------      -------------    -----------   -------------
Issuance of Class A common stock in connection
     with 401(k) plan                                          -                  -                -              492
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
Proceeds from the exercise of stock options                    -                  -                -               70
                                                        ------------      -------------    -----------   -------------
Balance at December 31, 2003                                   -              $(272)       $(548,343)          $4,412
Net income                                                     -                  -            7,602            7,602
Unrealized holding gains on marketable securities              -                529                -              529
Cumulative foreign currency translation                        -               (329)               -             (329)
                                                        ------------      -------------    -----------   -------------
Comprehensive income                                           -                200            7,602            7,802
                                                        ------------      -------------    -----------   -------------
Issuance of Class A common stock in connection
     with 401(k) plan                                          -                  -                -              400
Issuance of Class A common stock in
     connection with employee termination                      -                  -                -              150
Issuance of Class A common stock in
     lieu of cash interest on debt                             -                  -                -               48
Proceeds from the exercise of stock options                    -                  -                -               32
Conversion of Class B common stock
     to Class A common stock                                   -                  -                -                -
Other                                                          -                  -                -              204
                                                        ------------      -------------    -----------   -------------
BALANCE AT DECEMBER 31, 2004                                   -               $(72)         $(540,741)         $13,048
                                                        ============      =============    ===========   =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       43
<PAGE>

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

                                                                             YEAR ENDED DECEMBER 31,
                                                                       -------------------------------------
                                                                          2004          2003          2002
                                                                       ---------     ---------     ---------
<S>                                                                    <C>           <C>           <C>
Cash flows from operating activities:
Net income (loss)..............................................        $  7,602       $50,948      $(85,845)
  Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
Loss from discontinued operations..............................               -           938             -
Depreciation and amortization..................................           4,987         8,295        10,417
Amortization of goodwill and other intangible assets...........           2,686         2,919         8,039
Non-cash interest..............................................              48           184         1,830
Provision for doubtful accounts................................             410             1         2,596
Provision for restructuring charges (credits)..................            (350)        1,478         2,320
Gain on debt restructuring and settlements.....................            (984)      (54,078)       (6,558)
Issuance of shares as matching contributions to employee
  benefit plans................................................             400           492           437
Other non-cash charges.........................................             168            65           208
Write-off of fixed assets......................................               6           119           204
Gain on sale of businesses/Mailwatch service line..............          (5,017)            -          (426)
Impairments of goodwill and intangibles........................             500             -        78,784
Impairments of investments.....................................               -             -         1,515
Changes in operating assets and liabilities:
  Accounts receivable, net.....................................           1,396           508         7,278
  Prepaid expenses and other current assets....................            (911)          260          (210)
  Other assets.................................................             232           460           (83)
  Accounts payable, accrued expenses and other
    current liabilities........................................          (4,895)       (4,931)      (18,346)
                                                                       ---------     ---------     ---------
Net cash provided by operating activities......................           6,278         7,658         2,160
                                                                       ---------     ---------     ---------
Cash flows from investing activities:
Purchases of property and equipment, including
capitalized software...........................................          (2,970)       (4,214)       (3,498)
Proceeds from sale of businesses/Mailwatch service line........           3,500             -           426
Proceeds from sale of assets...................................           1,000             -             -
                                                                       ---------     ---------     ---------
Net cash provided by (used in) investing activities............           1,530        (4,214)       (3,072)
                                                                       ---------     ---------     ---------
Cash flows from financing activities:
Net proceeds from issuance of Class A common stock.............               -         1,000             -
Net proceeds from issuance of Class A common stock upon
  exercise of employee stock options...........................              32            70             -
Payments under capital lease obligations.......................            (472)         (426)         (585)
Proceeds from notes payable....................................          12,000             -             -
Principal payments of notes payable............................         (12,053)       (5,793)         (821)
Interest payments on restructured notes and capitalized interest.        (1,009)         (843)         (897)
                                                                       ---------     ---------     ---------
Net cash used in financing activities..........................          (1,502)       (5,992)       (2,303)
                                                                       ---------     ---------     ---------
Effect of foreign exchange rate changes on cash
   and cash equivalents........................................            (329)          (27)         (209)
                                                                       ---------     ---------     ---------
Net increase (decrease)  in cash and cash equivalents..........           5,977        (2,575)       (3,424)

Cash used in discontinued operations...........................            (300)         (356)         (300)

Cash and cash equivalents at beginning of the year.............           6,623         9,554        13,278
                                                                       ---------     ---------     ---------

Cash and cash equivalents at the end of the year...............         $12,300        $6,623        $9,554
                                                                       =========     =========     =========

Supplemental disclosures of cash flow information:
Cash paid for interest.........................................            $497          $691        $3,138

Net cash paid for taxes........................................            $173           $48           $31

Purchases of property, plant and equipment through capital
   lease obligations...........................................            $649
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       44
<PAGE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:

During the three years ended December 31, 2004, 2003, and 2002, the Company paid
approximately $0.5 million, $0.7 million and $3.1 million, respectively, for
interest. In addition, the Company issued 35,530, 284,304 and 888,810 shares of
Class A common stock valued at approximately $48,000, $184,000 and $1.8 million,
respectively, as payment of interest in lieu of cash for the years ended
December 31, 2004, 2003 and 2002, respectively.


During the year ended December 31, 2002, the Company issued 98,841 shares of its
Class A common stock valued at approximately $524,000, in connection with
certain settlement obligations.

During the year ended December 31, 2002 the Company issued 127,550 shares of its
Class A common stock valued at approximately $182,000, in connection with the
settlement of vendor obligations.

During the years ended December 31, 2004, 2003 and 2002, the Company issued
273,129, 531,545 and 314,642 shares, respectively, in connection with matching
contributions to its 401K plan. These shares were valued at approximately
$400,000, $492,000 and $437,000, respectively.

NON-CASH INVESTING ACTIVITIES:

No shares were issued in connection with non-cash investing activities during
the years ended December 31, 2004, 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). The Company
entered into various capital leases for computer equipment. These capital lease
obligations resulted in non - cash financing activities of $649,000 during
2004.

                                       45
<PAGE>

                          EASYLINK SERVICES CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

(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 Management Services consisting of
integrated desktop messaging services and document capture and management
services such as fax to database, fax to data and data conversion services;
Transaction Delivery Services consisting of electronic data interchange or
"EDI," and production messaging services utilizing email, fax and telex; and
through July 31, 2004, services that protect corporate e-mail systems such as
virus protection, spam control and content filtering services (the MailWatch
service line).

The Company operates in a single industry segment, business communication
services. Although the Company provides various major service offerings, many
customers employ multiple services using the same access and network facilities.
Similarly, network operations and customer support services are provided across
various services. Accordingly, allocation of expenses and reporting of operating
results by individual services would be impractical and arbitrary. Services are
provided in the United States and certain other regions in the world
(predominantly in the United Kingdom).

(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. The Company has a working
capital deficiency and an accumulated deficit that raises substantial doubt
about its ability to continue as a going concern. 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 maintain
profitable operations. Throughout 2002, 2003 and 2004, management improved the
Company's operations through cost reductions resulting in net cash from
operations of $2.2 million, $7.7 million and $6.3 million, respectively, for
those years. During those years, the Company reduced its working capital deficit
to $19.6 million at year end 2002, $11.8 million at year end 2003 and $378,000
at year end 2004. During 2003, the Company reduced its debt by $63.0 million. In
December, 2004, the Company refinanced its remaining secured debt through a new
credit facility with Wells Fargo Foothill, Inc. 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.

(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 in the accompanying financial
statements. 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.

                                       46
<PAGE>

(F) MARKETABLE SECURITIES

All of the Company's marketable securities are classified as available-for-sale
securities with unrealized gains and losses excluded from earnings and reflected
as a separate component of stockholders' equity.

(G) 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.

(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. In
2002, the Company wrote down the value of two of its investments by $1.5 million
due to the other than temporary decline in their values. As a result, all of the
Company's investments have been written down to minimal amounts.

(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 indefinite-lived intangible assets. SFAS No. 144 establishes a
single model for the impairment of long-lived assets including intangible assets
with finite lives. 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 ongoing
basis, management reviews the value and period of amortization or depreciation
of long-lived assets, including other intangible assets. During this review, the
significant assumptions used in determining the original cost of long-lived
assets are reevaluated. 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, trademark, 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. Trademark is deemed to have
indefinite life and therefore is not amortized. 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 5.

                                       47
<PAGE>

(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 communication services include Transaction Management
Services consisting of integrated desktop messaging services and document
capture and management services such as fax to database, fax to data and data
conversion; Transaction Delivery Services consisting of electronic data
interchange or "EDI" and production messaging services utilizing email, fax and
telex; and, through July 31, 2004, services that help protect corporate e-mail
systems such as virus protection, spam control and content filtering services
(the MailWatch service line). The Company derives revenues from monthly fees and
usage-based charges for all its services and from license fees for integrated
desktop messaging. Revenues for services are recognized as performed. License
revenue is recognized over the average estimated customer life of 3 years.

Other revenues consist of revenues from the licensing of domain names wherein
revenue is recognized ratably over the license period. Such revenues amounted to
$392,000, $475,000 and $480,000 in 2004, 2003 and 2002, respectively. In
December, 2004, the Company sold its domain name assets to the former Chairman
of the Board of Directors. See Note 3.

(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, 2004
and 2003, the fair value of cash, cash equivalents, marketable securities and
accounts receivable approximated their financial statement carrying amount
because of the short-term maturity of these instruments. The recorded values of
loans payable, 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 2004, 2003 or 2002. Revenues from the Company's five largest customers
accounted for an aggregate of 10%, 7% and 6% of the Company's total revenues in
2004, 2003 and 2002, respectively.

(P) STOCK-BASED COMPENSATION PLANS

In 2004, 2003 and 2002, 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. 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 the fair value recognition provisions
of SFAS No. 123 had been applied to stock-based employee compensation.

                                       48
<PAGE>

<TABLE>
<CAPTION>

($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                             FOR THE YEAR ENDED DECEMBER 31,
                                                                       ------------------------------
                                                                      2004              2003         2002
                                                                  ----------       ----------     ----------
<S>                                                               <C>              <C>            <C>
Net income (loss):
Income (loss) from continuing operations, as reported.........    $    7,602       $   51,886     $  (85,845)
Deduct total stock based employee compensation expense
determined under the fair value method for all awards,
net of tax....................................................        (2,769)          (8,394)        (9,343)
                                                                  ----------       ----------     ----------
Pro forma income (loss) from continuing operations............    $    4,833           43,492        (95,188)

Loss from discontinued operations.............................    $        -     $       (938)             -
                                                                  ----------       ----------     ----------
Proforma net income (loss)....................................    $    4,833       $   42,554     $  (95,188)
                                                                  ==========       ==========     ==========

Basic net income (loss) per share:
Income (loss) from continuing operations as reported..........    $     0.17       $     1.47     $    (5.13)
Deduct total stock based employee compensation
expense determined under the fair value method for
all awards, net of tax........................................    $    (0.06)      $    (0.24)    $    (0.56)
                                                                  ----------       ----------     ----------
Pro forma income (loss) from continuing operations.               $     0.11       $     1.23     $    (5.69)
Loss from discontinued operations                                 $        -       $    (0.03)             -
                                                                  ----------       ----------     ----------
Proforma basic net income (loss)..............................    $     0.11       $     1.20     $    (5.69)
                                                                  ==========       ==========     ==========

Diluted net income (loss) per share:
Income (loss) from continuing operations as reported..........    $     0.17       $     1.46     $    (5.13)
Deduct total stock based employee compensation
Expense determined under the fair value method for
all awards, net of tax........................................    $    (0.06)      $    (0.24)    $    (0.56)
                                                                  ----------       ----------     ----------
Pro forma income (loss) from continuing operations............    $     0.11       $     1.22     $    (5.69)
Loss from discontinued operations.............................    $        -       $    (0.03)            -
                                                                  ----------       ----------     ----------
Proforma diluted net income (loss)............................    $     0.11        $    1.19     $    (5.69)
                                                                  ==========       ==========     ==========
</TABLE>

The resulting effect on the pro forma net income (loss) disclosed for the years
ended December 31, 2004, 2003 and 2002 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 2004: dividend yield of zero (0%) percent, average risk-free
rate interest rate of 3.4%, expected life of 5 years and volatility of 119%,
2003: dividend yield of zero (0%) percent, average risk-free rate interest rate
of 3.0%, expected life of 5 years and volatility of 123%, 2002: dividend yield
of zero (0%) percent, average risk-free interest rate of 4.1%, expected life of
5 years and volatility of 120%.

(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.

                                       49
<PAGE>

Diluted net income per common share for the years ended December 31, 2004 and
2003 include the effect of employee options to purchase 886,765 and 251,527
shares of common stock, respectively. Diluted net loss per share is equal to
basic loss per share for the year ended December 31, 2002, since all common
stock equivalents are anti-dilutive for this period.

Diluted net income (loss) per common share for the years ended December 31,
2004, 2003 and 2002, does not include the effects of employee options to
purchase 1,524,086, 1,429,516 and 2,773,446 shares of common stock,
respectively, and 798,523, 798,523 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 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 materially impact
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 did not materially impact
the Company's financial statements.

                                       50
<PAGE>

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 did not materially impact 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.

In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
123 (revised 2004), "Share-Based Payment" (SFAS 123(R)) which replaces SFAS 123,
"Accounting for Stock-Based Compensation," and supersedes APB Opinion No. 25,
"Accounting for Stock Issued to Employees. Among other items, SFAS 123(R)
eliminates the use of APB 25 and the intrinsic method of accounting, and
requires all share-based payments, including grants of employee stock options,
to be recognized in the financial statements based on their fair values. SFAS
123(R) is effective for public companies beginning with the first interim period
that begins after June 15, 2005. The Company will adopt SFAS 123(R) in 2005 and
in accordance with its provisions will recognize compensation expense for all
share-based payments and employee stock options based on the grant-date fair
value of those awards. The Company is currently evaluating the impact of the
statement on its financial statements. See Note 1 (p) for the proforma effect of
SFAS 123.

In December 2004, the FASB issued FASB Staff Position, 109-1 ("FSP FAS 109-1"),
"Application of FASB Statement No. 109, "Accounting for Income Taxes," to the
Tax Deduction on Qualified Production Activities Provided by the American Jobs
Creation Act of 2004". In FSP FAS 109-1, the FASB concluded that the tax relief
(special tax deduction for domestic manufacturing) from this legislation should
be accounted for as a "special deduction" instead of a tax rate reduction. The
guidance in FSP FAS 109-1 was effective December 21, 2004 and had no impact on
the Company's results of operations or its financial position.

In December 2004, the FASB issued FSP FAS 109-2, "Accounting and Disclosure
Guidance for the Foreign Earnings Repatriation Provision within the American
Jobs Creation Act of 2004". The American Jobs Creation Act of 2004 introduces a
special one-time dividends received deduction on the repatriation of certain
foreign earnings to a U.S. taxpayer (repatriation provision), provided certain
criteria are met. FSP FAS 109-2 gives a company additional time to evaluate the
effects of the legislation on any plan for reinvestment or repatriation of
foreign earnings for purposes of applying SFAS No. 109, Accounting for Income
Taxes. The deduction is subject to a number of limitations, and uncertainty
remains as to how to interpret numerous provisions in the Act. As such, the
Company is not in a position to decide on whether, and to what extent, it might
repatriate foreign earnings that have not yet been remitted to the U.S. based on
its analysis to date. The Company expects to be in a position to finalize its
assessment by December 31, 2005.

In September 2004, the Emerging Issues Task Force ("EITF") of the FASB reached a
consensus on EITF Issue No. 04-08, "The Effect of Contingently Convertible Debt
on Diluted Earnings Per Share," which requires the shares issuable under
contingently convertible debt, such as the Company's convertible subordinated
debentures, to be included in diluted earnings per share computations,
regardless of whether the contingency had been met, if the effect would be
dilutive to the earnings per share calculation. The provisions are effective for
reporting periods ending after December 15, 2004. If the impact is dilutive, all
prior period earnings per share amounts presented are required to be restated to
conform to the provisions of the EITF. The Company adopted this rule during the
fourth quarter of 2004 and there was no effect on diluted income (loss) per
share for all periods presented since the effect was anti-dilutive to the
earnings per share calculation.

(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.

                                       51
<PAGE>

(2) SALE OF BUSINESSES/MAILWATCH SERVICE LINE


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 an
earlier acquisition. The full purchase price was recorded as a gain as the net
book value of assets transferred was zero.

On July 31, 2004, the Company sold its MailWatch service line to Infocrossing,
Inc. for total consideration of approximately $5.0 million, including $3.5
million in cash and 123,193 shares of Infocrossing's common stock valued at
approximately $1.5 million. The sale resulted in a gain of $4.1 million before
income taxes. The Infocrossing stock is reported at market value in the December
31, 2004 balance sheet and the unrealized gain related thereto of $521,000 is
included in the accumulated other comprehensive gain(loss) account in
stockholders' equity.

(3) SALE OF INTERNET DOMAIN NAMES

In December 2004, the Company sold its internet domain name portfolio and
related assets to its former Chairman of the Board of Directors for $1 million
and recognized a gain of $891,000 on the transaction. In addition to the initial
purchase price, the Company will receive 15% of all revenues related to the
purchased domain names during the second and third years following the sale and
10% of all such revenues in the fourth and fifth years. The Company also has the
option to purchase back substantially all the domain names for $4.5 million at
any time during the fourth and fifth years.

The former Chairman resigned as an employee of the Company and member of the
Board of Directors on the same day as the domain name sale was completed.
Furthermore, he agreed to the conversion of all his one million shares of 10 for
1 super-voting Class B common stock into 1 for 1 standard voting Class A common
stock. As a result, there are no Class B shares outstanding as of December 31,
2004.

(4) PROPERTY AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                                                              DECEMBER 31,
                                                                                          2004         2003
                                                                                        --------     --------
<S>                                                                                     <C>          <C>
Computer equipment and software......................................................   $ 39,878     $ 40,878
Furniture and fixtures...............................................................      1,589        1,589
Web development......................................................................        181          181
Leasehold improvements...............................................................      2,282        2,187
                                                                                        --------     --------
Subtotal.............................................................................     43,930       44,835
Less accumulated depreciation and amortization.......................................     35,805       34,194
                                                                                        --------     --------
Property and equipment, net..........................................................   $  8,125     $ 10,641
                                                                                        ========     ========
</TABLE>

Depreciation and amortization expense of property and equipment totaled $5.0
million, $8.3 million and $10.4 million for the years ended December 31, 2004,
2003 and 2002, respectively.

(5) GOODWILL AND INTANGIBLE ASSETS

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
("SFAS 142"). 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 142 effective January 1, 2002.

                                       52
<PAGE>

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. 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-trademarks, $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.

During the quarter ended December 31, 2004, the Company completed its 2004
assessment of its goodwill and indefinite-lived intangible assets with the
assistance of an independent appraiser and determined that there was an
impairment of its trademark of $500,000. The evaluation employed the same
methodology as that used in the prior years' evaluations.

Included in the Company's balance sheet as of December 31, 2004 and 2003 are the
following (in thousands):


<TABLE>
<CAPTION>
                                                                                 AS OF DECEMBER 31, 2004
                                                                        --------------------------------------
                                                                                       ACCUMULATED
                                                                        GROSS COST    AMORTIZATION      NET
                                                                        ----------    --------------  --------
<S>                                                                     <C>           <C>             <C>
Intangibles with indefinite lives:
Goodwill..............................................................   $ 152,659      $(146,393)    $ 6,266
                                                                        ==========    ==============  ========
Trademarks............................................................   $  15,500      $ (10,400)    $ 5,100
                                                                        ==========    ==============  ========
Intangibles with finite lives:
Technology............................................................   $  16,550      $ (14,339)    $ 2.211
Customer lists........................................................      11,000         (9,943)      1,057
Software development and licenses.....................................       4,564         (4,086)        478
                                                                        ----------    --------------  --------
                                                                         $  32,114      $ (28,368)    $ 3,746
                                                                        ==========    ==============  ========

                                                                                 AS OF DECEMBER 31, 2003
                                                                        --------------------------------------
                                                                                       ACCUMULATED
                                                                        GROSS COST    AMORTIZATION      NET
                                                                        ----------    --------------  --------
Intangibles with indefinite lives:
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>

                                       53
<PAGE>

The Company's estimated amortization expense is $2.3 million, $0.6 million, $0.2
million, $0.2 million, and $0.2 million in 2005, 2006, 2007, 2008 and 2009,
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.

(6) ACCRUED EXPENSES

Accrued expenses consist of the following, in thousands:
<TABLE>
<CAPTION>
                                                                                              DECEMBER 31,
                                                                                          2004         2003
                                                                                        --------     --------
<S>                                                                                     <C>          <C>
Carrier charges......................................................................   $  3,820     $  5,507
Payroll and related costs............................................................      2,960        2,532
Sales/Use/VAT taxes payable..........................................................      1,506        1,792
Federal and state income taxes payable...............................................      1,780           --
Professional services, consulting fees and
sales agents' commissions............................................................      1,581        1,295
Interest.............................................................................         90          233
Software and hardware maintenance....................................................        181          168
Other................................................................................      1,973        2,809
                                                                                        --------     --------
Total................................................................................   $ 13,891     $ 14,336
                                                                                        ========     ========
</TABLE>

(7) LOANS AND NOTES PAYABLE

Loans and notes payable include the following, in thousands:

<TABLE>
<CAPTION>
                                                                             December 31,
                                                            -----------------------------------------------
                                                              2004                            2003
                                                            --------------        -------------------------
                                                                                  Capitalized
                                                            Principal              Interest       Principal
                                                            ---------             -----------     ---------
<S>                                                         <C>                   <C>             <C>
Term loan payable....................................       $  12,000                  ---             ---

7% Convertible Subordinated Notes,
   due February 1, 2005..............................           1,425                  ---        $  1,425

12% restructure note: as amended and
   restated effective September 2003.................             ---                1,884          10,504

12% restructured notes payable quarterly
    beginning June 2003..............................             ---                  109           1,025

Restructure balloon payment due November, 2004.......             ---                  ---             396

12% restructure note payable to
  shareholder........................................             ---                    3             118
                                                            ---------             -----------     ---------

Total loans and notes payable........................          13,425                1,996          13,468

Current portion......................................           3,825                1,040           2,957
                                                            ---------             -----------     ---------

Long term portion....................................       $   9,600               $  956        $ 10,511
                                                            =========             ===========     =========
</TABLE>

                                       54
<PAGE>

TERM LOAN PAYABLE

On December 16, 2004 the Company entered into a $15 million credit facility with
Wells Fargo Foothill, Inc. (a subsidiary of Wells Fargo Bank) that includes a
$12 million Term Loan payable monthly over 60 months and the availability of
working capital advances of $3 million initially, increasing to $7.5 million
upon the completion of certain items by the Company subject to limitations
including the maximum outstanding under the facility of $15 million. The credit
facility is secured by a security interest in substantially all of the Company's
assets. $9.5 million of the proceeds from the Term Loan were used by the Company
to repay all outstanding restructure notes. The balance of the proceeds will be
used to repay the outstanding balance of the 7% Convertible Subordinated Notes,
due February 1, 2005 and to fund other cash requirements of the Company's
operations. As a result of the repayment of the restructure notes, $984,000 of
previously capitalized interest was reversed and recognized as a gain on debt
restructurings and settlements. The capitalized interest had been recorded in
2001 at the time of previous debt restructuring in accordance with SFAS No. 15,
"Accounting by Debtors and Creditors for Troubled Debt Restructurings.

Interest on the Term Loan is payable monthly at the rate of 3.75% over the Wells
Fargo Bank prime rate and an annual fee of 1% of the balance outstanding is
payable on each anniversary of the loan. The Term Loan includes certain
mandatory prepayments as follows: (1) beginning with the year ended December 31,
2005, a mandatory prepayment is required for any year in which the Company has
"excess cash flow", as defined in the agreement, equal to the lesser of $400,000
or 25% of the excess cash flow for that year; (2) upon the sale or disposition
of certain assets excluding up to $3,000,000 in proceeds from the sale of domain
names and up to $2,000,000 from the sale of Infocrossing, Inc. stock obtained in
the MailWatch service line sale; (3) upon the receipt of certain extraordinary
funds as defined in the agreement in excess of $1,000,000; and (4) at any time
that total borrowings under the credit facility exceeds one of the following:
$15,000,000, 2 times trailing twelve months EBITDA, 50% of the Company's
enterprise valuation or the amount of accounts receivable collections for
domestic revenues for the preceding 90 days.

Interest on outstanding Advances is payable monthly at the rate of 0.75% over
the Wells Fargo Bank prime rate. A fee of 0.25% per annum is payable monthly on
the amount of available but unused advances and a servicing fee of $2,500 per
month is also payable. Advances are specifically limited to 85% of Eligible
Accounts Receivable which represent all revenues from US customers excluding
certain balances based on the periods such balances are outstanding.

The credit facility includes certain affirmative and restrictive covenants,
including a restriction on the incurrence of indebtedness, a restriction on the
payment of dividends, limitations on capital expenditures and maintenance on
quarterly levels of EBITDA. The Company was not in compliance with the $3
million limitation on capital expenditures for 2004; however, Wells Fargo waived
the covenant. Additionally, on March 31, 2005, the Company entered into an
amendment to the credit agreement whereby it can exclude severance charges
related to the George Abi Zeid settlement of up to $2.475 million from the
calculation of EBITDA for covenant compliance purposes.

7% CONVERTIBLE SUBORDINATED NOTES

The 7% Convertible Subordinated Notes outstanding as of December 31, 2004 and
2003 represent the balance outstanding from $100 million in notes issued on
January 26, 2000. The Notes are convertible by holders into shares of EasyLink
Class A common stock at a conversion price of $189.50 per share. Through a
series of exchange, settlement and restructuring transactions completed in 2001
through 2003, the outstanding notes were reduced to the current amount which was
paid on the maturity date of February 1, 2005.

RESTRUCTURE NOTES

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 to 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. The Company was not required to make scheduled principal payments
on any of the notes until June 2003.

                                       55
<PAGE>

One restructure note, which was amended and restated effective September 2003,
was originally issued for $10 million to AT&T Corp. in connection with the 2001
debt restructuring. The debt was originally $35 million from the acquisition of
STI, including the EasyLink Services business as purchased from AT&T by STI
shortly before the Company's acquisition. In 2003, AT&T entered into an
agreement to sell the $10 million note and 1.4 million shares of EasyLink Class
A common stock, received by AT&T as part of the debt restructuring, 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. In October 2003 the legal dispute was settled. Under the settlement,
the Company agreed to consent to the transfer of the note and shares from AT&T
to PTEK in exchange for a revised amortization schedule on the note and return
of a warrant to the Company for cancellation. The warrant, also issued in
connection with the 2001 debt restructuring, was for the purchase of 1 million
shares of the Company's Class A common stock at a purchase price of $6.10 per
share. The amended and restated note, amounting to $11.0 million which included
the balance of principal and interest outstanding as of September 1, 2003, was
repayable in quarterly installments of principal and interest of $800,000 with a
final payment of $5.8 million on the June 1, 2006 maturity date.

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 was 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 the former 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.

 (8) 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.

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

<TABLE>
<CAPTION>
                                                                              STATEMENTS OF OPERATIONS DATA
                                                                                 YEAR ENDED DECEMBER 31,
                                                                              -----------------------------
                                                                                2004        2003       2002
                                                                              --------    --------   --------
<S>                                                                           <C>         <C>        <C>
Revenues..............................................................        $     --    $     --   $     --
                                                                              ========    ========   ========
Loss from discontinued operations.....................................        $     --    $    938   $     --
                                                                              ========    ========   ========
</TABLE>


                                       56
<PAGE>

<TABLE>
<CAPTION>
                                                                                         BALANCE SHEET DATA
                                                                                         AS OF DECEMBER 31,
                                                                                       ----------------------
                                                                                          2004         2003
                                                                                       ----------   ----------
<S>                                                                                    <C>          <C>
Current assets........................................................                  $      17   $      17
Total assets..........................................................                        404         404
Current liabilities...................................................                        740       1,040
Long-term liabilities and minority interest...........................                        193         193
Net liabilities of discontinued operations............................                       (528)       (828)

</TABLE>

(9) LEASES

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,
2004, 2003 and 2002 was approximately $3.6 million, $4.2 million, and $3.4
million, respectively.

At December 31, 2004, the Company had $507,000 in gross amount of fixed assets
and $67,000 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, 2004 are as follows, in thousands:

<TABLE>
<CAPTION>

YEAR  ENDING DECEMBER 31,
                                                                                         CAPITAL     OPERATING
                                                                                         LEASES       LEASES
                                                                                         -------     ---------
<C>                                                                                      <C>         <C>
2005.................................................................................     $  321       $2,917
2006.................................................................................         43        2,195
2007.................................................................................          -        1,565
2008.................................................................................          -        1,221
2009.................................................................................          -        1,255
2010 and later.......................................................................          -        3,764
                                                                                         -------     ---------
              Total minimum lease payments...........................................     $  364      $12,917
                                                                                         =======     =========

Less current portion of obligations under capital leases.............................        321

Obligations under capital leases, excluding current portion..........................     $   43
                                                                                         =======
</TABLE>

Of the total operating lease commitments as of December 31, 2004 noted above,
$12.0 million is for occupied properties and $0.9 million is for abandoned
properties, which are a component of the restructuring obligation. The balance
for capital leases and related interest as of December 31, 2004 is for computer
equipment and software.

(10) 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 until November 2004, 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.

                                       57
<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. During 2004, pursuant to such agreement the
Company paid Mr. Abi Zeid $320,000 of net proceeds received by the Company.
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. On May 1, 2003 in connection with the Company's 2003 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, all of which has been paid. See Note 7 - Loans and Notes
Payable.

Subsequent to December 31, 2004 Mr. Abi Zeid resigned as an officer and director
of the Company pursuant to a separation agreement. Under the agreement, the
Company agreed to pay Mr. Abi Zeid $240,000 as a severance payment on the
effective date of his resignation, February 4, 2005, and an aggregate amount of
$1,960,000 in equal installments over three years in consideration of the
non-compete and other covenants contained in the agreement. In connection with
the agreement, the Company also agreed to pay $200,000 of severance payments to
two other employees of the Company.

SALE OF INTERNET DOMAIN NAMES

In December 2004, the Company sold its portfolio of Internet domain names and
related assets to Gerald Gorman, the Company's former Chairman and director. See
Note 3.

(11) 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

As of December 31, 2004, the number of authorized shares consist of 500,000,000
shares of Class A common stock, 10,000,000 shares of Class B common stock and
60,000,000 undesignated shares of preferred stock, all with a par value of $0.01
per share.

COMMON STOCK

VOTING RIGHTS

Each share of Class A common stock has one vote per share. Prior to the
conversion into Class A common stock in December 2004, 1 million shares of Class
B common stock, which were owned by the Chairman, had ten votes per share.

                                       58
<PAGE>

PRIVATE PLACEMENT OF COMMON STOCK

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.

SETTLEMENTS

During 2002, the Company issued 226,391 shares of Class A common stock in
connection with various settlements of certain obligations and for payment of
services rendered valued at $706,000 in the aggregate. The 2002 issuances
included 127,550 shares in connection with vendor settlements and 98,841 shares
related to discontinued operations. In addition, 888,810 shares of Class A
common stock were issued during 2002 in lieu of cash interest payments on Senior
Convertible Notes and subordinated debentures valued at $1.8 million in the
aggregate.


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, 2004 and 2003, 60,000,000 authorized shares of
undesignated preferred stock were available for creation and issuance in this
manner.

(12) STOCK OPTIONS

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,

                                                2004                     2003                     2002
                                       ---------------------   -----------------------   ----------------------
                                                    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.................   4,881,980       $4.00    2,773,446        $6.80   1,855,781      $13.51
Options granted.....................     441,000       $1.37    2,470,131        $1.14   1,285,300       $1.04
Options canceled....................    (186,417)      $3.92     (290,047)       $7.23    (367,732)     $20.44
Options exercised...................     (44,300)      $0.75      (71,550)       $0.98          97           -
                                       ---------    --------   ----------     --------   ---------      ------
Options outstanding at
end of period.......................   5,092,263       $3.80    4,881,980        $4.00   2,773,446       $0.67
                                       =========    ========   ==========     ========   =========      ======
Options exercisable at period end...   3,318,729                2,200,787                1,174,560
                                       =========               ==========                =========
Weighted average fair value of
options granted during the
period..............................       $0.90                    $0.90                    $0.93
                                       =========               ==========                =========
</TABLE>

The following table summarizes information about stock options outstanding and
exercisable at December 31, 2004:

<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>
$0.53-0.70................................           489,650       7.80          $.54         432,150      $0.53
$0.98-1.45................................         3,203,527       8.00         $1.18       1,575,030      $1.08
$1.50-2.20................................           680,404       6.00         $2.12         608,245      $2.17
$2.30-3.40................................            24,957       7.10         $2.82          17,263      $2.84
$3.80-5.31................................            96,157       4.20         $4.44          92,230      $4.45
$5.80-8.13................................            32,723       3.40         $6.20          29,525      $6.20
$9.06-13.44...............................           218,627       5.10        $12.31         218,377     $12.31
$14.69-20.00..............................           253,785       4.20        $17.00         253,476     $17.00
$23.36-35.00..............................            42,707       3.10        $34.97          42,707     $34.97
$40.00-55.32..............................            28,763       4.30        $51.08          28,763     $51.08
$63.10-74.61..............................             1,544       5.40        $72.39           1,544     $72.39
$118.60-175.00............................            18,194       5.10       $155.84          18,194    $155.84
$190.00-193.03............................               957       4.20       $192.71             957    $192.71
$294.80-294.80............................               268       0.20       $294.80             268    $294.80
                                                ------------   -----------   ---------    -----------    --------
                                                   5,092,263       7.20         $3.80       3,318,729      $5.14
                                                ============   ===========   =========    ===========    ========
</TABLE>

                                       59
<PAGE>


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.

(13) 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 273,129, 531,545,
and 314,642 shares of Class A common stock, for the years ended December 31,
2004, 2003 and 2002 resulted in compensation expense of $400,000, $492,000, and
$437,000, 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, 2004, 2003 and
2002 amounted to $344,049, $210,000 and $454,000, respectively.

(14) RESTRUCTURING CHARGES

During 2003 and 2002, restructuring charges of $1.5 million and $2.3 million,
respectively, were recorded by the Company 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.

In 2004, based upon revised estimates of the previously recorded abandonment
costs, largely due to a negotiated settlement of liability on one lease,
$350,000 of restructuring charges were reversed.

                                       60
<PAGE>

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

<TABLE>
<CAPTION>
                                                                     FOR THE YEAR ENDED DECEMBER 31, 2004
                                                                 --------------------------------------------------
                                                                  BEGINNING   CURRENT YEAR   CURRENT YEAR   ENDING
                                                                   BALANCE      PROVISION     UTILIZATION   BALANCE
                                                                               (REVERSAL)
                                                                 ----------   ------------   ------------   -------
<S>                                                              <C>          <C>            <C>            <C>
Lease abandonments............................................     $2,747        $(350)        $(1,494)      $  903
                                                                 ==========   ============   ============   =======

                                                                     FOR THE YEAR ENDED DECEMBER 31, 2003
                                                                 --------------------------------------------------
                                                                  BEGINNING   CURRENT YEAR   CURRENT YEAR   ENDING
                                                                   BALANCE      PROVISION     UTILIZATION   BALANCE
                                                                               (REVERSAL)
                                                                 ----------   ------------   ------------   -------
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
                                                                 ==========   ============   ============   =======

                                                                     FOR THE YEAR ENDED DECEMBER 31, 2002
                                                                 --------------------------------------------------
                                                                  BEGINNING   CURRENT YEAR   CURRENT YEAR   ENDING
                                                                   BALANCE      PROVISION     UTILIZATION   BALANCE
                                                                               (REVERSAL)
                                                                 ----------   ------------   ------------   -------
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>


(15) INCOME TAXES

The provision for income taxes in 2004 consist of the following:

                  Current taxes:
                          Federal           $1,600
                          State                300
                                            --------
                                            $1,900

There is no tax provision for 2003 and 2002 since the Company has incurred
losses for tax purposes in those years and since inception. Although the Company
has tax loss carryforwards which could have offset its taxable income in 2004,
the availability of such net operating loss carryforwards to offset income in
the current period and in the future has been determined to be significantly
limited. As a result of numerous historical equity transactions, the Company has
experienced "ownership changes," as defined by Section 382 of the Internal
Revenue Code of 1986, as amended (the "Code") and accordingly, the utilization
of net operating loss carryforwards is limited under the change in stock
ownership rules of the Code. Accordingly, the December 31, 2004 and 2003
deferred tax assets disclosed below have been adjusted to reflect the Section
382 limitation. As of December 31, 2004 and 2003, the Company had approximately
$9.2 million and $10.9 of federal net operating loss carryforward available to
offset future taxable income after considering the limitations under the change
in stock ownership rules of the Code. Such carryforward expires ratably through
2023.

Additionally, the Company had $3.9 million and $4.3 million, respectively, of
foreign net operating loss carryforwards at December 31, 2004 and 2003, which
had no expiration date.

The elimination of outstanding debt in 2003 resulted 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. Although the
relevant tax authorities may challenge the Company's income tax positions, the
Company does not expect to incur any material current income tax liability from
the elimination of this debt. See Note 18.

                                       61
<PAGE>

The difference between the statutory federal income tax rate and the Company's
effective tax rate for the year ending December 31, 2004 is principally due to
the utilization of federal and state net operating losses. For the year ending
December 31, 2003 reduction of income in accordance with applicable tax rules,
and net operating losses for which no tax benefit was recorded, resulted in the
difference between the statutory federal income tax rate and the Company's
effective tax rate.

The effects of temporary differences and tax loss carryforwards that give rise
to significant portions of deferred tax assets and deferred tax liabilities at
December 31, 2004 and 2003 are presented below, in thousands.

<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,
                                                                                         -----------------------
                                                                                            2004        2003
                                                                                         ----------   ----------
<S>                                                                                      <C>          <C>
Deferred tax assets(liabilities):
Net operating loss carryforwards.....................................................    $ 4,845      $ 5,657
Accounts receivable principally due to allowance for doubtful accounts...............      1,345        1,576
Plant and equipment, principally due to differences in depreciation..................       (582)        (208)
Write down of assets and investments.................................................       (665)      (1,263)
Accrued expenses.....................................................................        411          199
Restructuring reserve................................................................        361          790
Other................................................................................       (210)           -
                                                                                         ----------   ----------
Gross deferred tax assets............................................................      5,505        6,751
Less: valuation allowance............................................................     (5,505)      (6,751)
                                                                                         ----------   ----------
      Net deferred tax assets........................................................    $     -      $     -
                                                                                         ==========   ==========
</TABLE>


Based upon the level of historical losses and after considering projections for
future taxable income over the periods in which the deferred tax assets are
expected to be deductible, the Company has recorded a full valuation allowance
against its net deferred tax assets, including the remaining net operating loss
carryforward, since it believes that it is not more likely that not that these
assets will be realized.

(16) 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, 2002.............   $   14,547           $2,596      $     --           $9,091       $  8,052
For the year ended December 31, 2003.............   $    8,052           $    1      $     --           $3,229       $  4,824
For the year ended December 31, 2004.............   $    4,824           $  410      $     --           $1,284       $  3,950

</TABLE>

(17) COMMITMENTS AND CONTINGENCIES

MASTER CARRIER AGREEMENT

In connection with the acquisition of the EasyLink Services business from AT&T
Corporation in 2001, 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. In April, 2004, the Company entered into a Data
Service Terms and Pricing attachment (the "MCA Attachment") to the Master
Carrier Agreement for the renewed purchase of private line and satellite
services for a minimum term of 18 months with an option by the Company to extend
the term up to an additional 12 months. Under the MCA Attachment, the Company
has a minimum purchase commitment for services equal to $3.6 million over the
initial contract period of 18 months. If the Company terminates the network
connection services or the private line and satellite services prior to the end
of the applicable 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. If the Company decides to exercise the
option at the end of the initial contract period, there is no minimum purchase
commitment and the service term is on a month-to-month basis. 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. The Company has complied with the annual
minimum revenue commitment for switched services through the annual period
ending September 2004.

                                       62
<PAGE>

OTHER TELECOMMUNICATIONS SERVICES

The Company has committed to purchase from MCI Worldcom a minimum of $900,000
per year in other telecommunications services through January 2007.

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; claims alleging unsolicited commercial faxes sent on behalf of the
Company's customers; and contract claims. These claims include claims that some
of the Company's 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, it may be required to discontinue use of any
infringing technology, to pay damages and/or to pay ongoing license fees which
would increase the costs of providing service.

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
filed for an appeal. The Court has permitted the Company, in lieu of posting an
appeal bond, to place $400,000 into a trust account to provide funds for the
payment of the judgment if upheld on appeal. The Company has paid in full the
$400,000 into the trust account. Oral arguments on the appeal occurred on
September 22, 2004, and the parties await the decision of the Court of Appeals.
No assurance can be given as to the Company's likelihood of success or its
ultimate liability, if any, in connection with this matter.

The Company previously reported that the staff of the US Securities and Exchange
Commission was reviewing certain transactions accounting for approximately $4.8
million of revenue generated by its former advertising network business in 2000,
a year in which the Company reported $61.2 million in total revenue. The Company
announced that it has reached a settlement of the matter with the SEC. Under the
settlement, the Company agreed to the entry of an SEC order requiring that it
cease and desist from violations of certain reporting, record keeping and
internal control provisions of the federal securities laws. The Company settled
without admitting or denying the statements made in the SEC's findings. The
order does not impose any fine or other penalty upon EasyLink and does not
require restatement of any of EasyLink's historical financial statements.

On January 28, 2005, Steven Brin instituted a third party complaint against the
Company and four other companies and two individuals for implied indemnification
and/or contribution. The case was filed in the Circuit Court of Cook County,
Illinois, County Department, Chancery Division, Case No. 03 CH 13062. In the
underlying action against Mr. Brin in the same case, titled Jerold Rawson et al.
v. Steven Brin et al.,the plaintiffs filed a putative class action against Mr.
Brin and the other defendants for allegedly sending or causing to be sent
unsolicited advertisements to telephone facsimile machines in violation of the
federal Telephone Consumer Protection Act, 47 U.S.C. ss. 227, the Illinois
Consumer Fraud and Deceptive Business Practices Act and common law conversion
and trespass. Mr. Brin has denied liability to the plaintiffs. Mr. Brin alleges
in the third party complaint filed against the Company and the other third-party
defendants, however, that, if he is found liable to the plaintiffs in the
underlying complaint, then the Company and the other third party defendants
should be held liable to Mr. Brin for implied indemnification and/or
contribution. The Company has until April 13, 2005 to file its answer or
otherwise plead to the third-party complaint, absent an extension. The plaintiff
in the underlying lawsuit made an offer to the defendants to settle the claim
for $30,000. Although we intend to defend this lawsuit vigorously, we cannot
assure you that our ultimate liabiity, if any, in connection with this matter
will not have a material effect on our results of operations, financial
condition or cash flow.

                                       63
<PAGE>

OTHER

The Company's tax filings may be subject to challenge by various tax
authorities. See Note 15. 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.

(18) QUARTERLY FINANCIAL INFORMATION - UNAUDITED

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

<TABLE>
<CAPTION>
                                                 2004                                    2003
                                --------------------------------------  --------------------------------------
                                 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......................  $ 20,941  $ 22,509  $ 24,053  $ 24,336  $ 24,738  $25,065  $ 25,802  $ 25,742
Cost of revenues..............     8,207     8,428     9,764    10,325    11,622   10,863    13,361    13,707
                                --------  --------  --------  --------   -------- -------- --------  --------
Gross profit..................    12,734    14,081    14,289    14,011    13,116   14,202    12,441   12,035
Operating expenses............    12,680     8,024    12,595    13,141    12,571   12,760    12,787   14,595
                                --------  --------  --------  --------   -------- -------- --------  --------
Income(loss)
from operations...............        54     6,057     1,694       870       545    1,442      (346)  (2,560)
Gain from debt
restructuring.................       984        --        --       412        --   47,026     6,640
Other income/(expense),
net...........................       (75)  (1,566)      (400)      (17)     (116)    (75)      (304)    (778)
                                --------  --------  --------  --------  --------  -------- --------  --------

Income from
continuing operations.........       963     4,491     1,294       853       841    1,367    46,376    3,302
                                --------  --------  --------  --------  --------  -------- --------  --------

Loss from discontinued
operations....................        --        --        --        --      (100)    (838)       --       --
                                --------  --------  --------  --------  --------  -------- --------  --------
Net income....................  $    963  $  4,491  $  1,294  $    853  $    741  $   529   $46,376  $  3,302
                                ========  ========  ========  ========  ========  ======== ========  ========
Basic and diluted
income (loss) per share:
Income from
continuing operations.........  $   0.02  $   0.10  $   0.03  $   0.02  $   0.02  $  0.03  $   1.28  $   0.19
Loss from discontinued
operations....................        --        --        --        --        --    (0.02)       --        --
                                --------  --------  --------  --------  --------  -------- --------  --------
Net income....................  $   0.02  $   0.10  $   0.03  $   0.02  $   0.02  $   0.01 $   1.28  $   0.19
                                ========  ========  ========  ========  ========  ======== ========  ========
</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.

                                       64
<PAGE>

(19) GEOGRAPHIC DISCLOSURE

<TABLE>
<CAPTION>
                                                                                 GEOGRAPHIC INFORMATION
                                                                                   FOR THE YEARS ENDED
                                                                          -----------------------------------
                                                                            2004         2003         2002
                                                                          ---------    ---------  -----------
<S>                                                                       <C>          <C>        <C>
United States:
Revenues................................................................  $ 67,973     $ 77,019   $  89,356
Operating income (loss).................................................     2,517         (175)    (84,543)
Total assets............................................................    50,624       49,408      58,704
Long lived assets.......................................................    22,335       27,585      34,317

All other regions:
Revenues................................................................    23,867       24,328      24,998
Operating income (loss).................................................     1,143         (742)     (2,390)
Total assets............................................................       (98)           4       2,307
Long lived assets.......................................................       901          951       1,544

-------------------------------------------------------------------------------------------------------------
Significant country included in all other regions

United Kingdom:
Revenues................................................................    20,516       20,463      20,940
Operating income (loss).................................................     1,713          172      (1,798)
Total assets............................................................     1,713        1,176       2,453
Long lived assets.......................................................       575          541         938

</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.


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, 2004 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Not applicable.

                                       65
<PAGE>

                                    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, 2004.

                                     PART IV

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibits.

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

                                       66
<PAGE>

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 10.3 of EasyLink
         Services Corporation's Current Report on Form 8-K filed April 5, 2005)

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)

10.3

         10.3.1   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)

         10.3.2   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)

         10.3.3   +Domain Portfolio Purchase Agreement made the 23rd day of
                  December, 2004, by and among Easylink Services Corporation; NJ
                  Domains LLC; and Gerald Gorman (Incorporated by reference to
                  Exhibit 10.1 to EasyLink Services Corporation's Current Report
                  on Form 8-K filed December 28, 2004)+

                                       67
<PAGE>

         10.3.4   Guaranty of Domain Portfolio Purchase Agreement made and
                  delivered the 23rd day of December, 2004, by Gerald Gorman in
                  favor of EasyLink Services Corporation (Incorporated by
                  reference to Exhibit 10.2 to EasyLink Services Corporation's
                  Current Report on Form 8-K filed December 28, 2004)

         10.3.5   Amendment No. 2 dated December 23, 2004 to Employment
                  Agreement dated November 12, 2002 between EasyLink Services
                  Corporation and Gerald Gorman (Incorporated by reference to
                  Exhibit 10.3 to EasyLink Services Corporation's Current Report
                  on Form 8-K filed December 28, 2004)

         10.3.6   Severance Agreement made the 23rd day of December, 2004, by
                  and between Gerald Gorman and Easylink Services Corporation
                  (Incorporated by reference to Exhibit 10.4 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 28, 2004)

         10.3.7   Release made and delivered the 23rd day of December, 2004 by
                  Gerald Gorman in favor of EasyLink Services Corporation
                  (Incorporated by reference to Exhibit 10.5 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 28, 2004)

         10.3.8   Release made and delivered the 23rd day of December, 2004 by
                  EasyLink Services Corporation in favor of Gerald Gorman
                  (Incorporated by reference to Exhibit 10.6 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 28, 2004)

10.4

         10.4.1   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)

         10.4.2   Amendment dated June 1, 2003 to Employment Agreement between
                  EasyLink Services Corporation and George Abi Zeid
                  (Incorporated by reference to Exhibit 10.4 to EasyLink
                  Services Corporation's Annual Report on Form 10-K filed March
                  30, 2004)

         10.4.3   Separation Agreement between EasyLink Services Corporation and
                  George Abi Zeid dated January 28, 2005 (Incorporated by
                  reference to Exhibit 10.6 to EasyLink Services Corporation's
                  Current Report on Form 8-K filed January 28, 2005)

         10.4.4   Reaffirmation Agreement made as of July 23, 2004, by and among
                  EasyLink Services Corporation (f/k/a Mail.com, Inc.), a
                  Delaware corporation, Swift Telecommunications, Inc., a
                  Delaware corporation, and George Abi Zeid (Incorporated by
                  reference to Exhibit 10.1 to EasyLink Services Corporation's
                  Quarterly Report on Form 10-Q filed August 16, 2004)

10.5              Employment Agreement between EasyLink Services Corporation and
                  Michael A. Doyle dated March 22, 2004 (Incorporated by
                  reference to Exhibit 10.5 to EasyLink Services Corporation's
                  Annual Report on Form 10-K filed March 30, 2004)

10.6

         10.6.1   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)

         10.6.2   Letter Agreement between EasyLink Services Corporation and
                  Debra McClister dated March 30, 2005 (Incorporated by
                  reference to Exhibit 10.2 of EasyLink Services Corporation's
                  Current Report on Form 8-K filed April 5, 2005)

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) (Incorporated by reference to Exhibit 10.8
                  to EasyLink Services Corporation's Annual Report on Form 10-K
                  filed March 30, 2004)

10.9              2004 Executive Incentive Plan - Level 1 International
                  (applicable to President - International Operations)
                  (Incorporated by reference to Exhibit 10.9 to EasyLink
                  Services Corporation's Annual Report on Form 10-K filed March
                  30, 2004)

10.10             2004 Executive Incentive Plan - Level 2 (applicable to other
                  named executive officers) (Incorporated by reference to
                  Exhibit 10.10 to EasyLink Services Corporation's Annual Report
                  on Form 10-K filed March 30, 2004)

10.11             2004 Executive Incentive Plan - Vice President of Sales
                  (Incorporated by reference to Exhibit 10.11 to EasyLink
                  Services Corporation's Annual Report on Form 10-K filed March
                  30, 2004)

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)

                                       68
<PAGE>

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

         10.30.1  Form of Stock Option Agreement for options granted under the
                  Company's stock option plans (version providing 6 month period
                  to exercise following termination for reasons other than cause
                  or performance)

         10.30.2  Form of Stock Option Agreement for options granted under the
                  Company's stock option plans (version providing 12 month
                  period to exercise following termination for reasons other
                  than cause or performance)

         10.30.3  Form of Stock Option Agreement for options granted under the
                  Company's stock option plans (version providing 18 month
                  period to exercise following termination for reasons other
                  than cause or performance)

         10.30.4  Form of Stock Option Agreement for options granted under the
                  Company's stock option plans (version providing 24 month
                  period to exercise following termination for reasons other
                  than cause or performance)

         10.30.5  Form of Stock Option Agreement for options granted under the
                  Company's stock option plans (version providing 60 day period
                  to exercise following termination for reasons other than cause
                  or performance)

10.31             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 (Incorporated by
                  reference to Exhibit 10.33 to EasyLink Services Corporation's
                  Annual Report on Form 10-K filed March 30, 2004)

10.32             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)

                                       69
<PAGE>

10.33

         10.33.1+ Credit Agreement by and among EasyLink Services Corporation,
                  EasyLink Services USA, Inc., Swift Telecommunications, Inc.,
                  EasyLink Services International, Inc. and Wells Fargo
                  Foothill, Inc. dated as of December 9, 2004+(Incorporated by
                  reference to Exhibit 10.1 to EasyLink Services Corporation's
                  Current Report on Form 8-K filed December 20, 2004)

         10.33.2  First Amendment to Credit Agreement entered into as of March
                  30, 2005 by and among Wells Fargo Foothill, Inc., EasyLink
                  Services Corporation, Swift Telecommunications, Inc., EasyLink
                  Services USA, Inc., EasyLink Services International, Inc.
                  (Incorporated by reference to Exhibit 10.1 of EasyLink
                  Services Corporation's Current Report on Form 8-K filed April
                  5, 2005)

         10.33.3  Security Agreement dated as of December 9, 2004 by EasyLink
                  Services Corporation in favor of Wells Fargo Foothill, Inc.
                  (Incorporated by reference to Exhibit 10.2 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.4  Security Agreement dated as of December 9, 2004 by EasyLink
                  Services USA, Inc. in favor of Wells Fargo Foothill, Inc.
                  (Incorporated by reference to Exhibit 10.3 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.5  Security Agreement dated as of December 9, 2004 by Swift
                  Telecommunications, Inc. in favor of Wells Fargo Foothill,
                  Inc. (Incorporated by reference to Exhibit 10.4 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.6  Security Agreement dated as of December 9, 2004 by EasyLink
                  Services International, Inc. in favor of Wells Fargo Foothill,
                  Inc. (Incorporated by reference to Exhibit 10.5 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.7+ Pledge Agreement, dated as of December 9, 2004, made by
                  Easylink Services Corporation in favor of Wells Fargo
                  Foothill, Inc.+ (Incorporated by reference to Exhibit 10.6 to
                  EasyLink Services Corporation's Current Report on Form 8-K
                  filed December 20, 2004)

         10.33.8+ Pledge Agreement, dated as of December 9, 2004, made by
                  Easylink Services USA, Inc. in favor of Wells Fargo Foothill,
                  Inc.+ (Incorporated by reference to Exhibit 10.7 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.9* Pledge Agreement, dated as of December 9, 2004, made by Swift
                  Telecommunications, Inc. in favor of Wells Fargo Foothill,
                  Inc.+ (Incorporated by reference to Exhibit 10.8 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.10+Intellectual Property Security Agreement, dated as of December
                  9, 2004, made by Easylink Services Corporation in favor of
                  Wells Fargo Foothill, Inc.+(Incorporated by reference to
                  Exhibit 10.9 to EasyLink Services Corporation's Current Report
                  on Form 8-K filed December 20, 2004)

         10.33.11+Intellectual Property Security Agreement, dated as of December
                  9, 2004, made by Easylink Services USA, Inc. in favor of Wells
                  Fargo Foothill, Inc.+(Incorporated by reference to Exhibit
                  10.10 to EasyLink Services Corporation's Current Report on
                  Form 8-K filed December 20, 2004)

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") (Incorporated
                  by reference to Exhibit 10.48.1 to EasyLink Services
                  Corporation's Annual Report on Form 10-K filed March 30, 2004)

         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 Reporton
                  Form 8-K of EasyLink Services Corporation filed on March 9,
                  2001)

         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 (Incorporated by reference to Exhibit
                  10.48.4 to EasyLink Services Corporation's Annual Report on
                  Form 10-K filed March 30, 2004)

         10.48.5* AT&T Managed Internet Service Terms and Pricing Attachment
                  (Incorporated by reference to Exhibit 10.48.5 to EasyLink
                  Services Corporation's Annual Report on Form 10-K filed March
                  30, 2004)

         10.48.6* AT&T Private Line and Satellite Service Terms and Pricing
                  Attachment (Incorporated by reference to Exhibit 10.48.6 to
                  EasyLink Services Corporation's Annual Report on Form 10-K
                  filed March 30, 2004)

                                       70
<PAGE>

         10.48.7* AT&T Uniplan Service Terms and Pricing Attachment
                  (Incorporated by reference to Exhibit 10.48.7 to EasyLink
                  Services Corporation's Annual Report on Form 10-K filed March
                  30, 2004)

         10.48.8* AT&T Asynchronous Transfer Mode Service - Service Order
                  Attachment (Incorporated by reference to Exhibit 10.2 to
                  EasyLink Services Corporation Form 10-Q filed on May 14, 2004)

         10.48.9* AT&T Data Service Terms and Pricing Attachment (Incorporated
                  by reference to Exhibit 10.3 to EasyLink Services Corporation
                  Form 10-Q filed on May 14, 2004)

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) (Incorporated by reference to Exhibit 10.49 to EasyLink Services
         Corporation's Annual Report on Form 10-K filed March 30, 2004)

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) (Incorporated by reference to Exhibit 10.50 to EasyLink Services
         Corporation's Annual Report on Form 10-K filed March 30, 2004)

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) (Incorporated by reference to Exhibit 10.51
         to EasyLink Services Corporation's Annual Report on Form 10-K filed
         March 30, 2004)

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) (Incorporated by reference to Exhibit 10.52 to EasyLink
         Services Corporation's Annual Report on Form 10-K filed March 30, 2004)

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) (Incorporated by reference to Exhibit 10.53 to EasyLink
         Services Corporation's Annual Report on Form 10-K filed March 30, 2004)

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) (Incorporated by reference to Exhibit 10.54 to EasyLink Services
         Corporation's Annual Report on Form 10-K filed March 30, 2004)

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)
         (Incorporated by reference to Exhibit 10.55 to EasyLink Services
         Corporation's Annual Report on Form 10-K filed March 30, 2004)

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) (Incorporated by reference to Exhibit 10.56 to EasyLink Services
         Corporation's Annual Report on Form 10-K filed March 30, 2004)

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.

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

Financial Statement Schedules

None

                                       71
<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 April 11, 2005.

                               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 April 11, 2005.


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


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

/s/  PETER J. HOLZER           Director
---------------------------
(Peter J. Holzer)

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

/s/  JOHN C. PETRILLO          Director
---------------------------
(John C. Petrillo)

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

/s/   ERIC J. ZAHLER           Director
---------------------------
(Eric J. Zahler)


                                       72
<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 10.3 of EasyLink Services
         Corporation's Current Report on Form 8-K filed April 5, 2005)

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)

10.3

         10.3.1   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)


                                       73
<PAGE>


         10.3.2   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)

         10.3.3+  Domain Portfolio Purchase Agreement made the 23rd day of
                  December, 2004, by and among Easylink Services Corporation; NJ
                  Domains LLC; and Gerald Gorman (Incorporated by reference to
                  Exhibit 10.1 to EasyLink Services Corporation's Current Report
                  on Form 8-K filed December 28, 2004)+

         10.3.4   Guaranty of Domain Portfolio Purchase Agreement made and
                  delivered the 23rd day of December, 2004, by Gerald Gorman in
                  favor of EasyLink Services Corporation (Incorporated by
                  reference to Exhibit 10.2 to EasyLink Services Corporation's
                  Current Report on Form 8-K filed December 28, 2004)

         10.3.5   Amendment No. 2 dated December 23, 2004 to Employment
                  Agreement dated November 12, 2002 between EasyLink Services
                  Corporation and Gerald Gorman (Incorporated by reference to
                  Exhibit 10.3 to EasyLink Services Corporation's Current Report
                  on Form 8-K filed December 28, 2004)

         10.3.6   Severance Agreement made the 23rd day of December, 2004, by
                  and between Gerald Gorman and Easylink Services Corporation
                  (Incorporated by reference to Exhibit 10.4 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 28, 2004)

         10.3.7   Release made and delivered the 23rd day of December, 2004 by
                  Gerald Gorman in favor of EasyLink Services Corporation
                  (Incorporated by reference to Exhibit 10.5 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 28, 2004)

         10.3.8   Release made and delivered the 23rd day of December, 2004 by
                  EasyLink Services Corporation in favor of Gerald Gorman
                  (Incorporated by reference to Exhibit 10.6 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 28, 2004)

10.4

         10.4.1   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)

         10.4.2   Amendment dated June 1, 2003 to Employment Agreement between
                  EasyLink Services Corporation and George Abi Zeid
                  (Incorporated by reference to Exhibit 10.4 to EasyLink
                  Services Corporation's Annual Report on Form 10-K filed March
                  30, 2004)

         10.4.3   Separation Agreement between EasyLink Services Corporation and
                  George Abi Zeid dated January 28, 2005 (Incorporated by
                  reference to Exhibit 10.6 to EasyLink Services Corporation's
                  Current Report on Form 8-K filed January 28, 2005)

         10.4.4   Reaffirmation Agreement made as of July 23, 2004, by and among
                  EasyLink Services Corporation (f/k/a Mail.com, Inc.), a
                  Delaware corporation, Swift Telecommunications, Inc., a
                  Delaware corporation, and George Abi Zeid (Incorporated by
                  reference to Exhibit 10.1 to EasyLink Services Corporation's
                  Quarterly Report on Form 10-Q filed August 16, 2004)

10.5     Employment Agreement between EasyLink Services Corporation and Michael
         A. Doyle dated March 22, 2004 (Incorporated by reference to Exhibit
         10.5 to EasyLink Services Corporation's Annual Report on Form 10-K
         filed March 30, 2004)


10.6

         10.6.1   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)

         10.6.2   Letter Agreement between EasyLink Services Corporation and
                  Debra McClister dated March 30, 2005 (Incorporated by
                  reference to Exhibit 10.2 of EasyLink Services Corporation's
                  Current Report on Form 8-K filed April 5, 2005)

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) (Incorporated by reference to Exhibit 10.8 to EasyLink
         Services Corporation's Annual Report on Form 10-K filed March 30, 2004)

10.9     2004 Executive Incentive Plan - Level 1 International (applicable to
         President - International Operations) (Incorporated by reference to
         Exhibit 10.9 to EasyLink Services Corporation's Annual Report on Form
         10-K filed March 30, 2004)

10.10    2004 Executive Incentive Plan - Level 2 (applicable to other named
         executive officers) (Incorporated by reference to Exhibit 10.10 to
         EasyLink Services Corporation's Annual Report on Form 10-K filed March
         30, 2004)

10.11    2004 Executive Incentive Plan - Vice President of Sales (Incorporated
         by reference to Exhibit 10.11 to EasyLink Services Corporation's Annual
         Report on Form 10-K filed March 30, 2004)



                                       74
<PAGE>

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)

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

         10.30.1  Form of Stock Option Agreement for options granted under the
                  Company's stock option plans (version providing 6 month period
                  to exercise following termination for reasons other than cause
                  or performance)

         10.30.2  Form of Stock Option Agreement for options granted under the
                  Company's stock option plans (version providing 12 month
                  period to exercise following termination for reasons other
                  than cause or performance)

         10.30.3  Form of Stock Option Agreement for options granted under the
                  Company's stock option plans (version providing 18 month
                  period to exercise following termination for reasons other
                  than cause or performance)

         10.30.4  Form of Stock Option Agreement for options granted under the
                  Company's stock option plans (version providing 24 month
                  period to exercise following termination for reasons other
                  than cause or performance)

         10.30.5  Form of Stock Option Agreement for options granted under the
                  Company's stock option plans (version providing 60 day period
                  to exercise following termination for reasons other than cause
                  or performance)


                                       75
<PAGE>


10.31    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 (Incorporated by reference to Exhibit 10.33 to EasyLink
         Services Corporation's Annual Report on Form 10-K filed March 30, 2004)

10.32    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)

10.33

         10.33.1+ Credit Agreement by and among EasyLink Services Corporation,
                  EasyLink Services USA, Inc., Swift Telecommunications, Inc.,
                  EasyLink Services International, Inc. and Wells Fargo
                  Foothill, Inc. dated as of December 9, 2004+(Incorporated by
                  reference to Exhibit 10.1 to EasyLink Services Corporation's
                  Current Report on Form 8-K filed December 20, 2004)

         10.33.2  First Amendment to Credit Agreement entered into as of March
                  30, 2005 by and among Wells Fargo Foothill, Inc., EasyLink
                  Services Corporation, Swift Telecommunications, Inc., EasyLink
                  Services USA, Inc., EasyLink Services International, Inc.
                  (Incorporated by reference to Exhibit 10.1 of EasyLink
                  Services Corporation's Current Report on Form 8-K filed April
                  5, 2005)

         10.33.3  Security Agreement dated as of December 9, 2004 by EasyLink
                  Services Corporation in favor of Wells Fargo Foothill, Inc.
                  (Incorporated by reference to Exhibit 10.2 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.4  Security Agreement dated as of December 9, 2004 by EasyLink
                  Services USA, Inc. in favor of Wells Fargo Foothill, Inc.
                  (Incorporated by reference to Exhibit 10.3 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.5  Security Agreement dated as of December 9, 2004 by Swift
                  Telecommunications, Inc. in favor of Wells Fargo Foothill,
                  Inc. (Incorporated by reference to Exhibit 10.4 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.6  Security Agreement dated as of December 9, 2004 by EasyLink
                  Services International, Inc. in favor of Wells Fargo Foothill,
                  Inc. (Incorporated by reference to Exhibit 10.5 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.7+ Pledge Agreement, dated as of December 9, 2004, made by
                  Easylink Services Corporation in favor of Wells Fargo
                  Foothill, Inc.+ (Incorporated by reference to Exhibit 10.6 to
                  EasyLink Services Corporation's Current Report on Form 8-K
                  filed December 20, 2004)

         10.33.8+ Pledge Agreement, dated as of December 9, 2004, made by
                  Easylink Services USA, Inc. in favor of Wells Fargo Foothill,
                  Inc.+ (Incorporated by reference to Exhibit 10.7 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.9* Pledge Agreement, dated as of December 9, 2004, made by Swift
                  Telecommunications, Inc. in favor of Wells Fargo Foothill,
                  Inc.+ (Incorporated by reference to Exhibit 10.8 to EasyLink
                  Services Corporation's Current Report on Form 8-K filed
                  December 20, 2004)

         10.33.10+Intellectual Property Security Agreement, dated as of December
                  9, 2004, made by Easylink Services Corporation in favor of
                  Wells Fargo Foothill, Inc.+(Incorporated by reference to
                  Exhibit 10.9 to EasyLink Services Corporation's Current Report
                  on Form 8-K filed December 20, 2004)

         10.33.11+Intellectual Property Security Agreement, dated as of December
                  9, 2004, made by Easylink Services USA, Inc. in favor of Wells
                  Fargo Foothill, Inc.+(Incorporated by reference to Exhibit
                  10.10 to EasyLink Services Corporation's Current Report on
                  Form 8-K filed December 20, 2004)

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") (Incorporated
                  by reference to Exhibit 10.48.1 to EasyLink Services
                  Corporation's Annual Report on Form 10-K filed March 30, 2004)

         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 Reporton
                  Form 8-K of EasyLink Services Corporation filed on March 9,
                  2001)

         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)


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<PAGE>


         10.48.4* AT&T MEGACOM Service & AT&T MEGACOM 800 Service Terms and
                  Pricing Attachment (Incorporated by reference to Exhibit
                  10.48.4 to EasyLink Services Corporation's Annual Report on
                  Form 10-K filed March 30, 2004)

         10.48.5* AT&T Managed Internet Service Terms and Pricing Attachment
                  (Incorporated by reference to Exhibit 10.48.5 to EasyLink
                  Services Corporation's Annual Report on Form 10-K filed March
                  30, 2004)

         10.48.6* AT&T Private Line and Satellite Service Terms and Pricing
                  Attachment (Incorporated by reference to Exhibit 10.48.6 to
                  EasyLink Services Corporation's Annual Report on Form 10-K
                  filed March 30, 2004)

         10.48.7* AT&T Uniplan Service Terms and Pricing Attachment
                  (Incorporated by reference to Exhibit 10.48.7 to EasyLink
                  Services Corporation's Annual Report on Form 10-K filed March
                  30, 2004)

         10.48.8* AT&T Asynchronous Transfer Mode Service - Service Order
                  Attachment (Incorporated by reference to Exhibit 10.2 to
                  EasyLink Services Corporation Form 10-Q filed on May 14, 2004)

         10.48.9* AT&T Data Service Terms and Pricing Attachment (Incorporated
                  by reference to Exhibit 10.3 to EasyLink Services Corporation
                  Form 10-Q filed on May 14, 2004)

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) (Incorporated by reference to Exhibit 10.49 to EasyLink Services
         Corporation's Annual Report on Form 10-K filed March 30, 2004)

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) (Incorporated by reference to Exhibit 10.50 to EasyLink Services
         Corporation's Annual Report on Form 10-K filed March 30, 2004)

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) (Incorporated by reference to Exhibit 10.51
         to EasyLink Services Corporation's Annual Report on Form 10-K filed
         March 30, 2004)

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) (Incorporated by reference to Exhibit 10.52 to EasyLink
         Services Corporation's Annual Report on Form 10-K filed March 30, 2004)

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) (Incorporated by reference to Exhibit 10.53 to EasyLink
         Services Corporation's Annual Report on Form 10-K filed March 30, 2004)

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) (Incorporated by reference to Exhibit 10.54 to EasyLink Services
         Corporation's Annual Report on Form 10-K filed March 30, 2004)

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)
         (Incorporated by reference to Exhibit 10.55 to EasyLink Services
         Corporation's Annual Report on Form 10-K filed March 30, 2004)

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) (Incorporated by reference to Exhibit 10.56 to EasyLink Services
         Corporation's Annual Report on Form 10-K filed March 30, 2004)

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.

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



                                       77