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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, 2002

                                       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           (I.R.S. Employer Identification No.)
 of 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)

                      399 Thornall Street, Edison, NJ 08837
              (Former name, former address and former fiscal year,
                          if changed from last report)

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 [X]

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, 2002 was $16,267,900.

Indicate the number of outstanding shares of each of the registrants' classes of
common stock as of February 28, 2003: Class A Common Stock, 16,316,802 shares;
and Class B Common Stock, 1,000,000 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2002 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.
<S>                                                                                                                      <C>
Part I

1.  Business.......................................................................................................       3
2.  Properties.....................................................................................................      19
3.  Legal Proceedings..............................................................................................      19
4.  Submission of Matters to a Vote of Security Holders............................................................      20

Part II

5.  Market for Registrant's Common Equity and Related Stockholder Matters..........................................      21
6.  Consolidated Selected Financial Data ..........................................................................      21
7.  Management's Discussion and Analysis of Financial Condition and Results of Operations..........................      22
7A. Quantitative and Qualitative Disclosures About Market Risk.....................................................      36
8.  Consolidated Financial Statements and Supplementary Data ......................................................      37
9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..........................      81

Part III

The information required by Items 10 through 13 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, 2002.

14. Controls and Procedures........................................................................................      82

Part IV

15. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................................      82

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

         (1) Consolidated Financial Statements-See Item 8.

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

         (3) Exhibits

(b) Reports on Form 8-K

Signatures

Certifications

Exhibits
</TABLE>

                                       -2-
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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" and similar terms refer to
EasyLink Services Corporation and its direct and indirect subsidiaries.

Item 1   Business

Company Overview

EasyLink Services Corporation is 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 over
800,000 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 our services to thousands of business customers worldwide including the
majority of the Fortune 500. Our strategy is 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.

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

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


<PAGE>

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 services provide a broad range of strong capabilities to enterprises,
including the ability to:

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

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

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

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

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

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

                                       -3-
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Through the ongoing development and introduction of new transaction delivery and
management services, we plan to continue to build upon the substantial customer
base, technology and servicing assets we brought together during 2001. We are
building these capabilities to increase the accessibility, security, data
translation and document transformation capabilities of our network.

Our Business Services

We offer a range of transaction delivery and other services to a customer base
composed primarily of business enterprises. The following chart describes our
major service offerings:

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               Service                                     Description
<S>                                          <C>
Transaction Delivery Services:

EDI Services:

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

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

Production Messaging Services:

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

Integrated Desktop Messaging Services:

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

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

Transaction Management Services

EasyLink Trading Community Enablement        EasyLink Trading Community Enablement and Management Services are a family of
& Management Services                        Transaction Management offerings that facilitate business transactions between
                                             large enterprises and small- to mid-sized companies in their trading
                                             communities, significantly increasing the number of companies with whom they
                                             conduct business electronically. The service family currently includes:

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

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

                                       -4-
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<TABLE>
<S>                                          <C>
                                             EasyLink File Integration Service - enables small- to mid-sized businesses to
                                             exchange high volumes of transaction data with large trading partners simply by
                                             sending documents in formats such as Microsoft Excel to EasyLink, which
                                             transforms and delivers them in Electronic Data Interchange (EDI), Extensible
                                             Markup Language (XML) or similar formats used by larger enterprises.

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

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

                                             EasyLink's Fax to Database service creates database records that combine the
                                             received image with associated document information that is captured and
                                             verified from predefined fields within the image. Database records are 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.

Virus and Content Scanning Services:

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

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

Revenues

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

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

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

Worldwide Sales and Marketing

Our primary marketing objectives are to:

-        promote higher usage of all services in all segments;

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

-        grow our customer and distribution base; and

-        build our brand.

                                       -5-
<PAGE>

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.

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

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

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

Technology

EasyLink Transaction Delivery Services Network

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

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

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.


<PAGE>

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

                                       -6-
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EasyLink MailWatch (Virus Protection, Spam Control and Content Filtering
Services) Network

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

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

Network Operations

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

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

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

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

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

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

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

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

Telecommunications Services

In connection with the acquisition of the EasyLink Services business from AT&T
Corp., we entered into a Master Carrier Agreement with AT&T. Under this
agreement, AT&T will provide us with a variety of telecommunications services
that are required in connection with the provision of our services. The term of
the agreement for network connection services is for 36 months through May 2005
and the term of the agreement for private line and satellite services is 36
months through February 2004. Under the agreement, we have a minimum purchase
commitment for network connection services equal to $3 million for each of the
three years of the contract. In addition, we have a minimum purchase commitment
for private line and satellite services equal to $375,000 per month during the
three-year term. If we terminate the network connection services or the private
line and satellite services prior to the end of the term or AT&T terminates the
services for our breach, we must pay to AT&T a termination charge equal to 50%
of the unsatisfied minimum purchase commitment for these services for the period
in which termination occurs plus 50% of the minimum purchase commitment for each
remaining commitment period in the term.

The Company has committed to purchase from MCI Worldcom a minimum of $75,000 per
month in other telecommunications services through January 2005.


<PAGE>

Competition

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

Competition in the transaction delivery sector varies. Competitors in the EDI
and Trading Community Enablement Services markets include Inovis, Internet
Commerce Corp., GXS, IBM Interchange Services and Sterling Commerce, Inc., a
subsidiary of SBC Communications Inc. Our competitors in the integrated desktop
messaging and production messaging markets include telecommunications companies
around the world, such as MCI WorldCom, British Telecom PLC, France Telecom,
Deutsche Telekom, KDD in Japan, Korea Telecom, Singapore Telecom, the regional
Bell operating companies, telecommunications resellers, and direct transaction
delivery service delivery competitors, including PTEK Holdings Inc.'s Xpedite
Services and J2 Global Communications. 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.

                                       -7-
<PAGE>

Many of these 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 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 faxMailer 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.


<PAGE>

To the extent that we license any of our content from third parties, our
exposure to copyright infringement actions may increase because we must rely
upon these third parties for information as to the origin and ownership of the
licensed content. We generally obtain representations as to the origins and
ownership of any licensed content and indemnification to cover breaches of any
representations. However, such representations may be inaccurate or any
indemnification may be insufficient to provide adequate compensation for any
breach of these representations.

Government Regulation

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

                                       -8-
<PAGE>

We are subject to regulation by various state public service and public utility
commissions and by various international regulatory authorities with respect to
our fax services. We are licensed by the FCC as an authorized telecommunications
company and are classified as a "non-dominant interexchange carrier." Generally,
the FCC has chosen not to exercise its statutory power to closely regulate the
charges or practices of non-dominant carriers. Nevertheless, the FCC acts upon
complaints against such carriers for failure to comply with statutory
obligations or with the FCC's rules, regulations and policies. The FCC also has
the power to impose more stringent regulatory requirements on us and to change
its regulatory classification. There can be no assurance that the FCC will not
change its regulatory classification or otherwise subject us to more burdensome
regulatory requirements.

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 facsimile nodes
continues. There can be no assurance that we will be able to satisfy the
regulatory requirements in each of the countries currently targeted for node
deployment, and the failure to satisfy such requirements may prevent us from
installing Internet-capable facsimile nodes in such countries. The failure to
deploy a number of such nodes could have a material adverse effect on its
business, operating results and financial condition.

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

The legal structure and scope of operations of our subsidiaries in some foreign
countries may be subject to restrictions which could result in severe limits to
our ability to conduct business in these countries and this could have a
material adverse effect on our financial position, results of operations and
cash flows. We have also announced that we intend to expand our business in
international markets. To the extent that we offer our services in foreign
countries, we will be subject to the laws and regulations of these countries.
The laws and regulations relating to the Internet in many countries are evolving
and in many cases are unclear as to their application. 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 Employees

As of February 28, 2003, we had approximately 600 employees. Of these personnel,
161 persons worked in technology, product management, professional services,
telex settlements and customer service; 177 persons worked in sales, marketing
and business development; and 262 persons worked in operations and
administration. Approximately 400 employees are domestic employees and
approximately 200 are international employees. We have never had a work stoppage
and no personnel are represented under collective bargaining agreements. We
consider our employee relations to be good.

We believe that our future success will depend in part on our continued ability
to attract, integrate, retain and motivate highly qualified sales, technical,
and managerial personnel, and upon the continued service of our senior
management and key sales and technical personnel. To help us retain our
personnel, some of our full-time employees have received stock option grants.
None of our personnel are bound by employment agreements that prevent them from
terminating their relationship at any time for any reason.

Competition for qualified personnel is intense, and we may not be successful in
attracting, integrating, retaining and motivating a sufficient number of
qualified personnel to conduct our business in the future.


<PAGE>

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

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

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

                                      -9-
<PAGE>

We have incurred losses since inception.

We have not achieved profitability in any period, and we may not be able to
achieve or sustain profitability. We incurred a net loss of $85.8 million for
the year ended December 31, 2002. We had an accumulated deficit of $599.3
million as of December 31, 2002. We intend to upgrade and enhance our
technology, continue our international expansion, and improve and expand our
management information and other internal systems. We intend to continue to make
strategic acquisitions and investments where resources permit, which may result
in significant amortization of intangibles and other expenses or a later
impairment charge arising out of the write-off of goodwill booked as a result of
such acquisitions or investments. We are making 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 for
the year ended December 31, 2002 as compared to the comparable period ended
December 31, 2001. See Part II, Item 7: Management's Discussion and Analysis of
Financial Condition and Results of Operations. If we do not succeed in
substantially increasing our revenues or integrating the EasyLink Services and
Swift businesses with our historical business, our losses may continue.

If we are unable to raise necessary capital in the future, we may be unable to
invest in the growth of our business or fund necessary expenditures.

We may need to raise additional capital in the future. See Part II. Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources. At December 31, 2002, we had $9.6
million of cash, cash equivalents and marketable securities. Our principal
commitments consist of subordinated convertible notes, senior convertible notes,
notes payable, obligations under capital leases, accounts payable and other
current obligations, commitments for capital expenditures and commitments for
telecommunications services. For each of the three years ended December 31,
2002, 2001 and 2000, we received a report from our independent accountants
containing an explanatory paragraph stating that we suffered recurring losses
from operations since inception and have a working capital deficiency that raise
substantial doubt about our ability to continue as a going concern. We may need
additional financing to invest in the growth of our business and to pay other
obligations, and the availability of such financing when needed, on terms
acceptable to us, or at all, is uncertain. See "Risk Factors - We have incurred
significant indebtedness for money borrowed, and we may be unable to pay debt
service on this indebtedness." If we are unable to raise additional financing,
generate sufficient cash flow, or restructure our debt obligations before they
become due and payable, we may be unable to continue as a going concern.

If we raise additional funds by issuing equity securities or debt convertible
into equity securities, stockholders may experience significant dilution of
their ownership interest. The amount of dilution resulting from issuance of
additional shares of Class A common stock and securities convertible into Class
A common stock and the potential dilution that may result from future issuances
has significantly increased in light of the decline in our stock price.
Moreover, we could issue preferred stock that has rights senior to those of the
Class A common stock. Some of our stockholders have registration rights that
could interfere with our ability to raise needed capital. If we raise funds by
issuing debt, our lenders may place limitations on our operations, including our
ability to pay dividends.

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

As of December 31, 2002, we had approximately $87.8 million principal amount of
outstanding indebtedness for borrowed money, including approximately $11.7
million of capitalized future interest, and capital leases. We had an operating
loss and negative cash flow for the year ended December 31, 2002. In addition,
we have a substantial amount of outstanding accounts payable and other
obligations. Accordingly, cash generated by our operations would have been
insufficient to pay the amount of interest payable annually on our outstanding
indebtedness or to pay our other obligations.


<PAGE>

We recently announced that we are seeking to eliminate substantially all of our
indebtedness for borrowed money. Pursuant to these efforts, we have eliminated
approximately $7.1 million principal amount of debt after December 31, 2002
through the date hereof in exchange for the payment of approximately $0.8
million in cash and the issuance or commitment to issue approximately 1.1
million shares of our Class A common stock. These transactions will result in a
gain of approximately $6.6 million which will be recorded in the first quarter
of 2003. As a result of this transaction, the Company also eliminated $0.7
million of capitalized interest and $0.2 million of accrued interest associated
with the debt eliminated. We may issue additional shares or securities
convertible into or exercisable for shares of Class A common stock in connection
with raising any capital needed to fund cash payments for any additional debt
that we may eliminate. Upon elimination of any additional indebtedness, we would
also eliminate the capitalized interest and accrued interest associated with the
debt eliminated. Holders of substantially all indebtedness on which we currently
owe accrued but unpaid interest payments have agreed to defer such payments
pending completion of our proposed debt restructuring in most cases until April
30, 2003 or May 31, 2003.

                                      -10-
<PAGE>

We cannot assure you that we will be able to successfully complete the
elimination of any other indebtedness that we are seeking to eliminate on
favorable terms or at all. On February 27, PTEK Holdings, Inc., one of our
principal competitors, announced that it had entered into an agreement with AT&T
to purchase 1,423,980 shares of outstanding Class A common stock of EasyLink
held by AT&T and a promissory note of EasyLink held by AT&T. The promissory
note, with a principal amount of $10 million, represents approximately 13% of
the aggregate principal amount of debt that EasyLink has been seeking to
eliminate pursuant to its debt restructuring plan. In response to PTEK's
announcement, we commenced on March 17, 2003 an action against AT&T Corp., PTEK
Holdings, Inc. and PTEK's subsidiary Xpedite Systems, Inc. The suit seeks, among
other things, to enjoin AT&T from selling the EasyLink promissory note held by
AT&T to PTEK, to compel AT&T to participate in EasyLink's current debt
restructuring and to enjoin Xpedite and PTEK from contacting EasyLink's
creditors and making false statements to EasyLink's customers and creditors
regarding EasyLink and its financial position. EasyLink believes that if the
sale of the note to PTEK is permitted to occur, EasyLink's current debt
restructuring may be at substantial risk. Easylink has a variety of commercial
relationships with AT&T, and this dispute may have an adverse effect on these
relationships.

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

The elimination of outstanding debt pursuant to our debt restructuring strategy
will result in substantial cancellation of debt income for tax purposes. We
intend to offset this income using our historical net operating losses and as
result do not expect to incur any material current tax liability as a result of
the elimination of this debt. The relevant tax authorities may take the position
that our historical net operating losses cannot be used to offset some or all of
the cancellation of debt income. No assurance can be given that we will be able
to offset all or any of the cancellation of debt income resulting from the
elimination of debt pursuant to our debt restructuring. If we are not able to
offset this income, we may incur material 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.

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.


<PAGE>

We have completed a number of acquisitions and strategic investments since our
initial public offering. For example, we acquired NetMoves Corporation, a
provider of production messaging services and integrated desktop messaging
services to businesses, and The Allegro Group, Inc., a provider of email and
email related services, such as virus blocking and content screening, to
businesses. We also acquired Swift Telecommunications, Inc. and the EasyLink
Services business that it had contemporaneously acquired from AT&T Corp. 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 amortize acquisition expenses and acquired
assets or to incur impairment charges as a result of the write-off of goodwill
booked 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.

                                      -11-
<PAGE>

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

Under a Transition Services Agreement entered into in connection with the
acquisition, AT&T agreed to provide us with a variety of services to enable us
to continue to operate the business pending the transition to EasyLink. We have
successfully transitioned virtually all of these services provided by AT&T under
the Transition Services Agreement to ourselves, including customer service,
network operations center, telex switching equipment and services and office
space in a variety of locations. However, the network for the portion of this
business relating to EDI, fax and email services continues to reside on AT&T's
premises, but is being operated and maintained by EasyLink. We plan to migrate
our network off of AT&T's premises to EasyLink's premises over the next two
years.

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

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

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

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

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.

<PAGE>

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

The following are among the factors that could cause significant fluctuations in
our operating results:

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

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

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

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

-        disruption or impairment of the Internet;

-        demand for outsourced transaction delivery and transaction management
         services;

                                      -12-
<PAGE>

-        attracting and retaining customers and maintaining customer
         satisfaction;

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

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

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

-        general economic and market conditions and global political factors.

Other such factors in our non-core assets include:

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

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

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" in this Form 10-K and subsequent
reports filed with the Securities and Exchange Commission.

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

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

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


<PAGE>

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

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

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

                                      -13-
<PAGE>

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

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

The performance of our computer systems is critical to the quality of service we
are able to provide to our customers. If our services are unavailable or fail to
perform to their satisfaction, they 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 monetary damages.

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

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

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

Our computer systems may fail and interrupt our service.

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

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


<PAGE>

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

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, stored email or other
personal or business information. Our customers or their employees may assert
claims for money damages for any breach in our security and any breach could
harm our reputation.

                                      -14-
<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, 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.

We are dependent on licensed technology.

We license a significant amount of technology from third parties, including
technology related to our virus protection, spam control and content filtering
services, Internet fax services, billing processes and database. We anticipate
that we will need to license additional technology to remain competitive. We may
not be able to license these technologies on commercially reasonable terms or at
all. Third-party licenses 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 costs, and the possible
termination of or failure to renew an important license by the third-party
licensor.

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

Our business depends on the effectiveness of the Internet as a means of
transmitting data. The recent growth in the use of the Internet has caused
frequent interruptions and delays in accessing and transmitting data over the
Internet. Any deterioration in the performance of the Internet as a whole could
undermine the benefits of our services. Therefore, our success depends on
improvements being made to the entire Internet infrastructure to alleviate
overloading and congestion. We also depend on telecommunications network
suppliers such as AT&T Corp. and Worldcom 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 Integrate the EasyLink Services Business Acquired From
AT&T" above, "Item 1. Business - Technology" in this Form 10-K and subsequent
filings with the Securities and Exchange Commission.

Gerald Gorman and George Abi Zeid collectively held as of February 28, 2003
approximately 48.4% of the total outstanding voting power of EasyLink and will
be able to prevent a change of control.

Gerald Gorman, our Chairman, held as of February 28, 2003 Class A and Class B
common stock representing approximately 38.8% of the voting power of our
outstanding common stock. Each share of Class B common stock entitles the holder
to 10 votes on any matter submitted to the stockholders. George Abi Zeid, our
President-International Operations and Director, beneficially owned as of
February 28, 2003 Class A common stock representing approximately 9.6% of the
voting power of our outstanding common stock and, after giving effect to the
issuance of shares issuable upon conversion or exercise of convertible
securities and warrants held by Mr. Abi Zeid, approximately 11.4% of such voting
power. Based on their voting power as of February 28, 2003, Mr. Gorman and Mr.
Abi Zeid will likely be able to determine the outcome of all matters requiring
stockholder approval, including the election of directors, amendment of our
charter and approval of significant corporate transactions. Mr. Gorman and Mr.
Abi Zeid will be in a position to prevent a change in control of EasyLink even
if the other stockholders were in favor of the transaction.

We have agreed to permit Federal Partners, L.P., a holder of our senior
convertible notes and Class A common stock, to designate one member of our board
of directors. In addition, in connection with the acquisition of Swift
Telecommunications, Inc., we agreed to appoint George Abi Zeid, the former sole
shareholder of Swift, as a director and as our President of International
Operations.

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


<PAGE>

Our goal of building brand identity is likely to be difficult and expensive.

We announced on April 2, 2001 that we have changed our corporate name to
EasyLink Services Corporation to more accurately reflect the strengths,
relationships and solutions that we offer. We believe that a quality brand
identity will be essential if we are to develop our business services market. If
our marketing efforts cost more than anticipated or if we cannot increase our
brand awareness, our losses will increase and our ability to succeed will be
seriously impeded.

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

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

                                      -15-
<PAGE>

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

-        difficulties and costs of staffing and managing international
         operations;

-        differing technology standards;

-        difficulties in collecting accounts receivable and longer collection
         periods;

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

-        potentially adverse tax consequences;

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

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

-        export restrictions, and

-        difficulties in enforcing contracts and potentially adverse
         consequences.

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

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

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

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

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


<PAGE>

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

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

Our fax nodes and our faxLauncher service utilize encryption technology in
connection with the routing of customer documents through the Internet. The
export of such encryption technology is regulated by the United States
government. We have authority for the export of such encryption technology other
than to Cuba, Iran, Iraq, Libya, North Korea, and Rwanda. 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.

                                      -16-
<PAGE>

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

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

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

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

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

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

In connection with the sale of our consumer-based email and advertising network
business, we transferred to the buyer the rights to direct the "MX" record, or
the right to direct email messages addressed to domain names owned by us and
used in this business. Although we do no operate the service or have any role in
the delivery of messages sent by users of the service, our position as the
registrant of the domain names used as addresses for email accounts maintained
by such service may subject us to claims from time to time. We could face
liability for defamation, copyright, patent or trademark infringement,
harassment, unsolicited commercial e-mail and other claims based on the content
of the messages transmitted over the service of this business. These claims,
even if without merit, can cause us to incur legal expenses and may divert
management time and resources.

<PAGE>

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, 2003, we had an aggregate of 17,316,802 shares of Class A and Class
B common stock outstanding. As of February 28, 2003 we had options to purchase
approximately 2.7 million shares of Class A common stock outstanding. As of
February 28, 2003, we had warrants to purchase 1,843,942 shares of Class A
common stock outstanding. As of February 28, 2003, we had approximately
4,397,914 shares of Class A common stock issuable upon conversion of outstanding
senior convertible notes and an indeterminate number of additional shares of
Class A common stock issuable over five years in payment of interest on such
senior notes. In addition, we had 127,151 shares of Class A common stock
issuable upon conversion of our remaining outstanding 7% Convertible
Subordinated Notes due 2005 at an exercise price of $189.50 per share. Moreover,
we have issued or committed to issue additional shares in connection with the
proposed elimination of our debt. See "Risk Factors That May Affect Future
Results - We have incurred significant indebtedness for money borrowed, and we
may be unable to pay debt service on this indebtedness."

                                      -17-
<PAGE>

As of February 28, 2003, approximately 16.2 million shares of Class A common
stock and Class B common stock were freely tradable, in some cases subject to
the volume and manner of sale limitations contained in Rule 144. As of such
date, approximately 1.1 million shares of Class A common stock will become
available for sale at various later dates upon the expiration of one-year
holding periods or upon the expiration of any other applicable restrictions on
resale. We are likely to issue large amounts of additional Class A common stock,
which may also be sold and which could adversely affect the price of our stock.

As of February 28, 2003, the holders of approximately 6.3 million shares of
outstanding Class A common stock, the holders of 1.8 million shares of Class A
common stock issuable upon exercise of our outstanding warrants and the holders
of approximately 5.7 million shares of Class A common stock issuable upon
conversion of our outstanding senior or subordinated convertible notes and
issuable in payment of interest over the first 18 months after the date of
issuance on our senior convertible notes, had the right, subject to various
conditions, to require us to file registration statements covering their shares,
or to include their shares in registration statements that we may file for
ourselves or for other stockholders. By exercising their registration rights and
selling a large number of shares, these holders could cause the price of the
Class A common stock to fall. An undetermined number of these shares have been
sold publicly pursuant to Rule 144.

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

Our Class A common stock faces 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 either $1 or $3. Specifically, an issuer will
be considered non-compliant with the minimum bid price requirement only if it
fails to satisfy the applicable requirement for any 30 consecutive trading day
period. It would then be afforded a 90 calendar day grace period in which to
regain compliance. In addition, the listing standards require that we maintain
compliance with various other standards, including market capitalization or
total assets and total revenue, number of publicly held shares, which are shares
held by persons who are not officers, directors or beneficial owners of 10% of
our outstanding shares, and market value of publicly held shares. If we do not
comply with the $3 minimum bid price, but we do comply with the $1 minimum bid
price, then we must comply with certain other standards, including a $10 million
minimum stockholders' equity requirement. The minimum bid price of our stock was
below $1 during various periods in the fourth quarter of 2000 and the first
quarter of 2001 and was below $1 during the period from March 14, 2001 through
January 22, 2002.

On January 23, 2002, we effected a ten-for-one reverse stock split. Although our
stock price has exceeded the $1 minimum bid price requirement. for a period of
time since our reverse stock split, our stock price was also below $1.00 during
the period from July 10, 2002 through July 26, 2002 and from July 30, 2002
through August 16, 2002 and from November 18, 2002 until the present. On
December 24, 2002 Nasdaq granted us 90 calendar days, or until March 24, 2003,
to regain compliance. On March 11, 2003, the SEC declared effective Nasdaq's
rule filing which extends the 90 day period to 180 days. Accordingly, the
Company now has until June 23, 2003 to regain compliance. In order to regain
compliance, the bid price for the Company's Class A common stock must close at
or above $1 per share for 10 consecutive trading days. If we are unable to
regain compliance, we may be subject to delisting.

As of December 31, 2002, we had a total stockholders' deficit in the amount of
$61.8 million. As a result, we are currently not in compliance with the $10
million minimum total stockholders' equity requirement. We will attempt to
regain compliance with this requirement through the elimination of debt and the
issuance of additional equity.

We are also required to maintain at least 3 independent directors on our board
to satisfy the Nasdaq's audit committee requirements. As a result of the
resignations of Mr. Donaldson and Mr. Ketchum from our Board of Directors on
November 12, 2002 and March 31, 2003, respectively, we will need to appoint two
qualified independent directors in order to be in compliance with this
requirement. Nasdaq initially granted the Company a 90 day extension until
February 11, 2003, subsequently extended to March 31, 2003, to regain compliance
with the independent director requirement. We intend to seek a further extension
from Nasdaq pending the completion of our debt restructuring. If we are unable
to obtain an extension or to find suitable candidates by the date specified in
any such extension, we may be subject to delisting.
<PAGE>

No assurance can be given that we will regain compliance with the minimum bid
requirement, the total stockholders' equity requirement or the independent
director requirement or that we will maintain compliance with all of the other
applicable listing standards in the future.

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.

We may have continuing obligations in connection with the sale of our
advertising network business.

On March 30, 2001, we completed the sale of our advertising network business to
Net2Phone, Inc. Included in the sale was our rights to provide e-mail-based
advertising and permission marketing solutions to advertisers, as well as our
rights to provide e-mail services directly to consumers at the www.mail.com Web
site and in partnership with other Web sites. In connection with the sale, we
entered into a hosting agreement under which we agreed to host or arrange to
host the consumer e-mailboxes for Net2Phone for a minimum of one year. During
the second quarter of 2001, we completed the migration of the hosting of these
consumer mailboxes to a third party provider whom we paid for this service. On
November 14, 2001, we entered into an agreement with Net2Phone which terminated
the hosting agreement as of September 30, 2001. Net2Phone has subsequently
transferred this business to a third party.

                                      -18-
<PAGE>

Notwithstanding the migration of the consumer mailboxes to the third party
provider, the termination of the hosting agreement with Net2Phone and the
assignment to Net2Phone of our Web site contracts with third parties, we may
nonetheless remain liable for obligations under some of such third party Web
site contracts. Accordingly, we may have liability if there is a breach on the
part of the third party to which we have migrated the hosting or on the part of
Net2Phone under the third party Web site agreements that were assigned to them.

Item 2   Properties

United States

Effective March 2003, 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 20,000 square feet
still remaining under leases expiring in 2005 and 2006. In addition, we have
office and development lab space at four other locations throughout the United
States under leases expiring primarily in 2005 and 2006; three U.S. network
installations co-located in telehousing facilities under short-term leases; and
sales offices under short term leases for our business messaging staff in the
Chicago, Dallas, Ft. Lauderdale, Los Angeles, New York and San Francisco
metropolitan areas. In connection with the acquisition of the EasyLink Services
business from AT&T we also lease approximately 5,000 square feet under an
Equipment Space Sublease Agreement with AT&T for the operation of the network
equipment for this business through January 31, 2005.

While we believe that these facilities meet our anticipated needs at least
through the end of 2003, we continually review our needs and may add facilities
in the future.

International

We lease approximately 28,000 square feet of office space in six locations in
England. The leases expire between May 2003 and June 2017, with cancellation
provisions available in the two longer term leases, 10 years prior to expiration
in 2004 and 2007.

We lease approximately 18,000 square feet of office space in locations in Hong
Kong, Germany, Singapore, Malaysia, Dubai, France, South Korea and India. The
leases expire between June 2002 and December 2004.

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

Item 3   Legal Proceedings

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

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

In connection with the termination of an agreement to sell the portal operations
of the Company's discontinued India.com business, the Company brought suit
against a broker that it had engaged in connection with the proposed sale of the
portal operations alleging, among other things, breach of contract and
misrepresentation. The broker brought a counterclaim against the Company for a
brokerage fee that would have been payable on the closing of the proposed sale.
The court entered a judgment in the amount of $931,000 against the Company. In
response to the judgment, the Company filed a motion to alter the judgment in
which the Company, among other things, requested that the Court vacate the
judgment or reduce the amount of damages. On February 20, 2003, the Court
vacated the original judgment and entered a declaratory judgment in EasyLink's
favor that EasyLink does not owe the broker any fee or other compensation
arising from the failed sale of the portal operations. On March 13, 2003, the
broker filed a motion to amend the judgment or for a new trial requesting, among
other things, re-instatement of the original judgment or, in the alternative, a
new trial. The Court has subsequently ordered a settlement conference to be held
on April 1, 2003. Although we intend to defend vigorously the matter described
above, we cannot assure you that the settlement conference will be successful
and, if it is not, that our ultimate liability, if any, in connection with the
claim will not exceed our reserves or have a material adverse effect on our
results of operations, financial condition or cash flows.

                                      -19-
<PAGE>

On February 27, PTEK Holdings, Inc. announced that it had entered into an
agreement with AT&T to purchase 1,423,980 shares of outstanding Class A common
stock of EasyLink held by AT&T and a promissory note of EasyLink held by AT&T.
The promissory note, with a principal amount of $10 million, represents
approximately 13% of the aggregate principal amount of debt that EasyLink has
been seeking to eliminate pursuant to its debt restructuring plan. In response
to PTEK's announcement, we commenced on March 17, 2003 an action against AT&T
Corp., PTEK Holdings, Inc. and PTEK's subsidiary Xpedite Systems, Inc. The suit
seeks, among other things, to enjoin AT&T from selling the EasyLink promissory
note held by AT&T to PTEK, to compel AT&T to participate in EasyLink's current
debt restructuring and to enjoin Xpedite and PTEK from contacting EasyLink's
creditors and making false statements to EasyLink's customers and creditors
regarding EasyLink and its financial position. EasyLink believes that if the
sale of the note to PTEK is permitted to occur, EasyLink's current debt
restructuring may be at substantial risk. See "Risk Factors That May Affect
Future Results - We have incurred significant indebtedness for money borrowed,
and we may be unable to pay debt service on this indebtedness." The Court has
ordered limited document discovery and has established a timetable for
considering EasyLink's motion, including a hearing on May 1, 2003 at which oral
argument will be made. No assurance can be given as to the outcome of this
matter.

Item 4   Submission of Matters to a Vote of Security Holders

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

                                      -20-
<PAGE>
                                     Part II

Item 5   Market for the Registrant's Common Equity and Related Stockholder
         Matters

Stockholder Data

<TABLE>
<CAPTION>
                                                                     2002

                                               Fourth        Third         Second         First
                                               Quarter       Quarter       Quarter        Quarter
                                               -------       -------       -------        -------
<S>                                            <C>           <C>           <C>            <C>
Market Price
High..................................         $  1.60       $  2.95       $  3.15        $  6.70
Low...................................            0.51          0.66          0.96           2.55
End of Quarter........................            0.64          1.46          1.25           2.70

<CAPTION>
                                                                     2001

                                               Fourth        Third         Second         First
                                               Quarter       Quarter       Quarter        Quarter
                                               -------       -------       -------        -------
<S>                                            <C>           <C>           <C>            <C>
Market Price
High..................................         $  7.50       $  5.50       $  8.60        $ 18.80
Low...................................            3.40          2.20          4.60           6.30
End of Quarter........................            4.90          4.00          5.50           6.88
</TABLE>

The Nasdaq closing market price at February 28, 2003 was $0.61.

Dividends

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

Number of Security Holders

At February 28, 2003, the approximate number of holders of record of Class A and
Class B common stock was 764 and 1, respectively.

Stock listings

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

Recent Sales of Unregistered Securities

During the three months ended December 31, 2002, EasyLink Services issued
233,630 Class A common stock to third parties in connection with business
transactions or granted options to employees in reliance upon the exemption from
registration pursuant to Section 4(2) of the Securities Act of 1933 and Rule 701
or Regulation S promulgated thereunder in various transactions as follows:

During the three months ended December 31, 2002, we issued 115,676 shares of
Class A common stock to employees at a weighted average price of $0.96 per share
representing the Company's matching contribution to its 401(k) plan.

During the three months ended December 31, 2002, we issued 111,420 shares valued
at $94,707, in connection with interest payments on our debt.

During the three months ended December 31, 2002, we issued 6,534 shares valued
at $6,001 in association with the settlement of a contingent purchase price
obligation arising out of the acquisition of MyIndia.com by our India.com
subsidiary.

Item 6   Consolidated Selected Financial Data

The following consolidated selected financial data should be read in conjunction
with the consolidated financial statements and the notes to these statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" elsewhere in this document. The consolidated financial statements
included herein have been prepared assuming that the Company will continue as a
going concern. The Company's independent public accountants have included two
explanatory paragraphs in their audit report accompanying the 2002 consolidated
financial statements. The first explanatory paragraph states that the Company
has suffered recurring losses from operations since inception and has a working
capital deficiency and stockholders' 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. The second explanatory paragraph states that as discussed in Notes
1(k), 1(t) and 7, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" and Statement of
Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44
and 64, and Amendment of FASB Statement No. 13, Technical Corrections" in the
year ended December 31, 2002.

We believe that due to the many acquisitions that we made in recent years and
dispositions during 2001, the period to period comparisons for 1998 through 2002
are not meaningful and should not be relied upon as indicative of future
performance.


                                      -21-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                       2002         2001         2000         1999         1998
                                                                    ----------   ----------   ----------   ----------   ----------
<S>                                                                 <C>          <C>          <C>          <C>          <C>
Consolidated Statement of Operations Data for
 the Year Ended December 31,
Revenues..........................................................  $  114,354   $  123,929   $   52,698   $   12,709   $    1,495
Total cost of revenues and operating expenses (a).................     201,287      296,170      204,196       66,352       14,626
Total other income (expense), net (b).............................       1,088       28,203       (7,405)       6,628          606
Loss from continuing operations...................................     (86,933)    (172,241)    (151,498)     (53,643)     (13,131)
Loss from discontinued operations.................................           -      (63,027)     (70,624)           -            -
Extraordinary gain................................................           -          782            -            -            -
Net loss..........................................................     (85,845)    (206,283)    (229,527)     (47,015)     (12,525)
Cumulative dividends on settlement
 of contingent obligations to
preferred stockholders............................................           -            -            -      (14,556)           -
Net loss attributable to common stockholders......................     (85,845)    (206,283)    (229,527)     (61,571)     (12,525)

Basic and diluted net loss per common share:
Loss from continuing operations...................................       (5.13)      (15.26)      (27.79)      (19.63)       (8.60)
Loss from discontinued operations.................................           -        (6.68)      (12.35)           -            -
Extraordinary gain................................................           -         0.09            -            -            -
                                                                    ----------   ----------   ----------   ----------   ----------
Net loss..........................................................  $    (5.13)  $   (21.85)  $   (40.14)      (19.63)       (8.60)
                                                                    ==========   ==========   ==========   ==========   ==========
Weighted average basic and diluted shares outstanding.............      16,733        9,442        5,718        3,137        1,461

Consolidated Balance Sheet Data at December 31,
Cash and cash equivalents.........................................       9,554       13,278        4,331       36,870        8,414
Marketable securities.............................................           -            -       12,595        7,006            -
Total current assets..............................................      23,511       36,900       86,490       50,137        9,970
Property and equipment, net.......................................      14,833       21,956       38,997       28,935        4,341
Domain names, net.................................................         214          214        2,764        7,934        1,010
Goodwill and other intangible assets, net.........................      20,814      107,937      154,804       28,964            -
Total assets......................................................      61,011      170,242      306,917      137,267       20,344
Deferred revenue..................................................           -            -          775        1,335        1,905
Total current liabilities.........................................      43,499       54,494       54,242       28,336        4,894
Long-term capital lease obligations...............................         196          566       12,638       12,016        1,437
Capitalized interest on notes payable, less current portion.......       7,740       12,659            -            -            -
Long-term notes payable...........................................      71,398       80,923      100,321            -            -
Redeemable convertible preferred stock............................           -            -            -            -       13,048
Total stockholders' (deficit) equity..............................     (61,822)      20,509      138,941       96,014         (333)

Number of Employees at December 31,...............................         572          587        1,401          276           89
</TABLE>

(a) Included in operating expenses are:

<TABLE>
<CAPTION>
                                                                       2002         2001         2000         1999         1998
                                                                    ----------   ----------   ----------   ----------   ----------
<S>                                                                 <C>          <C>          <C>          <C>          <C>
Amortization of goodwill and other intangible assets..............       6,751       52,068       39,977        2,979            -
Write-off of acquired in-process technology.......................           -            -        7,650          900            -
Impairment of intangible assets...................................      78,784       62,200            -            -            -
Restructuring charges.............................................       2,320       25,337        5,338            -            -
(Gain) loss on sale of businesses.................................        (426)       1,804            -            -            -
                                                                    ----------   ----------   ----------   ----------   ----------
</TABLE>

(b) Included in other income (expense), net are:

<TABLE>
<CAPTION>
                                                                       2002         2001         2000         1999         1998
                                                                    ----------   ----------   ----------   ----------   ----------
<S>                                                                 <C>          <C>          <C>          <C>          <C>
   Interest income................................................         189          565        4,686        1,885          277
   Interest expense...............................................      (4,785)     (10,383)      (9,791)        (751)        (109)
   Gain on debt restructuring and settlements.....................       6,558       47,960            -            -            -
   Impairment of investments......................................      (1,515)     (10,131)        (200)           -            -
   Loss on equity investment......................................           -            -       (2,100)           -            -
   Other, net.....................................................         641          192            -        5,494          438
</TABLE>

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

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

The following discussion and analysis of the financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and the related notes included elsewhere in this annual report. The
consolidated financial statements included herein have been prepared assuming
that the Company will continue as a going concern. The Company's independent
public accountants have included two explanatory paragraphs in their audit
report accompanying the 2002 consolidated financial statements. The first
explanatory paragraph states that the Company has suffered recurring losses from
operations since inception and has a working capital deficiency and
stockholders' 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. The second
explanatory paragraph states that as discussed in Notes 1(k), 1(t) and 7, the
Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" and Statement of Financial Accounting Standards No.
145, "Rescission of FASB Statements No. 4, 44 and 64, and Amendment of FASB
Statement No. 13, Technical Corrections" in the year ended December 31, 2002.
<PAGE>

Overview

On April 2, 2001, we changed our name to EasyLink Services Corporation. We
believe that the name change helped create a corporate identity tied to our
focus on outsourced electronic information exchange services. 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 over 800,000 transactions that are integral to the
movement of money, materials, products and people in the global economy such as
insurance claims, trade and travel confirmations, purchase orders, invoices,
shipping notices and funds transfers, among many others. We offer a broad range
of information exchange services to businesses and service providers, including
transaction delivery services such as electronic data interchange or "EDI,"
telex, desktop fax, broadcast and production messaging services; groupware
hosting services; services that protect corporate e-mail systems such as virus
protection, spam control and content filtering services; and document capture
and management services such as fax to database, fax to data and data conversion
services.

                                      -22-
<PAGE>

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

In March 2000, we formed WORLD.com to develop the Company's extensive portfolio
of domain names into major Web properties, such as Asia.com and India.com, which
served the business-to-business and business-to-consumer marketplace. Through
its subsidiaries, WORLD.com generated revenues primarily from sales of
information technology products, system integration and website development for
other companies, advertising related sales and commissions earned from booking
travel arrangements. On November 2, 2000, we announced our intent to sell all
assets not related to our core outsourced messaging business, including Asia.com
Inc., India.com Inc., and our portfolio of domain names. On May 3, 2001, our
majority-owned subsidiary Asia.com, Inc. sold its business to an investor group.
In October 2001, we sold a subsidiary of India.com, Inc. and we have ceased
conducting its portal business. Accordingly, the results of World.com and its
subsidiaries have been restated as discontinued operations in our financial
statements for all periods presented. See Notes 1(c) and 10 to our consolidated
financial statements for additional information.

For the year ended December 31, 2002, total revenues were $114.4 million
compared to $123.9 million in 2001 and $52.7 million in 2000. Our net loss was
$85.5 million for the year ended December 31, 2002 as compared to $206.3 million
for the year ended December 31, 2001 and $229.5 million for the year ended
December 31, 2000.

During 2002, we generated all our revenues from information exchange services to
enterprises. During 2001, we generated approximately 98% of our revenues from
information exchange services provided to enterprises and approximately 2% of
our revenue from the advertising network business and other sources. For the
years ended December 31, 2002, 2001, and 2000, approximately $114.4 million,
$122.2 million and $28.9 million, respectively, of our revenue was generated
from companies we acquired since January 1, 2000.

In light of the evolving nature of our business and our limited operating
history, we believe that period-to-period comparisons of our revenues and
operating results are not meaningful and should not be relied upon as
indications of future performance. The substantial increase in revenues for 2001
and 2000 can be attributable to acquisitions and, in 2000, revenues from our
advertising network business that was sold in March 2001. We believe the nature
of our revenues in future periods will be more comparable to that of 2002.

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

Critical Accounting Policies

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

Revenue Recognition

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

Facsimile license revenue is recognized over the average estimated customer life
of 3 years. The Company also licenses software under noncancellable license
agreements. License fee revenues are recognized when a noncancellable license
fee is in force, the product has been delivered and accepted, the license fee is
fixed, vendor specific objective evidence exists for the undelivered element and
collectibility is reasonably assured. Maintenance and support revenues are
deferred and recognized ratably over the term of the related agreements. The
Company also may host the software if requested by the customer. The customer
has the option to decide who hosts the application. If the Company provides the
hosting, revenue from hosting is ratably recognized over the hosting periods.
Pursuant to Emerging Issues Task Force 00-3, "Application of AICPA Statement of
Position 97-2 to Arrangements That Include the Right to Use Software on Another
Entity's Hardware", because the customer has the option of hosting the software
itself or contracting with an unrelated third party to host the software, the
hosting fee is ratably recognized over the hosting period in accordance with the
respective accounting guidance.

The Company also enters into supplier arrangements providing bulk messaging
services, at a fixed price and minimum quantity to certain customers for a
specified period of time. Revenues earned under such arrangements are recognized
over the term of the arrangement assuming collection of the resultant receivable
is probable.

Prior to the sale of the Advertising Network Business on March 30, 2001 (see
Note 4), advertising revenues were derived principally from the sale of banner
advertisements. Revenue on banner advertisements was recognized ratably as the
advertisements or respective impressions were delivered either on a "cost per
thousand" or "cost per action" basis. Revenue on upfront placement fees and
promotions was deferred and recognized over the term of the corresponding
agreement.

                                      -23-
<PAGE>

The Company also traded advertisements on its Web properties in exchange for
advertisements on the Internet sites of other companies as part of the ad
network business. Barter revenues and expenses were recorded at the fair market
value of services provided or received; whichever is more determinable in the
circumstances. Revenue from barter transactions were recognized as income when
advertisements were delivered on the Company's Web properties. Barter expense
was recognized when the Company's advertisements are run on other companies' Web
sites, which is typically in the same period when barter revenue was recognized.
If the advertising impressions were received from the customer prior to the
Company delivering the agreed-upon advertising impressions, a liability was
recorded, and if the Company delivered the advertising impressions to the other
companies' Web sites prior to receiving the agreed-upon advertising impressions,
a prepaid expense was recorded. At December 31, 2002, 2001 and 2000, the Company
did not record a liability for barter advertising to be delivered. Barter
revenues, which are a component of advertising revenue, amounted to $0.6 million
and $4.3 million for the years ended December 31, 2001 and 2000, respectively.
For the years ended December 31, 2001 and 2000, barter expenses, which is a
component of cost of revenues, were approximately the same $0.6 million and $4.3
million, respectively.

The advertising network subscription services were deferred and recognized
ratably over the term of the subscription periods of one, two and five years as
well as eight years for its lifetime subscriptions. Commencing March 10, 1999,
the Company no longer offered lifetime memberships and only offered monthly and
annual subscriptions. The eight-year amortization period for lifetime
subscriptions is based on the weighted-average expected usage period of a
lifetime member. The Company offered 30-day trial periods for certain
subscription services. The Company only recognized revenue after the 30-day
trial period expires. Deferred revenues principally consist of subscription fees
received from members for use of the Company's premium email services. The
Company was obligated to provide any enhancements or upgrades it develops and
other support in accordance with the terms of the applicable Mail.com Partner
agreements. The Company provided an allowance for credit card chargebacks and
refunds on its subscription services based upon historical experience. The
Company provided pro rated refunds and chargebacks to subscription members who
elect to discontinue their service. The actual amount of refunds and chargebacks
approximated management's expectations for all periods presented. Deferred
revenue represents payments that have been received in advance of the services
being performed.

Other revenues includes revenues from the sale of domain names, which are
recognized at the time when the ownership of the domain name is transferred
provided that no significant Company obligation remains and collection of the
resulting receivable is probable. To date, such revenues have not been material.

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 Asset". SFAS 142 eliminates the amortization of goodwill and
indefinite-lived intangible assets, addresses the amortization of intangible
assets with finite lives and addresses impairment testing and recognition for
goodwill and intangible assets. SFAS No. 144 establishes a single model for the
impairment of long-lived assets. We assess goodwill 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 nonamortizable
intangible impairment while undiscounted cash flow analyses are used to assess
long-lived asset impairment. If an assessment indicates impairment, the impaired
asset is written down to its fair market value based on the best information
available. Estimated fair market value is generally measured with discounted
estimated future cash flows. Considerable management judgment is necessary to
estimate undiscounted and discounted future cash flows. Assumptions used for
these cash flows are consistent with internal forecasts. On an on-going basis,
management reviews the value and period of amortization or depreciation of
long-lived assets, including goodwill and other intangible assets. During this
review, we reevaluate the significant assumptions used in determining the
original cost of long-lived assets. Although the assumptions may vary from
transaction to transaction, they generally include revenue growth, operating
results, cash flows and other indicators of value. Management then determines
whether there has been an impairment of the value of long-lived assets based
upon events or circumstances, which have occurred since acquisition. The
impairment policy is consistently applied in evaluating impairment for each of
the Company's wholly owned subsidiaries and investments.

Contingencies and Litigation

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

Restructuring Activities

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

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

<PAGE>

ACQUISITIONS, INVESTMENTS AND DIVESTITURES

Continuing Operations

GN Comtext

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

Swift Telecommunications, Inc. and EasyLink Services

On February 23, 2001, we acquired Swift Telecommunications, Inc., ("STI"). Just
prior to the acquisition in January 2001, STI acquired the EasyLink Services
business ("EasyLink Services") from AT&T Corp. At the closing of the acquisition
by STI of the EasyLink Services business from AT&T, we advanced $14 million to
STI in the form of a loan, the proceeds of which were used to fund part of the
cash portion of the purchase price to AT&T. Upon the closing of the acquisition
of STI, we assumed a $35 million note issued by STI to AT&T. The $35 million
note is secured by the assets of STI, including the EasyLink Services business,
and the shares of our Class A common stock issued to the sole shareholder (who
became an officer and director of EasyLink) in the merger. The note was payable
in equal monthly installments over four years with interest at the rate of 10%
per annum. In November 2001, the note, and accrued interest thereon, was
exchanged for a new note in the principal amount of $10 million, 1 million
shares of the Company's Class A common stock and warrants to purchase an
additional 1 million shares of stock. The $10 million note is secured by the
same security interests that secured the $35 million note. See Note 8 - Notes
Payable for a description of the Restructuring of certain debt and lease
obligations.

                                      -24-
<PAGE>

Upon the closing of the acquisition of STI, the Company paid to the sole
shareholder of STI (who became an officer and director of EasyLink) $835,294 in
cash and issued an unsecured note for approximately $9.2 million and
approximately 1.9 million shares of our Class A common stock valued at
approximately $22.9 million as the purchase price for the acquisition of STI. We
will also pay additional consideration to the sole shareholder of STI equal to
the amount of the net proceeds, after satisfaction of certain liabilities of STI
and its subsidiaries, from the sale or liquidation of the assets of one of STI's
subsidiaries. We also reimbursed the sole shareholder of STI for a $1.5 million
advance made to STI, the proceeds of which were used to fund the balance of the
cash portion of the purchase price for STI's acquisition of the EasyLink
Services business and certain other obligations to AT&T. The $9.2 million note
was non-interest bearing and payable in four equal semi-annual installments over
two years. In November 2001, this note was exchanged for a new note in the
principal amount of $2.7 million, 268,296 shares of the Company's Class A common
stock and warrants to purchase 268,296 shares of stock. See Note 8 - Notes
Payable for a description of the restructuring and settlement of certain debt
and lease obligations.

In connection with the acquisition of STI on February 23, 2001, we also entered
into a conditional commitment to acquire Telecom International, Inc. ("TII").
TII was an affiliate of STI prior to the acquisition of STI by us. The sole
shareholder of STI (who became an officer and director of the Company) is a
principal beneficial shareholder of TII. The purchase price for TII was
originally agreed to be $117,646 in cash, a promissory note in the aggregate
principal amount of approximately $1,294,118 and 267,059 shares of our Class A
common stock. In order to facilitate the debt restructuring and to reduce our
debt obligations and cash commitments, the parties agreed to modify our
commitments in respect of TII. In lieu of acquiring TII, we purchased certain
assets owned by TII for $250,000, payable in six monthly payments of $10,000
commencing May 27, 2002 and one payment of $190,000 on November 27, 2002. We
also agreed to reimburse TII for up to 50% of TII's payments on certain accounts
payable up to a maximum reimbursement of $200,000, to cancel a $236,490 payable
owed by STI to us and to issue up to 20,000 shares of Class A common stock to
TII valued at $122,000. In addition, we issued 300,000 shares of Class A common
stock to TII valued at $1,890,000.

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

Netmoves

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

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

Allegro

On August 20, 1999, we acquired The Allegro Group, Inc. ("Allegro"). Pursuant to
the terms of the merger agreement, Allegro became a wholly owned subsidiary of
the Company. In connection with this acquisition, we paid approximately $3.2
million in cash and issued 110,297 shares of our Class A common stock to the
shareholders of Allegro valued at $17.1 million based upon our average trading
price at the date of acquisition. We also paid one-time signing bonuses of
$800,000 to employees of Allegro who were not shareholders of Allegro. We were
obligated to pay additional amounts based upon Allegro's achievement of
specified revenue and spending targets in 2000. This contingent payment would
consist of up to $3.2 million payable in cash, additional bonus payments of up
to $800,000 and up to $16.0 million payable in shares of our Class A common
stock based on the market value of the stock at the time of payment, up to a
maximum of 200,000 shares. We also granted options to Allegro employees to
purchase approximately 62,500 shares of our Class A common stock at an exercise
price of $160.00 per share. These options vest quarterly over four years,
subject to continued employment. This acquisition has been accounted for as a
purchase business combination. On November 2, 2000, the Company settled its
contingent consideration obligation with Allegro. On December 31, 2001, we paid
to the former shareholders of Allegro 28,318 shares of our Class A common stock.
Upon issuance of the shares, the Company adjusted the purchase price and
goodwill by $139,000.
<PAGE>

TCOM

On October 18, 1999, the Company acquired TCOM, Inc. ("TCOM") a software
technology development firm specializing in the design of software for the
telecommunications and computer telephony industries. The addition of TCOM
expanded the Company's ability to deliver Internet services that meet the demand
of our business customers. The Company is not continuing the business operations
of TCOM but made the acquisition in order to obtain technology and development
resources. We paid $2 million in cash and 43,983 shares of our Class A common
stock valued at approximately $6.1 million based upon our average trading price
at the date of acquisition. In addition, we were obligated to pay to the
continuing employees of TCOM, bonuses totaling $400,000, payable in six-month
installments after the closing date in the amounts of $74,000, $88,000, $116,000
and $122,000, provided such employees continue their employment through the
applicable payment dates. As of December 31, 2001, approximately $300,000 was
paid in final settlement of these obligations.

                                      -25-
<PAGE>

We were obligated to pay additional consideration to the sellers of TCOM based
upon the achievement of certain objectives over an 18-month period. The
additional consideration would consist of up to $1.0 million payable in cash and
up to $2.75 million payable in shares of our Class A common stock based on its
market value at the time of payment, although the market value shall be deemed
to be not less than $40.00 per share. We also granted options to TCOM employees
to purchase approximately 45,933 shares of our Class A common stock at an
exercise price of $130.60 per share. These options vest quarterly over 4 years
subject to continued employment. On November 1, 2000, the Company settled the 12
month portion of its contingent consideration obligation with TCOM. We paid the
former shareholders of TCOM a total of $3.75 million, comprised of a cash
payment of $1 million and $2.75 million in Class A common stock. The remaining
portion of the contingent consideration obligation was settled with the issuance
of 162,083 shares valued at approximately $1.3 million in April 2001. There are
no longer any TCOM employees remaining with the Company. Accordingly, $5.1
million of goodwill was written off in 2001 and recorded as an impairment in the
2001 statement of operations.

Messaging Businesses

During the third quarter of 2000, the Company acquired two business messaging
companies by issuing 71,020 shares of Class A common stock valued at
approximately $4.3 million based upon the Company's average trading price at the
date of acquisition. These acquisitions were accounted for as purchase business
combinations.

InTandem

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

3Cube

On July 14, 1999, we purchased an equity interest in 3Cube, Inc ("3Cube"). Under
the agreement, we paid $1.0 million in cash and issued 8,008 shares of our Class
A common stock, valued at approximately $2.0 million, in exchange for 307,444
shares of 3Cube convertible preferred stock, which represents an equity interest
of less than 20% in 3Cube. We recorded this transaction under the cost method.
This agreement also included a technology licensing arrangement, whereby 3Cube
agreed to integrate its Internet facsimile technology into our email service
across our partner network. On June 30, 2000, the Company made an additional
investment in 3Cube by issuing 25,505 shares of Class A common stock valued at
approximately $1.5 million in exchange for 50,411 shares of 3Cube Series C
Preferred Stock. As of December 31, 2000, we owned preferred stock of 3Cube
representing an ownership interest of 21% of the combined common and preferred
stock outstanding of 3Cube. Accordingly, we then accounted for this investment
under the equity method of accounting. Under the equity method, our
proportionate share of each investee's operating losses and amortization of the
investor's net excess investment over its equity in each investee's net assets
is included in loss on equity investments. The effect of this change from the
cost method to the equity method of accounting resulted in a decrease of the
carrying value of the investment by $2.1 million which was recorded as a loss on
equity investment in our 2000 statement of operations. In addition, in December
2000, we wrote down the value of our investment in 3Cube by $200,000 as it was
determined that the decline in its value was other-than-temporary which was
recorded as an impairment of investments within other income (expense) in our
2000 statement of operations. See the section on Impairment Charges included in
the Results of Operations section below for additional information. In 2001, we
sold this investment for its carrying value of $2 million.

<PAGE>

Discontinued Operations

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

                                      -26-
<PAGE>

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

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

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

In addition, we were obligated to issue up to an additional 71,990 shares of
Class A common stock in the aggregate to the former stockholders of eLong.com if
EasyLink or Asia.com acquired less than $50.0 million in value of businesses
engaged in developing, marketing or providing consumer or business internet
portals and related services focused on the Asian market or a portion thereof,
or businesses in furtherance of such a business, prior to March 14, 2001. The
actual amount of shares to be issued was based upon the amount of any shortfall
in acquisitions below the $50.0 million target amount. Based upon the value of
the acquisitions completed as of March 14, 2001, we issued approximately 7,500
shares of our Class A common stock to the former stockholders of eLong.com. See
Note 10 to our consolidated financial statements for additional information.

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

During the second quarter of 2000, Asia.com acquired three companies for
approximately $18.4 million, including acquisition costs. Payments consisted of
cash approximating $500,000, 192,618 shares of our Class A common stock valued
at approximately $11.6 million and 467,345 shares of Asia.com Class A common
stock valued at approximately $6.1 million, all of which were based upon our
average trading price on the dates of acquisition.

During the fourth quarter of 2000, approximately $12 million of goodwill was
written off as we determined that the carrying value of the goodwill associated
with one of these acquisitions focused on the wireless sector had become
permanently impaired as a result of our November 2, 2000 decision, as approved
by the Board of Directors, to sell all assets not related to our core messaging
business, including our Asia-based businesses. See the discussion on
Restructuring Charges included in the Results of Operations section below for
additional information.

Under a stock purchase agreement associated with one of the Asia.com
acquisitions, we agreed to pay a contingent payment of up to $5 million if
certain wireless revenue targets are reached after the closing. The contingent
payment was payable in our Class A common stock, cash or, under certain
circumstances, Asia.com Class A common stock. We determined that these targets
were never achieved.
<PAGE>

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

On March 16, 2000, in exchange for $2 million in cash and 18,569 shares of our
Class A common stock valued at approximately $2.9 million, we acquired a domain
name from and made a 10% investment in Software Tool and Die, a Massachusetts
Corporation. Software Tool and Die is an Internet Service Provider and provides
Web hosting services. We concluded that the carrying value of this cost-based
investment was permanently impaired based on the achievement of business plan
objectives and milestones and the fair value of the investment relative to our
carrying value. During the fourth quarter of 2000, we recorded an impairment
charge of $4.2 million due to an other-than-temporary decline in the value of
this investment due to the decrease in net book value of the investment caused
by its losses, as well as a result of our November 2, 2000 decision, as approved
by the Board of Directors, to sell all assets not related to its core messaging
business, including its Asia-based businesses. This amount was recorded as an
impairment of investments within other income (expense) in our 2000 statement of
operations. Please see the section on Impairment Charges included in the Results
of Operations section below for additional information.

                                      -27-
<PAGE>

On March 31, 2000, we acquired a Mauritius entity, which in turn owned 80% of an
Indian subsidiary, to facilitate future investments in India. The terms were
$400,000 in cash and a $1 million 7% note payable due one year from closing. In
June 2000, we acquired through the Mauritius entity the remaining 20% of the
Indian subsidiary for $2.2 million in cash. In connection with this acquisition,
we incurred a $1.8 million charge related to the issuance of 10,435 shares of
Class A common stock, as compensation for services performed, and we paid
$200,000 cash and an additional $200,000 payable in our Class A common stock as
compensation for employees. In October 2001, we sold 90% of the shares of our
Multiple Zones Prvt. Ltd. Subsidiary. We recorded a nominal gain on the
transaction.

During the second quarter of 2001, we acquired a US and India based company for
approximately $600,000, including acquisition costs. The terms were $300,000 in
cash and 19,600 shares of our Class A common stock valued at approximately
$272,000 based upon our average trading price surrounding the date of
acquisition. The acquisition was accounted for as a purchase business
combination. The excess of the purchase price over the fair market value of the
assets acquired and assumed liabilities has been allocated to goodwill
($831,000), which was being amortized over a period of three years, the expected
estimated period of benefit. We subsequently transferred this acquired business
to the former management of its India.com subsidiary. As part of the
transaction, the transferred business assumed all of the liabilities of the
transferred business and certain liabilities of India.com. In consideration for
the assumption of these liabilities, we contributed to the transferred business
immediately prior to the sale in January 2002 56,075 shares of Class A common
stock valued at $0.3 million and $300,000 in cash.

On November 24, 1999, we acquired iFan, Inc. ("iFan"), which owns various domain
names. The acquisition has been accounted for as an acquisition of assets. iFan
had limited operations. We issued 7,270 shares of our Class A common stock
valued at approximately $1.6 million. The value was determined by using the
average of our Class A common stock around the closing date, which occurred
simultaneously with the announcement date. In addition, all outstanding iFan,
stock options were converted into 1,697 non-qualified stock options of EasyLink
at a weighted-average exercise price of $114.10 per share. The value ascribed to
the options using the Black Scholes pricing model ($370,000) was part of the
$2.1 million purchase price. The excess of the purchase price over the net book
value of the domain assets acquired of iFan has been allocated to other
intangible assets (non-compete agreements). Such amount was being ratably
amortized over a period of three years. In December 2000, we wrote off $160,000
of domain names as part of our restructuring program. Please see the
Restructuring section below for additional information.

RESULTS OF OPERATIONS - 2002 and 2001

Revenues

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

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

Cost of Revenues

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

<PAGE>

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

Sales and Marketing Expenses

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

                                      -28-
<PAGE>

General and Administrative Expenses

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

Product Development Expenses

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

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

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

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

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31,
                                                                                         -----------------------
(In thousands, except per share amounts)                                         2002                2001             2000
                                                                               --------           ---------         ---------
<S>                                                                            <C>                <C>               <C>
Loss from continuing operations..............................                  $ (85,848)         $(144,038)        $(158,903)
Add back: Goodwill amortization..............................                          -             40,376            38,761
Adjusted loss from continuing operations.....................                    (85,848)          (103,662)        $(120,142)

Loss from discontinued operations............................                          -            (63,027)        $ (70,625)
Add back: Goodwill amortization..............................                          -              3,851            19,963
Adjusted loss from discontinued operations...................                          -            (59,176)          (50,662)
Extraordinary gain...........................................                          -                782                 -

Adjusted net loss............................................                  $ (85,848)         $(162,056)         (170,804)

Basic and diluted net loss per share:
Loss from continuing operations..............................                  $   (5.13)         $  (15.26)        $  (27.79)
Goodwill amortization from continuing operations.............                          -               4.28              6.78
Adjusted loss from continuing operations.....................                  $   (5.13)            (10.98)           (21.01)

Loss from discontinued operations............................                          -              (6.68)           (12.35)
Goodwill amortization from discontinued operations...........                          -               0.41              3.49
Adjusted loss from discontinued operations...................                          -              (6.27)            (8.86)

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

Adjusted net income (loss)...................................                  $   (5.13)         $  (17.17)        $  (29,87)

Weighted average basic and diluted shares outstanding .......                     16,733              9,442             5,718
</TABLE>

Although SFAS No. 142 requires disclosure of these amounts to reflect the impact
of adoption on the Company's results for the years ending December 31, 2001 and
2000, had goodwill not been amortized and been added back, the effect would have
resulted in additional impairment charges being recorded in each of the
respective years.

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

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

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

Restructuring Charges

During 2002 and 2001, restructuring charges of $2.3 million and $25.3 million,
respectively were recorded by us in accordance with the provisions of EITF 94-3,
and Staff Accounting Bulletin 100. During 2002, our restructuring charges were
related to the relocation and consolidation of our New Jersey-based corporate
office facilities into one location and a similar consolidation of our office
facilities in England. For 2001, our restructuring initiatives were related to
our strategic decisions to exit the consumer messaging business and to focus on
our outsourced messaging business. The 2001 restructuring program also included
an incremental reduction in the workforce of approximately 150 employees
resulting in a restructuring charge of approximately $1.2 million. In addition,
asset disposals of $24.1 million reflect write-downs of excess fixed assets and
other assets to their net realizable values.

Gain or loss on the sale of businesses

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


<PAGE>

Other Income (Expense), Net

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

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

Interest expense was $4.8 million in 2002 as compared to $10.4 million in 2001.
The $5.6 million decrease was due to reductions in the total debt balances
outstanding during 2002 as compared to 2001 as a result of the exchange
transactions and debt restructurings completed in 2001 as described below. In
addition, no interest expense is recognized on the notes issued in connection
with the exchange transactions or on the restructured notes issued to AT&T and
the former shareholder of STI (who became an officer and director of the
Company) in accordance with FASB Statement No. 15 "Accounting by Debtors and
Creditors for Troubled Debt Restructurings" (See Note 8 to the Consolidated
Financial Statements).

                                      -29-
<PAGE>

Gain on Debt Restructuring and Settlements

2002 Transactions

On July 15, 2002, we entered into an agreement to repurchase a 12% senior
convertible note and related obligations in the amount of $0.5 million for
$90,000 in cash and 5,415 shares in Class A common stock, valued at
approximately $6,000. This transaction was accounted for in accordance with
Financial Accounting Standards Board Statement No. 15 ("FASB No.15"),
"Accounting by Debtors and Creditors for Troubled Debt Restructurings." As a
result of this transaction, we recorded a $0.4 million gain in 2002.

On September 27, 2002, we entered into an agreement to repurchase 10% senior
convertible notes in the amount of $4.95 million for $495,000. This transaction
was accounted for in accordance with FASB No.15), "Accounting by Debtors and
Creditors for Troubled Debt Restructurings." As a result of this transaction, we
recorded a $6.2 million gain in 2002 which includes the impact of a $1.7 million
reversal of capitalized interest previously recognized in connection with the
February 14, 2001 exchange agreement related to such notes.

2001 Transactions

Gain on debt restructuring in 2001 primarily relates to the issuance of $23.8
million principal amount of 10% Senior Convertible Notes in exchange for the
cancellation of $75.9 million principal amount of 7% Convertible Subordinated
Notes and the subsequent exchange of $2.5 million of the new 10% Senior
Convertible Notes for 1.4 million shares of our Class A Common Stock. In
accordance with FASB No. 15, "Accounting by Debtors and Creditors for Troubled
Debt Restructuring" ("FASB No. 15"), we recorded gains of $40.4 million on these
exchange transactions.

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

We also recorded net gains of $8.6 million upon the completion in November 2001
of the restructuring of certain debt and lease obligations in accordance with
FASB No. 15. Approximately $63.0 million of debt and equipment lease obligations
were exchanged for approximately $20.0 million of 12% restructured notes due in
installments from June 2003 through June 2006, 2.0 million shares of Class A
common stock valued at $6.10 per share and warrants to purchase 1.8 million of
shares of Class A common stock valued at $6.10 per share.

The restructure notes bear interest at a rate of 12% per annum and mature five
years from the date of the debt restructuring. We may elect to defer payment of
accrued interest on a portion of the restructure notes until various dates
commencing June 2003 and may elect to pay accrued interest on other restructure
notes in shares of Class A common stock having a market value at the time of
payment equal to 120% of the interest payment due.

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

The $7.8 million gain recorded on the debt restructuring was calculated based on
the amount of the total reduction in carrying values of the original restructure
obligations as compared to the carrying values of the restructure notes minus
the amount of the contingent share issuance obligation of $1.1 million recorded
by us due to the assumed payment of interest on a portion of the restructure
notes in shares of Class A common stock as described above.

Impairment of Investments

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

<PAGE>

Discontinued Operations

In 2001, the loss from discontinued operations includes the results and other
costs related to our discontinuance of our World.com business including
subsidiaries, Asia.com, Inc. and India.com Inc. The $63.0 million loss from
discontinued operations included a write-down of $56.4 million of assets,
primarily goodwill, to net realizable value, operating losses of $4.5 million,
severance and related benefits of $1.3 million and other related costs and
expenses including the closure of facilities of $0.8 million. In 2000, the loss
from discontinued operations included $58.4 million of operating losses and
$12.2 million of write-downs of goodwill and other intangible assets in
connection with the decision to abandon two of World.com's Asian based
businesses.

                                      -30-
<PAGE>

Extraordinary Gain

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

RESULTS OF OPERATIONS - 2001 and 2000

Revenues

Revenues in 2001 were $123.9 million as compared to $52.7 million in 2000. The
increase of $71.2 million was due primarily to revenues from our acquisition of
STI on February 23, 2001, including the EasyLink Services business acquired by
STI from AT&T Corp. The increased revenues from the acquisition were partially
offset by reductions in our advertising network revenues as a result of the sale
of the advertising network in March 2001.

Business messaging revenues for the year ended December 31, 2001 were $121.7
million as compared to $29.0 million in 2000. Business messaging includes
revenues derived from message delivery services such as electronic data
interchange or "EDI", telex, desktop fax, broadcast and production messaging;
managed e-mail and groupware hosting services; and services that protect
corporate e-mail systems such as virus protection, spam control and content
filtering.

Advertising network revenues, including subscription services and domain name
sales, amounted to $2.2 million in 2001 as compared to $23.7 million in 2000.
The significant decrease in these revenues in 2001 is attributable to the sale
of our advertising network in March 2001. Included in advertising network
revenues are barter revenues of $0.6 million and $4.3 million for the years
ended December 31, 2001 and 2000, respectively.

Cost of Revenues

Cost of revenues increased in the year ended December 31, 2001 to $75.9 million
as compared to $49.2 million in 2000. The increase in 2001 over 2000 was the
result of increased revenues but as a percentage of revenues these costs
decreased, particularly in 2001 with the inclusion of higher margin revenues
from the acquisition of STI, including the EasyLink Services business. Gross
margin in 2001 improved to 39% as compared to 7% in 2000.

Cost of revenues consists primarily of costs directly related to the delivery of
EDI, telex, fax and email messages. It includes depreciation of equipment used
in our computer systems; the cost of telecommunications services including local
access charges, leased network backbone circuit costs and long distance domestic
and international termination charges; licensing charges for third party network
software; and personnel costs associated with our systems, databases and support
services. In addition, as it related to our advertising network, we included the
cost of barter trades.

Sales and Marketing Expenses

Sales and marketing expenses were $28.2 million in 2001 as compared to $52.1
million in 2000. In 2001, these costs primarily relate to business messaging but
in 2000, the most significant costs were related to our advertising network.
Accordingly, the $23.8 million decrease in 2001 is primarily due to the
reduction and eventual elimination of advertising network expenditures in
anticipation of and the eventual sale of that business in March 2001. Partially
offsetting this cost reduction was an increase in sales and marketing expenses
for business messaging in support of the expanded business from the STI/EasyLink
Services acquisition in February 2001. The costs for business messaging
primarily consist of salaries, commissions and other related expenses for sales,
marketing and business development employees, third party agent commissions and
payments to marketing consultants.

General and Administrative Expenses

General and administrative expenses were $41.4 million in 2001 as compared to
$32.8 million in 2000. The $8.3 million increase was attributable to increased
personnel and other costs in connection with the expanded business from the
STI/EasyLink Services acquisition in February 2001. General and administrative
expenses consist primarily of compensation and other employee costs including
customer support, customer billing operations and other corporate functions as
well our provision for doubtful accounts and overhead expenses.

<PAGE>

Product Development Expenses

Product development costs were $9.2 million in 2001 as compared to $17.1 million
in 2000. In 2001 product development costs relate exclusively to business
messaging as development for the advertising network was eliminated with our
decision to sell that business. Product development costs consist primarily of
personnel and consultants' time and expense to research, conceptualize, and test
product launches and enhancements to all messaging products.

Amortization of Goodwill and Other Intangible Assets, Write-Off of Acquired
In-Process Technology and Impairment of Intangible Assets

                                      -31-
<PAGE>

Goodwill represents the excess of the purchase price of acquisitions over the
fair market value of the net assets acquired and was being amortized over a 3 to
5 year period through December 31, 2001. Amortization of goodwill and other
intangible assets increased to $52.1 million in 2001 as compared to $40.0
million in 2000 largely as a result of the goodwill amortization related to the
STI/EasyLink acquisition in February 2001.

The write-off of $7.7 million of acquired in-process technology was attributable
to the NetMoves transaction in 2000.

Impairment of intangible assets of $62.2 million included the write-offs of $60
million and $2.2 million of goodwill associated with the NetMoves and
professional services acquisitions, respectively, as an impairment charge in
2001. The impairment charge in 2001 resulted from our on-going business review,
based on quantitative and qualitative measures, and assessment of the need to
record impairment losses on long-lived assets used in operations when impairment
indicators are present. Management determined the amount of the impairment
charge by comparing the carrying value of goodwill and other long-lived assets
to their fair values. These evaluations of impairments are based upon an
achievement of business plan objectives and milestones of each business, the
fair value of each ownership interest relative to its carrying value, the
financial condition and prospects of the business and other relevant factors.
The business plan objectives and milestones that are considered include among
others, those related to financial performance, such as achievement of planned
financial results and completion of capital raising activities, if any, and
those that are not primarily financial in nature, such as launching or
enhancements of a web site or product, the hiring of key employees, the number
of people who have registered to be part of the associated business' web
community, and the number of visitors to the associated business' web site per
month. Management determines fair value based on a combination of the discounted
cash flow methodology, which is based on converting expected cash flows to
present value and the market approach, which includes analysis of market price
multiples of companies engaged in lines of business similar to the business
being evaluated. The market price multiples are selected and applied to the
business based on the relative performance, future prospects and risk profile of
the business in comparison to the guideline companies.

Restructuring Charges

During 2001 and 2000, restructuring charges of $25.3 million and $5.3 million,
respectively, were recorded by us in accordance with the provisions of EITF
94-3, and Staff Accounting Bulletin 100. Our 2001 restructuring initiatives are
related to our strategic decisions to exit the consumer messaging business and
to focus on the Company's outsourced messaging business. During 2001, the
Company's restructuring program included an incremental reduction in the
workforce of approximately 150 employees. Employees affected by the
restructuring were notified by direct personal contact and by written
notification. The remaining employee benefit termination amounts were paid out
in 2002. In addition, asset disposals of $24.1 million reflect write-downs of
excess fixed assets and other assets to their net realizable values. The lease
abandonments represent the cost to exit the facility leases. The remaining
amounts are to be paid out over the next 3 years which corresponds to the terms
of the lease.

Loss on Sale of Businesses

Loss on sale of businesses of $1.8 million represents the loss incurred from the
sale of our advertising network in March 2001.

Other Income (Expense), Net

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

Interest income for the year ended December 31, 2001 was $0.6 million as
compared to $4.7 million in 2000. The decrease in 2001 was principally due to
lower cash balances and lower interest rates.

Interest expense was $10.4 million in 2001 as compared to $9.8 million in 2000.
Although interest expense remained relatively consistent in 2001 as compared to
2000, the $0.6 million increase represents the net effect of additional interest
charges in 2001 on debt obligations related to the STI acquisition and reduced
interest charges on our 7% Convertible Notes as a result of exchange
transactions on $75.9 million of the 7% Convertible Notes for $23.8 million of
10% Senior Convertible Notes and from the non-recognition of interest expense on
the new notes in accordance with FASB No. 15.


<PAGE>

Gain on Debt Restructuring and Settlements

Gain on debt restructuring in 2001 primarily relates to the issuance of $23.8
million principal amount of 10% Senior Convertible Notes in exchange for the
cancellation of $75.9 million principal amount of 7% Convertible Subordinated
Notes and the subsequent exchange of $2.5 million of the new 10% Senior
Convertible Notes for 1.4 million shares of our Class A Common Stock. In
accordance with FASB No. 15, we recorded gains of $40.4 million on these
exchange transactions.

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

We also recorded net gains of $8.6 million upon the completion in November 2001
of the restructuring of certain debt and lease obligations in accordance with
FASB No. 15. Approximately $63.0 million of debt and equipment lease obligations
were exchanged for approximately $20.0 million of 12% restructured notes due in
installments from June 2003 through June 2006, 2.0 million shares of Class A
common stock valued at $6.10 per share and warrants to purchase 1.8 million of
shares of Class A common stock valued at $6.10 per share.

                                      -32-
<PAGE>

The restructure notes bear interest at a rate of 12% per annum and mature five
years from the date of the debt restructuring. We may elect to defer payment of
accrued interest on a portion of the restructure notes until various dates
commencing June 2003 and may elect to pay accrued interest on other restructure
notes in shares of Class A common stock having a market value at the time of
payment equal to 120% of the interest payment due.

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

The $7.8 million gain recorded on the debt restructuring was calculated based on
the amount of the total reduction in carrying values of the original restructure
obligations as compared to the carrying values of the restructure notes minus
the amount of the contingent share issuance obligation of $1.1 million recorded
by us due to the assumed payment of interest on a portion of the restructure
notes in shares of Class A common stock as described above.

Impairment of Investments

As indicated above, management performs on-going business reviews and, based on
quantitative and qualitative measures, assesses the need to record impairment
losses on its investments when impairment indicators are present. Management
determined that the decline in value of its cost investments in Bantu, Inc.,
BulletN.net and On View was other-than-temporary and recorded charges of $10.1
million for the year ended December 31, 2001. In 2000, as a result of sequential
declines in the operating results of 3Cube, management made an assessment of the
carrying value of its equity investment and determined that it was in excess of
its estimated fair value. Consequently, we wrote down our investment and
recorded an impairment charge of $200,000 in 2000.

Discontinued Operations

The loss from discontinued operations includes the results and other costs
related to the discontinuance of our World.com business including subsidiaries,
Asia.com, Inc. and India.com, Inc. In 2001, the $63.0 million loss from
discontinued operations included a write-down of $56.4 million of assets,
primarily goodwill, to net realizable value, operating losses of $4.5 million,
severance and related benefits of $1.3 million and other related costs and
expenses including the closure of facilities of $0.8 million. In 2000, the loss
from discontinued operations included $58.4 million of operating losses and
$12.2 million of write-downs of goodwill and other intangible assets in
connection with the decision to abandon two of World.com's Asian based
businesses.

Extraordinary Gain

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

Liquidity and Capital Resources

Since our inception, we have obtained financing through private placements of
convertible debt and equity securities, equipment leases, our initial public
offering and through a convertible debt offering. In January 2000, we received
net proceeds of $96.1 million from our convertible debt offering. During the
first three quarters of 2001, we raised approximately $14.1 million from the
issuance of 10% Senior Convertible Notes and $3.0 million from the issuance of
Class A common stock. In the fourth quarter of 2001, we raised an additional
$7.1 million. Of the $7.1 million, $5.7 million was raised through the issuance
of 1,460,000 shares of Class A common stock and $1.3 million was raised through
the issuance of senior convertible notes. These notes are convertible at $2.50
per share. The beneficial conversion feature of $1.1 million is being amortized
over 5 years. See Note 8 Notes Payable. We also financed the majority of our
capital expenditures in 2000 and 1999 through lease lines. In 2002, we did not
obtain any new financings.

<PAGE>

The $7.1 million raised in the fourth quarter of 2001, along with certain stock
issuances in lieu of payment of outstanding liabilities, enabled us to meet a
$10 million financing requirement for the restructuring of approximately $63
million of debt and capital lease obligations. The restructuring substantially
improved our liquidity. The $63 million of debt and capital lease obligations
were exchanged for approximately $20 million principal amount of new notes, 1.97
million shares of Class A common stock valued at $12.0 million and warrants to
purchase 1.8 million shares of Class A common stock valued at $6.10 per share.
The new notes issued in the restructuring are payable in installments commencing
June 2003 and extending through June 2006. Interest on the new notes started
accruing from various dates commencing June 1, 2001 and payments of interest are
either deferred until June 2003 or later or are payable in Class A common stock.
See Note 8 - Notes Payable. As part of the restructuring, we also settled
certain lease equipment obligations having an original cost of $22.5 million and
satisfied certain other obligations for approximately $3.7 million in cash and
approximately 820,000 shares of Class A common stock valued at $0.5 million.

                                      -33-
<PAGE>

Net cash provide from or (used in) operations was $1.7 million for the year
ended December 31, 2002, $(1.4) million for the year ended December 31, 2001 and
$(76.3) million for the year ended December 31, 2000. The results in 2002 and
2001 in comparison to 2000 reflect the change in business strategy pursuant to
which we acquired STI, including the EasyLink Services business, and sold our
advertising network business in the first quarter of 2001.

Net cash used in investing activities was $3.1 million, $3.2 million and $12.8
million in 2002, 2001 and 2000 respectively. In 2002 cash was used for capital
equipment purchase of $3.5 million net of $0.4 million of proceeds from the
sales of businesses. For 2001, cash used for capital equipment purchases
amounted to $5.3 million and cash used for acquisitions, mostly related to the
STI transaction, was $15.3 million. Offsetting these 2001 uses were $12.5
million in proceeds from the sales and maturities of marketable securities, $2.0
million from the sales of investments and $4.6 million from the sales of
businesses. In 2000 capital equipment purchases amounted to $5.3 million, net
purchases of marketable securities amounted to $5.3 million and other activities
accounted for the balance of $2.2 million of cash used for investing activities.

Net cash (used in) or provided from financing activities was $(1.9) million for
the year ended December 31, 2002 in comparison to $16.7 million and $85.7
million for the years ended December 31, 2001 and 2000. As described above we
obtained substantial financing in 2000 and 2001 but none in 2002. Payments for
debt service and capital leases, representing the more significant cash used for
financing activities amounted to $2.3 million in 2002, $9.1 million in 2001 and
$13.2 million in 2000.

As of December 31, 2002, our major commitments consist of $24.1 million
principal amount of 7% Convertible Subordinated Notes due in February 2005; $31
million principal amount of 10% Senior Convertible Notes due in January 2006;
and $19.1 million principal amount of 12% restructure notes payable in 13 equal
quarterly installments beginning in June 2003. A portion of the restructure
notes are also subject to mandatory prepayments out of a portion of the proceeds
of future financings by us. Our capital lease and operating lease commitments
for 2003 are approximately $3.6 million. Our cash interest payment obligations
are approximately $4.5 million during 2003 and our scheduled principal repayment
obligations are approximately $3.6 million during 2003, in each case after
giving effect to the elimination of debt on or before March 31, 2003 but without
giving effect to the elimination of any debt after March 31, 2003. We also have
minimum purchase commitments to telecommunications services providers. See Part
I, Item 1 "Business Description--Telecommunications Services."

For each of the years ended December 31, 2002, 2001 and 2000, we received a
report from our independent accountants containing an explanatory paragraph
stating that we suffered recurring losses from operations since inception and
have a working capital deficiency that raise substantial doubt about our ability
to continue as a going concern. 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. We
believe our ability to continue as a going concern is dependent upon our ability
to generate sufficient cash flow to meet our obligations on a timely basis, to
obtain additional financing or refinancing as may be required, to restructure
our debt service obligations and ultimately to achieve profitable operations.
Throughout 2001, management improved the Company's operations and liquidity
through a variety of actions, including the acquisition and integration of
STI/EasyLink Services, a reduction of its workforce, the sale or closure of all
of its World.com businesses, and the sale of its advertising network. In
addition, management successfully raised over $20 million in cash financing
during 2001. In 2002, management continued the process of improving the
Company's operations through further cost reductions to the point that net cash
of $1.7 million was provided from operations for the year.

During 2003, the Company plans to continue the efforts that it implemented
successfully throughout 2002 and 2001 to manage its costs and liabilities with a
view to ensuring our continued liquidity and to restructure its debt. We may
also seek complementary acquisitions and, if necessary, to raise additional
financing. We are also considering whether to pursue other strategic
alternatives, including potential business combinations. There can be no
assurance that the Company will be successful in these efforts. Sales of
additional equity securities could result in additional dilution to our
stockholders. In addition, on an ongoing basis, we continue to evaluate
potential acquisitions to complement our information exchange services or other
business combination transactions. In order to complete these potential
acquisitions, we may need additional equity or debt financing in the future.
<PAGE>

We recently announced that we are seeking to eliminate substantially all of our
indebtedness for borrowed money. Pursuant to these efforts, we have eliminated
approximately $7.1 million principal amount of debt after December 31, 2002
through the date hereof in exchange for the payment of approximately $0.8
million in cash and the issuance or commitment to issue approximately 1.1
million shares of our Class A common stock. These transactions will result in a
gain of approximately $6.6 million which will be recorded in the first quarter
of 2003. As a result of this transaction, the Company also eliminated $0.7
million of capitalized interest and $0.2 million of accrued interest associated
with the debt eliminated. We may issue additional shares or securities
convertible into or exercisable for shares of Class A common stock in connection
with raising any capital needed to fund cash payments for any additional debt
that we may eliminate. Upon elimination of any additional indebtedness, we would
also eliminate the capitalized interest and accrued interest associated with the
debt eliminated. Holders of substantially all indebtedness on which we currently
owe accrued but unpaid interest payments have agreed to defer such payments
pending completion of our proposed debt restructuring in most cases until April
30, 2003 or May 31, 2003.

We cannot assure you that we will be able to successfully complete the
elimination of any other indebtedness that we are seeking to eliminate on
favorable terms or at all. On February 27, PTEK Holdings, Inc., one of our
principal competitors, announced that it had entered into an agreement with AT&T
to purchase 1,423,980 shares of outstanding Class A common stock of EasyLink
held by AT&T and a promissory note of EasyLink held by AT&T. The promissory
note, with a principal amount of $10 million, represents approximately 13% of
the aggregate principal amount of debt that EasyLink has been seeking to
eliminate pursuant to its debt restructuring plan. In response to PTEK's
announcement, we commenced on March 17, 2003 an action against AT&T Corp., PTEK
Holdings, Inc. and PTEK's subsidiary Xpedite Systems, Inc. The suit seeks, among
other things, to enjoin AT&T from selling the EasyLink promissory note held by
AT&T to PTEK, to compel AT&T to participate in EasyLink's current debt
restructuring and to enjoin Xpedite and PTEK from contacting EasyLink's
creditors and making false statements to EasyLink's customers and creditors
regarding EasyLink and its financial position. EasyLink believes that if the
sale of the note to PTEK is permitted to occur, EasyLink's current debt
restructuring may be at substantial risk.

                                      -34-
<PAGE>

If we are unable to complete the elimination of debt pursuant to our proposed
debt restructuring on favorable terms, we cannot assure you that we will be able
to pay interest and other amounts due on our outstanding indebtedness, or our
other obligations, on the scheduled dates or at all. If our cash flow and cash
balances are inadequate to meet our obligations, we could face substantial
liquidity problems. If we are unable to generate sufficient cash flow or
otherwise obtain funds necessary to make required payments, or if we otherwise
fail to comply with any covenants in our indebtedness, we would be in default
under these obligations, which would permit these lenders to accelerate the
maturity of the obligations and pursue other remedies thereunder 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, including any deemed
sale of all or substantially all of our assets.

Recent Accounting Pronouncements

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

In April 2002, Statement of Financial Accounting Standards No. 145, "Rescission
of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("Statement 145") was issued. FASB Statement No. 4
required all gains and losses from the extinguishment of debt to be reported as
extraordinary items and Statement No. 64 related to the same matter. Statement
145 requires gains and losses from certain debt extinguishment to not be
reported as extraordinary items when the use of debt extinguishment is part of
the risk management strategy. Statement 44 was issued to establish transitional
requirements for motor carriers relative to intangible assets. Those transitions
are completed, therefore Statement 44 is no longer necessary. Statement 145 also
amends Statement No. 13 requiring sale-leaseback accounting for certain lease
modifications. Statement 145 is effective for fiscal years beginning after May
15, 2002. The provisions relating to sale-leaseback are effective for
transactions after May 15, 2002. The Company adopted Statement 145 effective
July 1, 2002. The adoption of this Statement resulted in gains from debt
restructuring and extinguishments of debt that were previously recorded as
extraordinary being reclassified as operating activities. During the quarter
ended September 30, 2002, the gains from extinguishment of debt were recorded as
part of continuing operations in accordance with Statement 145. The following
sets forth the impact of the reclassifications on the income (loss) from
continuing operations and earnings per share from continuing operations:

                                      -35-
<PAGE>

<TABLE>
<CAPTION>
                                                                       For the year ended December 31,
                                                                       2002         2001         2000
                                                                    ----------   ----------   ----------
<S>                                                                 <C>          <C>          <C>
Loss from continuing operations - pre FAS 145                       $  (85,845)  $ (191,145)  $ (158,993)
Extraordinary gain reclassified to Gain
 on debt restructuring and settlements                                       -       47,960            -
Extraordinary loss reclassified to operating expenses                        -         (853)           -
                                                                    ----------   ----------   ----------
Loss from continuing operations - post FAS 145                      $  (85,845)  $ (144,038)  $ (158,993)
                                                                    ==========   ==========   ==========
Loss per share from continuing operations - pre FAS 145             $    (5.13)  $   (20.24)  $   (27.79)
Loss per share from continuing operations - post FAS 145            $    (5.13)  $   (15.26)  $   (27.79)
Change in income (loss) per share on continuing operations          $        -   $     4.98   $        -
</TABLE>

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

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 England) and, to a lesser extent, in Singapore
and Malaysia. 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 receivables are subject, in the normal course of
business, to collection risks. We regularly assess these risks and have
established policies and business practices to protect against the adverse
effects of collection risks. As a result we do not anticipate any material
losses in this area.

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

                                      -36-
<PAGE>

Item 8   Consolidated Financial Statements and Supplementary Data

                          EASYLINK SERVICES CORPORATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                     Page
   <S>                                                                                                <C>
   Independent Auditors' Report..................................................................     33
   Consolidated Balance Sheets as of December 31, 2002 and 2001..................................     34
   Consolidated Statements of Operations for the years ended December 31, 2002, 2001, and 2000...     35
   Consolidated Statements of Stockholders' (Deficit) Equity and Comprehensive
   Loss for the years ended December 31, 2002, 2001 and 2000.....................................     36
   Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000....     43
   Notes to Consolidated Financial Statements....................................................     45
</TABLE>

                                      -37-
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
EasyLink Services Corporation:

We have audited the accompanying consolidated balance sheets of EasyLink
Services Corporation and subsidiaries as of December 31, 2002 and 2001, and the
related consolidated statements of operations, stockholders' (deficit) equity
and comprehensive loss, and cash flows for each of the years in the three-year
period ended December 31, 2002. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of EasyLink Services
Corporation and subsidiaries as of December 31, 2002 and 2001, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.

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

As discussed in Note 1(k), note 1(t), and 7, the Company adopted Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
and Statement of Financial Accounting Standards No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, and Amendment of FASB Statement No. 13, Technical
Corrections" in the year ended December 31, 2002.

                                   /s/KPMG LLP

New York, New York
February 27, 2003

                                      -38-
<PAGE>

                          EasyLink Services Corporation

                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                                           -----------------------
                                                                                             2002          2001
                                                                                           --------      ---------
<S>                                                                                        <C>           <C>
                                          ASSETS
Current assets:
Cash and cash equivalents..............................................................    $  9,554      $  13,278
Accounts receivable, net of allowance for doubtful accounts
  $8,052 and $14,547 as of December 31, 2002 and 2001, respectively....................      11,938         21,812
Prepaid expenses and other current assets..............................................       2,019          1,810
                                                                                           --------      ---------
Total current assets...................................................................      23,511         36,900
                                                                                           --------      ---------
Property and equipment, net............................................................      14,833         21,956
Domain assets held for sale, net.......................................................         214            214
Investments............................................................................          20          1,535
Goodwill, net..........................................................................       6,266         69,135
Other intangible assets, net (excluding goodwill)......................................      14,548         38,802
Restricted investments.................................................................         279            279
Debt issuance costs, net...............................................................         350            513
Other..................................................................................         990            908
                                                                                           --------      ---------
Total assets...........................................................................    $ 61,011      $ 170,242
                                                                                           ========      =========
                        LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable.......................................................................    $ 10,235      $  16,182
Accrued expenses.......................................................................      20,853         32,702
Restructuring reserves payable.........................................................       2,362            799
Current portion of capital lease obligations...........................................         413            554
Current portion of notes payable.......................................................       4,152
Current portion of capitalized interest on notes payable...............................       4,283          1,410
Deferred revenue.......................................................................         616            759
Other current liabilities..............................................................         563            413
Net liabilities of discontinued operations.............................................         360          1,675
                                                                                           --------      ---------
Total current liabilities..............................................................      43,837         54,494
                                                                                           --------      ---------
Capital lease obligations, less current portion........................................         196            566
Capitalized interest on notes payable, less current portion............................       7,402         13,750
Notes payable..........................................................................      71,398         80,923
                                                                                           --------      ---------
Total liabilities......................................................................     122,833        149,733
                                                                                           --------      ---------
Stockholders' (deficit) equity:
Common stock, $0.01 par value; 510,000,000 shares authorized at December 31,
  2002 and 2001, respectively:
Class A--500,000,000 shares authorized at December 31, 2002 and 2001; 16,129,318
  and 14,580,211 shares issued and outstanding at December 31, 2002 and 2001,
  respectively.........................................................................         161            146
Class B--10,000,000 shares authorized at December 31, 2002 and 2001,
  respectively, 1,000,000 issued and outstanding at December 31, 2002 and 2001.........          10             10
Additional paid-in capital.............................................................     537,544        533,878
Deferred compensation..................................................................           -            (42)
Accumulated other comprehensive loss...................................................        (246)           (37)
Accumulated deficit....................................................................    (599,291)      (513,446)
                                                                                           --------      ---------
Total stockholders' (deficit) equity...................................................     (61,822)        20,509
                                                                                           --------      ---------
Commitments and contingencies
Total liabilities and stockholders' (deficit) equity...................................    $ 61,011      $ 170,242
                                                                                           ========      =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      -39-
<PAGE>

                          EasyLink Services Corporation

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

<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                                ---------------------------------------------
                                                                    2002             2001             2000
                                                                -----------       ----------       ----------
<S>                                                             <C>               <C>              <C>
Revenues.....................................................   $   114,354       $  123,929       $   52,698

Operating expenses:
Cost of revenues.............................................        57,601           75,914           49,201
                                                                -----------       ----------       ----------
Gross profit.................................................        56,753           48,015            3,497
                                                                -----------       ----------       ----------
Sales and marketing..........................................        20,151           28,218           52,122
General and administrative...................................        28,694           41,421           32,791
Product development..........................................         7,412            9,208           17,117
Amortization of goodwill and other intangible assets.........         6,751           52,068           39,977
Write-off of acquired in-process technology..................             -                -            7,650
Impairment of intangible assets..............................        78,784           62,200                -
Restructuring charges........................................         2,320           25,337            5,338
(Gain) loss on sale of businesses............................          (426)           1,804                -
                                                                -----------       ----------       ----------
                                                                    143,686          220,256          154,995
                                                                -----------       ----------       ----------
Loss from operations.........................................       (86,933)        (172,241)        (151,498)
                                                                -----------       ----------       ----------
Other income (expense):
   Interest income...........................................           189              565            4,686
   Interest expense..........................................        (4,785)         (10,383)          (9,791)
   Gain on debt restructuring and settlements................         6,558           47,960                -
   Impairment of investments.................................        (1,515)         (10,131)            (200)
   Loss on equity investment.................................             -                -           (2,100)
   Other, net................................................           641              192                -
                                                                -----------       ----------       ----------
Total other income (expense), net............................         1,088           28,203           (7,405)
                                                                -----------       ----------       ----------
Loss from continuing operations..............................       (85,845)        (144,038)        (158,903)
                                                                -----------       ----------       ----------
Loss from discontinued operations............................             -          (63,027)         (70,624)
                                                                -----------       ----------       ----------
Loss before extraordinary item...............................       (85,845)        (207,065)        (229,527)

Extraordinary gain...........................................             -              782                -
                                                                -----------       ----------       ----------
Net loss.....................................................       (85,845)        (206,283)        (229,527)
                                                                ===========       ==========       ==========
Basic and diluted net loss per share:
Loss from continuing operations..............................   $     (5.13)      $   (15.26)      $   (27.79)
Loss from discontinued operations............................             -            (6.68)          (12.35)
Extraordinary gain...........................................             -             0.09                -
                                                                -----------       ----------       ----------
Net loss.....................................................   $     (5.13)      $   (21.85)      $   (40.14)
                                                                ===========       ==========       ==========
Weighted-average basic and diluted shares outstanding            16,732,793        9,442,047        5,717,856
                                                                ===========       ==========       ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      -40-
<PAGE>

                          EasyLink Services Corporation

CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY AND COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
                                                                                (in thousands, except share data)
                                                                      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, 1999                                       3,521,846    $   35    1,000,000    $   10   $  174,722
Net loss                                                                   -         -            -         -            -
Unrealized holding gains on marketable securities                          -         -            -         -            -
Cumulative foreign exchange currency translation                           -         -            -         -            -
Comprehensive loss                                                         -         -            -         -            -
Exercise of employee stock options                                   141,497         1            -         -        2,605
Issuance of Class A common stock in connection
with 401(k) plan                                                      15,120         -            -         -          534
Issuance of Class A common stock in connection with
employee stock purchase plan                                           6,044         -            -         -           37
Exercise of warrants                                                   2,000         -            -         -           20
Issuance of Class A common stock and options to NetMoves             635,448         6            -         -      166,189
Issuance of Class A common stock and options to eLong                359,949         4            -         -       61,566
Amortization of deferred compensation, net of cancellations                -         -            -         -         (538)
Purchase of employee stock options at fair value                           -         -            -         -           63
Issuance of Class A common stock to STD                               18,569         -            -         -        2,867
Issuance of Class A common stock in lieu of compensation              10,435         -            -         -        1,800
Adjustment of Class A common stock in connection with
partner agreement                                                      (815)         -            -         -          (84)
Issuance of Class A common stock to Bantu                            100,000         1            -         -        7,051
Issuance of Class A common stock in connection with Asia.com
acquisitions                                                         192,618         2            -         -       17,148
Issuance of Class A common stock to 3Cube                             25,505         -            -         -        1,516
Issuance of Class A common stock in connection with
messaging acquisitions                                                71,020         1            -         -        4,275
Issuance of Class A common stock to CheetahMail                       10,222         -            -         -          872
Issuance of Class A common stock in connection with purchase
of domain names                                                        1,375         -            -         -          117
Issuance of Class A common stock to BulletN.net                       36,443         1            -         -        3,108
Issuance of Class A common stock as payment for software and
software licenses                                                     31,644         1            -         -        2,363
                                                                   ---------    ------    ---------    ------   ----------
Balance at December 31, 2000                                       5,178,920    $   52    1,000,000    $   10   $  446,231
                                                                   ---------    ------    ---------    ------   ----------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                                               Accumulated
                                                                                                                  Other
                                                                              Subscriptions    Deferred      Comprehensive
                                                                               Receivable     Compensation        Loss
                                                                                ---------     ------------    -------------
<S>                                                                                <C>            <C>                 <C>
Balance at December 31, 1999                                                       $    -         $ (1,117)           $   0
Net loss                                                                                -                -                -
Unrealized holding gains on marketable securities                                       -                -               62
Cumulative foreign exchange currency translation                                        -                -               (4)
                                                                                ---------     ------------    -------------
Comprehensive loss                                                                      -                -               58
                                                                                ---------     ------------    -------------
Exercise of employee stock options                                                    (33)               -                -
Issuance of Class A common stock in connection
with 401(k) plan                                                                        -                -                -
Issuance of Class A common stock in connection with
employee stock purchase plan                                                            -                -                -
Exercise of warrants                                                                    -                -                -
Issuance of Class A common stock and options to NetMoves                                -                -                -
Issuance of Class A common stock and options to eLong                                   -                -                -
Amortization of deferred compensation, net of cancellations                             -              903                -
Purchase of employee stock options at fair value                                        -                -                -
Issuance of Class A common stock to STD                                                 -                -                -
Issuance of Class A common stock in lieu of compensation                                -                -                -
Adjustment of Class A common stock in connection with
partner agreement                                                                       -                -                -
Issuance of Class A common stock to Bantu                                               -                -                -
Issuance of Class A common stock in connection with Asia.com
acquisitions                                                                            -                -                -
Issuance of Class A common stock to 3Cube                                               -                -                -
Issuance of Class A common stock in connection with
messaging acquisitions                                                                  -                -                -
Issuance of Class A common stock to CheetahMail                                         -                -                -
Issuance of Class A common stock in connection with purchase
of domain names                                                                         -                -                -
Issuance of Class A common stock to BulletN.net                                         -                -                -
Issuance of Class A common stock as payment for software and
software licenses                                                                       -                -                -
                                                                            -------------     ------------    -------------
Balance at December 31, 2000                                                       $  (33)        $   (214)           $  58
                                                                            -------------     ------------    -------------
</TABLE>

                                      -41-
<PAGE>

<TABLE>
<CAPTION>
                                                                                             Total
                                                                        Accumulated      Stockholders'
                                                                          Deficit      Equity/(Deficit)
                                                                        -----------    ----------------
<S>                                                                     <C>            <C>
Balance at December 31, 1999                                            $   (77,636)   $         96,014
Net loss                                                                   (229,527)           (229,527)
Unrealized holding gains on marketable securities                                 -                  62
Cumulative foreign exchange currency translation                                  -                  (4)
                                                                        -----------    ----------------
Comprehensive loss                                                         (229,527)           (229,469)
                                                                        -----------    ----------------
Exercise of employee stock options                                                -               2,573
Issuance of Class A common stock in connection
with 401(k) plan                                                                  -                 534
Issuance of Class A common stock in connection with
employee stock purchase plan                                                      -                  37
Exercise of warrants                                                              -                  20
Issuance of Class A common stock and options to NetMoves                          -             166,195
Issuance of Class A common stock and options to eLong                             -              61,570
Amortization of deferred compensation, net of cancellations                       -                 365
Purchase of employee stock options at fair value                                  -                  63
Issuance of Class A common stock to STD                                           -               2,867
Issuance of Class A common stock in lieu of compensation                          -               1,800
Adjustment of Class A common stock in connection with
partner agreement                                                                 -                 (84)
Issuance of Class A common stock to Bantu                                         -               7,052
Issuance of Class A common stock in connection with Asia.com
acquisitions                                                                      -              17,150
Issuance of Class A common stock to 3Cube                                         -               1,516
Issuance of Class A common stock in connection with
messaging acquisitions                                                            -               4,276
Issuance of Class A common stock to CheetahMail                                   -                 872
Issuance of Class A common stock in connection with purchase
of domain names                                                                   -                 117
Issuance of Class A common stock to BulletN.net                                   -               3,109
Issuance of Class A common stock as payment for software and
software licenses                                                                 -               2,364
                                                                        -----------    ----------------
Balance at December 31, 2000                                            $  (307,163)   $        138,941
                                                                        -----------    ----------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -42-
<PAGE>

                          EasyLink Services Corporation

 Statement of Stockholders' Equity (Deficit) and Comprehensive Loss (continued)

<TABLE>
<CAPTION>
                                             (in thousands, except share data)
                                                                        Class A Common           Class B Common
                                                                             Stock                    Stock           Additional
                                                                  -----------------------    ---------------------     Paid-in
                                                                    Shares         Amount      Shares       Amount     Capital
                                                                  ----------       ------    ---------      ------    ----------
<S>                                                               <C>              <C>       <C>            <C>       <C>
Balance at December 31, 2000                                       5,178,920       $   52    1,000,000      $   10    $  446,231
Net loss                                                                   -            -            -           -             -
Realized holding gains on marketable securities                            -            -            -           -             -
Cumulative foreign exchange currency translation                           -            -            -           -             -
Comprehensive loss                                                         -            -            -           -             -
Reversal of stock subscription receivable                                  -            -            -           -             -
Exercise of employee stock options                                     2,000            -            -           -            10
Issuance of Class A common stock in connection
with 401(k) plan                                                      75,209            1            -           -           411
Issuance of Class A common stock in connection with
employee stock purchase plan                                           3,869            -            -           -            19
Reversal of deferred compensation related to employee
terminations                                                               -            -            -           -          (193)
Issuance of Class A common stock to certain employees                 81,456            1            -           -         1,029
Issuance of Class A common stock in connection with
STI acquisition                                                    1,876,618           19            -           -        30,828
Issuance of Class A common stock in connection with
private placement                                                    300,000            3            -           -         2,997
Issuance of Class A common stock in connection with
debt restructuring                                                 2,810,937           28            -           -        17,120
Issuance of Class A common stock in connection with
financing                                                          1,460,000           15            -           -         5,825
Issuance of Class A common stock for investments                      22,222            -            -           -           285
Issuance of Class A common stock in connection with
Asia.com settlements                                                  33,292            -            -           -           321
Issuance of Class A common stock to in connection with
exchange of senior notes                                             155,609            2            -           -         2,725
Issuance of Class A common stock in connection with
India.com employees                                                   10,590            -            -           -           106
Issuance of Class A common stock in connection with
contingent consideration to Tcom employees                           162,083            2            -           -         1,258
Issuance of Class A common stock in connection with
My India acquisition                                                  19,600            -            -           -           272
Issuance of Class A common stock in connection with
vendor settlements                                                   196,604            2            -           -         1,156
Issuance of Class A common stock as payment for promissory
note                                                                 103,359            1            -           -           474
Issuance of Class A common stock to minority interest
shareholders in exchange for preferred stock                       1,420,400           14            -           -         6,094
Issuance of Class A common stock to TII                              300,000            3            -           -         1,887
Issuance of Class A common stock in connection with
New Millenium                                                         19,591            -            -           -           120
Issuance of Class A common stock in connection with
Lansoft/Allegro merger agreements                                     53,319            -            -           -           259
Issuance of Class A common stock in lieu of cash
interest on debt                                                     294,533            3            -           -           637
Interest expense related to Senior Convertible Notes payable
in common stock                                                            -            -            -           -         1,506
Beneficial conversion in connection with debt restructuring                -            -            -           -         1,092
Issuance of warrants in connection with debt restructuring                 -            -            -           -        10,957
Transfer of officer's shares to certain employees in lieu of
compensation                                                               -            -            -           -           452
                                                                  ----------       ------    ---------      ------    ----------
Balance at December 31, 2001                                      14,580,211       $  146    1,000,000      $   10    $  533,878
                                                                  ----------       ------    ---------      ------    ----------
</TABLE>

                                      -43-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                                      Accumulated
                                                                                                                        Other
                                                                                   Subscriptions       Deferred      Comprehensive
                                                                                     Receivable      Compensation        Loss
                                                                                   -------------     ------------    -------------
<S>                                                                                       <C>            <C>                 <C>
Balance at December 31, 2000                                                              $  (33)        $   (214)           $  58
Net loss                                                                                       -                -                -
Realized holding gains on marketable securities                                                -                -              (62)
Cumulative foreign exchange currency translation                                               -                -              (33)
                                                                                   -------------     ------------    -------------
Comprehensive loss                                                                             -                -              (95)
                                                                                   -------------     ------------    -------------
Reversal of Stock Subscription Receivable                                                     33                -                -
Exercise of employee stock options                                                             -                -                -
Issuance of Class A common stock in connection
with 401(k) plan                                                                               -                -                -
Issuance of Class A common stock in connection with
employee stock purchase plan                                                                   -                -                -
Reversal of deferred compensation related to employee
terminations                                                                                   -              214                -
Issuance of Class A common stock to certain employees                                          -              (42)               -
Issuance of Class A common stock in connection with
STI acquisition                                                                                -                -                -
Issuance of Class A common stock in connection with
private placement                                                                              -                -                -
Issuance of Class A common stock in connection with
debt restructuring                                                                             -                -                -
Issuance of Class A common stock in connection with
financing                                                                                      -                -                -
Issuance of Class A common stock for investments                                               -                -                -
Issuance of Class A common stock in connection with
Asia.com settlements                                                                           -                -                -
Issuance of Class A common stock in connection with
exchange of senior notes                                                                       -                -                -
Issuance of Class A common stock in connection with
India.com employees                                                                            -                -                -
Issuance of Class A common stock in connection with
contingent consideration to Tcom employees                                                     -                -                -
Issuance of Class A common stock in connection with
My India acquisition                                                                           -                -                -
Issuance of Class A common stock in connection with
vendor settlements                                                                             -                -                -
Issuance of Class A common stock as payment for promissory
note                                                                                           -                -                -
Issuance of Class A common stock to minority interest
shareholders in exchange for preferred stock                                                   -                -                -
Issuance of Class A common stock to TII                                                        -                -                -
Issuance of Class A common stock in connection with
New Millenium                                                                                  -                -                -
Issuance of Class A common stock in connection with
Lansoft/Allegro merger agreements                                                              -                -                -
Issuance of Class A common stock in lieu of cash
interest on debt                                                                               -                -                -
Interest expense related to Senior Convertible Notes payable
in common stock                                                                                -                -                -
Beneficial conversion in connection with debt restructuring                                    -                -                -
Issuance of warrants in connection with debt restructuring                                     -                -                -
Transfer of officer's shares to certain employees in lieu of
compensation                                                                                   -                -                -
                                                                                   -------------     ------------    -------------
Balance at December 31, 2001                                                                   -         $    (42)           $ (37)
                                                                                   -------------     ------------    -------------
</TABLE>

                                      -44-
<PAGE>

<TABLE>
<CAPTION>
                                                                                           Total
                                                                       Accumulated   Stockholders'Equity/
                                                                         Deficit          (Deficit)
                                                                      ------------   --------------------
<S>                                                                   <C>            <C>
Balance at December 31, 2000                                          $   (307,163)  $            138,941
Net loss                                                                  (206,283)              (206,283)
Realized holding gains on marketable securities                                  -                    (62)
Cumulative foreign exchange currency translation                                 -                    (33)
                                                                      ------------   --------------------
Comprehensive loss                                                        (206,283)              (206,378)
                                                                      ------------   --------------------

Reversal of Stock Subscription Receivable                                        -                     33
Exercise of employee stock options                                               -                     10
Issuance of Class A common stock in connection with
401(k) plan                                                                      -                    412
Issuance of Class A common stock in connection with
employee stock purchase plan                                                     -                     19
Reversal of deferred compensation related to employee
terminations                                                                     -                     21
Issuance of Class A common stock to certain employees                            -                    988
Issuance of Class A common stock in connection with
STI acquisition                                                                  -                 30,847
Issuance of Class A common stock in connection with
private placement                                                                -                  3,000
Issuance of Class A common stock in connection with
debt restructuring                                                               -                 17,148
Issuance of Class A common stock in connection with
financing                                                                        -                  5,840
Issuance of Class A common stock for investments                                 -                    285
Adjustment of Class A common stock in connection with
Asia.com settlements                                                             -                    321
Issuance of Class A common stock in connection with
exchange of senior notes                                                         -                  2,727
Issuance of Class A common stock in connection with
India.com employees                                                              -                    106
Issuance of Class A common stock in connection with
contingent consideration to Tcom employees                                       -                  1,260
Issuance of Class A common stock in connection with
My India acquisition                                                             -                    272
Issuance of Class A common stock in connection with
vendor settlements                                                               -                  1,158
Issuance of Class A common stock as payment for promissory
note                                                                             -                    475
Issuance of Class A common stock to minority interest
shareholders in exchange for preferred stock                                     -                  6,108
Issuance of Class A common stock to TII                                          -                  1,890
Issuance of Class A common stock in connection with
New Millenium                                                                    -                    120
Issuance of Class A common stock in connection with
Lansoft/Allegro merger agreements                                                -                    259
Issuance of Class A common stock to in lieu of cash
interest on debt                                                                 -                    640
Interest expense related to Senior Convertible notes payable
in common stock                                                                  -                  1,506
Beneficial conversion in connection with debt restructuring                      -                  1,092
Issuance of warrants in connection with debt restructuring                       -                 10,957
Transfer of officer's shares to certain employees in lieu of
compensation                                                                     -                    452
                                                                      ------------   --------------------
Balance at December 31, 2001                                          $   (513,446)  $             20,509
                                                                      ------------   --------------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -45-
<PAGE>

                          EasyLink Services Corporation

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

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

                                      -46-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                       Accumulated
                                                                                                         Other
                                                                    Subscriptions       Deferred      Comprehensive
                                                                      Receivable      Compensation        Loss
                                                                    -------------     ------------    -------------
<S>                                                                         <C>            <C>               <C>
Balance at December 31, 2001                                                $   0          $   (42)          $  (37)
Net loss                                                                        -                -                -
Realized holding gains on marketable securities                                 -                -
Cumulative foreign exchange currency translation                                -                -             (209)
                                                                    -------------     ------------    -------------
Comprehensive loss                                                              -                -             (209)
                                                                    -------------     ------------    -------------
Reversal of Stock Subscription Receivable                                       -                -
Exercise of employee stock options                                              -                -
Issuance of Class A common stock in connection
with 401(k) plan                                                                -                -                -
Issuance of Class A common stock to certain employees                           -               42                -
Issuance of Class A common stock in connection with
employee termination                                                            -                -                -
Issuance of Class A common stock in connection with
private placement                                                               -                -                -
Issuance of Class A common stock in connection with
India.com contingent liability                                                  -                -                -
Issuance of Class A common stock to Fir Tree                                    -                -                -
Issuance of Class A common stock in connection with
MyIndia.com sale                                                                -                -                -
Issuance of Class A common stock in connection with
vendor settlements                                                              -                -                -
Issuance of Class A common stock issued to Lohoo                                -                -                -
Issuance of Class A common stock to third party vendors                         -                -                -
Issuance of Class A common stock in lieu of cash
interest on debt                                                                -                -                -
Interest expense related to Senior Convertible Notes payable
in common stock                                                                 -                -                -
Interest expense related to Capitalized Interest                                -                -                -

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


                                      -47-
<PAGE>

<TABLE>
<CAPTION>
                                                                                               Total
                                                                        Accumulated    Stockholders' (Deficit)/
                                                                           Deficit             Equity
                                                                        -----------    ------------------------
<S>                                                                     <C>                  <C>
Balance at December 31, 2001                                            $  (513,446)         $           20,509
Net loss                                                                    (85,845)                    (85,845)
Realized holding gains on marketable securities                                   -                           -
Cumulative foreign exchange currency translation                                  -                        (208)
                                                                        -----------          ------------------
Comprehensive loss                                                          (85,845)                    (86,054)
                                                                        -----------          ------------------
Issuance of Class A common stock in connection with
401(k) plan                                                                       -                         437
Issuance of Class A common stock to certain employees                             -                          42
Issuance of Class A common stock in connection with
employee terminations                                                             -                          84
Issuance of Class A common stock in connection with
private placement                                                                 -                           -
Issuance of Class A common stock in connection with
MyIndia.com contingent liability                                                  -                           6
Adjustment of Class A common stock in connection with
MyIndia.com sale                                                                  -                         315
Issuance of Class A common stock in connection with
vendor settlements                                                                -                         104
Issuance of Class A common stock issued to Lohoo                                  -                         203
Issuance of Class A common stock issued to third party vendors                    -                          78
Issuance of Class A common stock in lieu of cash
interest on debt                                                                  -                       1,830
Interest expense related to Senior Convertible notes payable
in common stock                                                                   -                         330
Interest expense related to Capitalized Interest                                  -                         294

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

                                      -48-
<PAGE>

                          EasyLink Services Corporation

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                               Year Ended December 31,
                                                                                     ------------------------------------------
                                                                                        2002            2001            2000
                                                                                     ---------       ----------       ---------
<S>                                                                                  <C>             <C>              <C>
Cash flows from operating activities:
Net loss........................................................................     $ (85,845)      $ (206,283)      $(229,527)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss from discontinued operations...............................................             -           63,027          70,624
Amortization of partner advances................................................             -            2,304          12,968
Non-cash compensation...........................................................             -              479               -
Non-cash interest...............................................................         1,830            1,030               -
Depreciation and amortization...................................................        10,417           16,811          16,009
Amortization of goodwill and other intangible assets............................         8,039           52,068          39,977
Provision for doubtful accounts.................................................         2,596            7,224           1,493
Provision for restructuring and impairments.....................................         2,320           25,337           5,538
Extraordinary gain..............................................................             -             (782)              -
Gain on debt restructuring and settlements......................................        (6,558)         (47,960)              -
Loss on equity investment.......................................................             -                -           2,100
Amortization of domain assets...................................................             -              233             773
Amortization of deferred compensation...........................................            42              468             365
Amortization of debt issuance costs/discount....................................           166              375             474
Write-off of acquired in-process technology.....................................             -                -           7,650
Write-off of fixed assets.......................................................           204              956               -
Non-cash advertising............................................................             -                -            (125)
Share of loss from equity investment............................................             -                -             118
(Gain) loss on sale of businesses...............................................          (426)           1,804               -
Impairments of goodwill.........................................................        78,784           62,200               -
Impairments of investments......................................................         1,515           10,131               -
Issuance of common stock for India.com preferred stock..........................             -            6,108               -
Changes in operating assets and liabilities, net of effect of
   acquisitions and discontinued operations:
   Accounts receivable, net.....................................................         7,278            2,276          (4,783)
   Prepaid expenses and other current assets....................................          (210)           3,216           3,224
   Other assets.................................................................           (83)             375             207
   Accounts payable, accrued expenses and other current liabilities.............       (18,203)          (2,089)         (4,513)
   Deferred revenue.............................................................          (143)            (711)          1,118
                                                                                     ---------       ----------       ---------
Net cash provided by (used) in operating activities.............................         1,723           (1,403)        (76,310)
                                                                                     ---------       ----------       ---------
Cash flows from investing activities:
Purchases of marketable securities..............................................             -                -        (116,295)
Proceeds from sales and maturities of marketable securities.....................             -           12,533         110,981
Purchases of domain assets......................................................             -                -          (1,130)
Purchase of restricted investment...............................................             -                -            (710)
Purchases of intangible assets..................................................             -           (1,756)         (1,426)
Purchase of investments.........................................................             -                -          (2,304)
Proceeds from sale leaseback....................................................             -                -           1,448
Proceeds from sales of investments..............................................             -            1,950               -
Proceeds from sales of businesses...............................................           426            4,641               -
Purchases of property and equipment, including capitalized software.............        (3,498)          (5,267)         (5,314)
Acquisitions, net of cash (acquired) paid.......................................             -          (15,308)          1,970
                                                                                     ---------       ----------       ---------
Net cash used in investing activities...........................................        (3,072)          (3,207)        (12,780)
                                                                                     ---------       ----------       ---------
Cash flows from financing activities:
Net proceeds from issuance of Class A common stock..............................             -            8,725               -
Proceeds from issuance of Class A common stock in
   connection with the exercise and purchase of warrants and options............             -               10           2,656
Issuance of shares to employee benefit plans....................................           437              431             570
Proceed from issuance of convertible notes, net.................................             -           14,110          96,139
Payments under capital lease obligations........................................          (585)          (5,137)         (8,415)
Proceeds from notes payable.....................................................             -            2,441               -
Principal payments of notes payable.............................................          (821)          (3,870)         (4,825)
Interest payments on restructured notes.........................................          (897)               -               -
Payments under domain asset purchase obligations................................             -                -            (452)
                                                                                     ---------       ----------       ---------
Net cash (used in) provided by financing activities.............................        (1,866)          16,710          85,673
                                                                                     ---------       ----------       ---------
Effect of foreign exchange rate changes on cash and cash equivalents............          (209)             (34)             (3)
                                                                                     ---------       ----------       ---------
Net (decrease) increase in cash and cash equivalents............................        (3,424)          12,066          (3,420)

Cash (used in) discontinued operations..........................................          (300)         (3,119)         (29,119)

   Cash and cash equivalents at beginning of the year...........................        13,278            4,331          36,870
                                                                                     ---------       ----------       ---------
   Cash and cash equivalents at the end of the year.............................     $   9,554       $   13,278       $   4,331
                                                                                     =========       ==========       =========
</TABLE>

                                      -49-
<PAGE>

Supplemental disclosure of non-cash information:

         During the years ended December 31, 2002, 2001 and 2000, the Company
         paid approximately $3.1 million, $6.5 million and $6.7 million,
         respectively, for interest. Through the issuance of 888,810 and 294,533
         shares of Class A common stock, the Company paid approximately $1.83
         million and $640,000 in interest for the year ended December 31, 2002
         and 2001, respectively.

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

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

         Non-cash investing activities:

         During the year ended December 31, 2001 and 2000, the Company issued
         22,222 and 16,523 shares, respectively, of its Class A common stock in
         connection with certain investments. These transactions resulted in a
         non-cash investing activities of $.4 million and $14.0 million,
         respectively (see Note 6). During the year ended December 31, 2001 and
         2000, the Company issued 1,896,218 and 1,259,035 shares, respectively,
         of its Class A common stock plus stock options in connection with
         certain acquisitions. These transactions resulted in non-cash investing
         activities of $31.1 million and $249.2 million, respectively (see Note
         2). During the year ended December 31, 2000, the Company purchased an
         equity interest in an Internet company by issuing 25,505 shares of
         Class A common stock. This transaction resulted in non-cash investing
         activities of $1.5 million . During the year ended December 31, 2000,
         the Company issued 31,644 shares of its Class A common stock in
         exchange for software and licenses. These transactions resulted in
         non-cash investing activities of approximately $2.4 million. During the
         year ended December 31, 2000 the Company purchased domain assets with
         1,375 shares of Class A common stock. This transaction resulted in a
         non-cash investing activity of $117 thousand.

         No shares were issued in connection with investing activities during
         the year ended December 31, 2002.

         Non-cash financing activities:

         During the year ended December 31, 2001, the Company issued 2,810,937
         in connection with its debt restructuring. This resulted in non-cash
         financing activities of $17.1 million (see Note 7). The Company entered
         into various capital leases for computer equipment. These capital lease
         obligations resulted in non-cash financing activities aggregating $0.2
         million and $16.7 million for the years ended December 31, 2001 and
         2000, respectively.

See accompanying notes to consolidated financial statements.

                                      -50-
<PAGE>

                          EasyLink Services Corporation

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

(1)      Summary of Operations and Significant Accounting Policies

(a)      Summary of Operations

On April 2, 2001, the Company changed its name to EasyLink Services Corporation.
The Company offers a broad range of information exchange services to businesses
and service providers, including transaction delivery services such as
electronic data interchange or "EDI," telex, desktop fax, broadcast and
production messaging services; managed e-mail and groupware hosting services;
and services that protect corporate e-mail systems such as virus protection,
spam control and content filtering services.

Until March 30, 2001, the Company also offered advertising services and consumer
e-mail services to Web sites, ISP's and direct to consumers through its web site
www.mail.com. On October 26, 2000, the Company announced its intention to sell
its advertising network business and stated that it will focus exclusively on
its established outsourced messaging business. The Company also announced that
as a result of its decision to focus on its outsourced messaging business, it
was streamlining the organization, taking advantage of lower cost areas and
further integrating its technological and operational infrastructures. On March
30, 2001, the Company completed the sale of its advertising network and consumer
e-mail business to Net2Phone. See Note 4 for additional information.

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

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

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. To date, the Company has
suffered recurring losses from operations since inception and has a working
capital deficiency that raise substantial doubt about its ability to continue as
a going concern. As shown in the accompanying consolidated financial statements,
the Company incurred net losses of $85.8 million, $206.3 million and $229.5
million, respectively, for the three-year period ended December 31, 2002, has an
accumulated deficit of $599.3 million as of December 31, 2002 and has a
stockholders' deficit of $61.8 million as of December 31, 2002. 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 ultimately to
achieve profitable operations. Throughout 2001, management improved the
Company's operations and liquidity through a variety of actions, including the
acquisition and integration of STI/EasyLink Services, a reduction of its
workforce, the sale or closure of all of its World.com businesses, and the sale
of its advertising network. In addition, management raised over $20 million in
cash financing during 2001. In 2002, Management continued the process of
improving the Company's operations through further cost reductions to the point
that net cash of $1.7 million was provided from operations for the year.
Management is continuing the process of further reducing operating costs and
increasing its sales efforts and is seeking to eliminate debt. There can be no
assurance that the Company will be successful in these efforts.

<PAGE>


(c)      Principles of Consolidation and Basis of Presentation

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

WORLD.com, a wholly owned subsidiary, and its majority-owned subsidiaries have
been reflected as discontinued operations and prior year amounts have been
reclassified to reflect such treatment (See Note 10).

                                      -51-
<PAGE>

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

(d)      Use of Estimates

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

(e)      Cash and Cash Equivalents

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

(f)      Letter of Credit and Restricted Investment

At December 31, 2002 and 2001, the Company maintained approximately $0.3 million
in letters of credit ("LC") with various parties, which are included in
restricted investments in the accompanying consolidated balance sheet.

(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)      Domain Assets Held For Sale and Registration Fees

A domain name is the part of an email address that comes after the @ sign (for
example, if membername@mail.com is the email address then "mail.com" is the
domain name). Domain assets represent the purchase of domain names and are
amortized using the straight-line method over their economic useful lives, which
had been estimated to be five years. During the first quarter of 2001, the
e-mail addresses for many of the domain names were sold to Net2Phone as part of
the sale of the advertising network (see Note 4). The net carrying value of
these assets at the time of sale was approximately $2.3 million.

All domain assets are classified as held for sale at December 31, 2002 and 2001
and are no longer being amortized.

(i)      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 and
amortization of the investor's net excess investment over its equity in each
investee's net assets 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.

<PAGE>

(j)      Accounting for Impairment of Long-Lived and Intangible 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 Asset". SFAS 142 eliminates the amortization of goodwill and
indefinite-lived intangible assets, addresses the amortization of intangible
assets with finite lives and addresses impairment testing and recognition for
goodwill and intangible assets. SFAS No. 144 establishes a single model for the
impairment of long-lived assets. We assess goodwill 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 nonamortizable
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.

(k)      Intangible Assets

Intangible assets include goodwill, trademarks, customer lists, technology and
other intangibles. Goodwill represents the excess of the purchase price of
acquired businesses over the estimated fair value of the tangible and
identifiable intangible net assets acquired. In 2001 and 2000, goodwill
amortization was recorded using the straight-line method over periods ranging
from three to ten years. Effective January 1, 2002, the Company adopted the
provisions of Financial Accounting Standards Board (FASB) No. 142 Goodwill &
Other Intangible Assets, which ceases goodwill amortization and requires an
annual assessment of goodwill for impairment in the absence of an indicator of
possible impairment. Trademarks and customer lists are being amortized on a
straight-line basis over ten years. Technology is being amortized on a
straight-line basis over its estimated useful lives from three to five years.
See note 7.

                                      -52-
<PAGE>

(l)      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.

(m)      Revenue Recognition

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

Facsimile license revenue is recognized over the average estimated customer life
of 3 years. The Company also licenses software under noncancellable license
agreements. License fee revenues are recognized when a noncancellable license
fee is in force, the product has been delivered and accepted, the license fee is
fixed, vendor specific objective evidence exists for the undelivered element and
collectibility is reasonably assured. Maintenance and support revenues are
deferred and recognized ratably over the term of the related agreements. The
Company also may host the software if requested by the customer. The customer
has the option to decide who hosts the application. If the Company provides the
hosting, revenue from hosting is ratably recognized over the hosting periods.
Pursuant to Emerging Issues Task Force 00-3, "Application of AICPA Statement of
Position 97-2 to Arrangements That Include the Right to Use Software on Another
Entity's Hardware", because the customer has the option of hosting the software
itself or contracting with an unrelated third party to host the software, the
hosting fee is ratably recognized over the hosting period in accordance with the
respective accounting guidance.

The Company also enters into supplier arrangements providing bulk messaging
services, at a fixed price and minimum quantity to certain customers for a
specified period of time. Revenues earned under such arrangements are recognized
over the term of the arrangement assuming collection of the resultant receivable
is probable.

Prior to the sale of the Advertising Network Business on March 30, 2001 (see
Note 4), advertising revenues were derived principally from the sale of banner
advertisements. Revenue on banner advertisements was recognized ratably as the
advertisements or respective impressions were delivered either on a "cost per
thousand" or "cost per action" basis. Revenue on upfront placement fees and
promotions was deferred and recognized over the term of the corresponding
agreement.

The Company also traded advertisements on its Web properties in exchange for
advertisements on the Internet sites of other companies as part of the ad
network business. Barter revenues and expenses were recorded at the fair market
value of services provided or received; whichever is more determinable in the
circumstances. Revenue from barter transactions were recognized as income when
advertisements were delivered on the Company's Web properties. Barter expense
was recognized when the Company's advertisements are run on other companies' Web
sites, which is typically in the same period when barter revenue was recognized.
If the advertising impressions were received from the customer prior to the
Company delivering the agreed-upon advertising impressions, a liability was
recorded, and if the Company delivered the advertising impressions to the other
companies' Web sites prior to receiving the agreed-upon advertising impressions,
a prepaid expense was recorded. At December 31, 2002, 2001 and 2000, the Company
did not record a liability for barter advertising to be delivered. Barter
revenues, which are a component of advertising revenue, amounted to $0.6 million
and $4.3 million for the years ended December 31, 2001 and 2000, respectively.
For the years ended December 31, 2001 and 2000, barter expenses, which is a
component of cost of revenues, were approximately the same $0.6 million and $4.3
million, respectively.

<PAGE>


The advertising network subscription services were deferred and recognized
ratably over the term of the subscription periods of one, two and five years as
well as eight years for its lifetime subscriptions. Commencing March 10, 1999,
the Company no longer offered lifetime memberships and only offered monthly and
annual subscriptions. The eight-year amortization period for lifetime
subscriptions was based on the weighted-average expected usage period of a
lifetime member. The Company offered 30-day trial periods for certain
subscription services. The Company only recognized revenue after the 30-day
trial period expires. Deferred revenues principally consist of subscription fees
received from members for use of the Company's premium email services. The
Company was obligated to provide any enhancements or upgrades it developed and
other support in accordance with the terms of the applicable Mail.com Partner
agreements. The Company provided an allowance for credit card chargebacks and
refunds on its subscription services based upon historical experience. The
Company provided pro rated refunds and chargebacks to subscription members who
elect to discontinue their service. The actual amount of refunds and chargebacks
approximated management's expectations for all periods presented. Deferred
revenue represents payments that have been received in advance of the services
being performed.

Other revenues includes revenues from the sale of domain names, which are
recognized at the time when the ownership of the domain name is transferred
provided that no significant Company obligation remains and collection of the
resulting receivable is probable. To date, such revenues have not been material.

                                      -53-
<PAGE>

(n)      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 e-mail products on our partners' and our email web sites.

(o)      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.

The Company has entered into certain partner agreements whereby the Company
compensates its partners based upon a percentage of net revenues generated by
the Company on its partners' email Web sites. The Company's partner payments are
included as a component of sales and marketing expenses in the same period the
revenues are recorded.

(p)      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, restricted
investments, marketable securities, accounts receivable, notes payable and
convertible notes payable. At December 31, 2002 and December 31, 2001, the fair
value of cash, cash equivalents, restricted investments, marketable securities
and accounts receivable approximated their financial statement carrying amount
because of the short-term maturity of these instruments. The recorded values of
notes payable and convertible notes payable approximate their fair values, as
interest approximates market rates with the exception of the Convertible
Subordinated Notes payable with a carrying value of $24.1 million, which has an
estimated fair value of $6.0 million at December 31, 2002 based upon quoted
market prices.

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 2002 or 2001. Revenues from the Company's five largest customers accounted
for an aggregate of 6%, 3% and 8% of the Company's total revenues in 2002, 2001
and 2000, respectively.

(q)      Stock-Based Compensation Plans

In 2002, 2001 and 2000, we had stock option plans, which are described more
fully in Note 16. As allowed by SFAS No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, we have retained the compensation
measurement principles of Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and its related interpretations for
stock options. SFAS No. 148 also requires more prominent and more frequent
disclosures in both interim and annual financial statements about the method of
accounting for stock-based compensation and the effect of the method used on
reporting results. We adopted the disclosure provisions of SFAS No. 148 as of
December 31, 2002 and continue 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 loss and net loss per share if we
had applied the fair value recognition provisions of SFAS No. 123 to stock-based
employee compensation.

<TABLE>
<CAPTION>
($ in thousands, except per share amounts)                                    Year ended December 31,
                                                                              -----------------------
                                                                  2002                  2001                     2000
                                                              ------------           -----------              -----------
<S>                                                           <C>                    <C>                      <C>
Net loss
   As reported.................................               $  (85,845)            $  (206,283)             $  (229,527)
   Pro forma...................................               $  (95,188)            $  (213,893)             $  (252,951)
Basic and diluted net loss per share:
   As reported.................................               $    (5.13)            $    (21.85)             $    (40.14)
   Pro forma...................................               $    (5.69)            $    (22.65)             $    (44.24)
</TABLE>

The resulting effect on the pro forma net loss disclosed for the years ended
December 31, 2002, 2001 and 2000 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 only three, four and five years,
respectively, of grants and related vesting, while subsequent years will include
additional grants and vesting. For purposes of pro-forma disclosure, the
estimated fair value of the options is amortized to expense over the options'
vesting period.

<PAGE>


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 2002: dividend yield of zero (0%) percent, average risk-free
interest rate of 4.1%, expected life of 5 years and volatility of 136%, 2001:
dividend yield of zero (0%) percent, average risk-free interest rate of 4.4%,
expected life of 5 years and volatility of 115%, in 2000: dividend yield of zero
(0%) percent, average risk-free interest rate of 6.10%, expected life of 5 years
and volatility of 107%.

(r)      Basic and Diluted Net Loss Per Share

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

                                      -54-
<PAGE>

Diluted net loss per common share for the years ended December 31, 2002, 2001
and 2000, does not include the effects of employee options to purchase
2,773,446, 1,855,781 and 1,334,429 shares of common stock, respectively, and
1,843,982, 1,843,982 and 22,687 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.

(s)      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.

(t)      Recent Accounting Pronouncements

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

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

                                      -55-
<PAGE>

<TABLE>
<CAPTION>
                                                                            For the year ended December 31,
                                                                     2002                 2001                 2000
                                                                   --------            ---------            ---------
<S>                                                                <C>                 <C>                   <C>
Loss from continuing operations - pre FAS 145                      $(85,845)           $(191,145)           $(158,903)
Extraordinary gain reclassified to Gain on
 debt restructuring and supplements                                       -               47,960                    -
Extraordinary loss reclassified to operating expenses                     -                 (853)                   -
                                                                   --------            ---------            ---------
Loss from continuing operations - post FAS 145                     $(85,845)           $(144,038)           $(158,903)
Loss per share from continuing operations - pre FAS 145            $  (5.13)           $  (20.24)           $  (27.79)
Loss per share from continuing operations - post FAS 145           $  (5.13)           $  (15.26)           $  (27.79)
Change in loss per share on continuing operations                  $      -            $    4.98            $       -
</TABLE>

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

(u)      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). Net gains and losses from foreign currency
transactions are included in the 2002, 2001 and 2000 consolidated statements of
operations and were not significant.

(2)      Acquisitions

GN Comtext

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

Swift Telecommunications, Inc. And Easylink Services

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

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

<PAGE>


At the closing of the acquisition by STI of the EasyLink Services business from
AT&T, the Company advanced $14 million to STI in the form of a loan, the
proceeds of which were used to fund part of the $15 million cash portion of the
purchase price to AT&T. Upon the closing of the acquisition of STI, the Company
assumed a $35 million note issued by STI to AT&T. The $35 million note was
secured by the assets of STI, including the EasyLink Services business, and the
shares of EasyLink Class A common stock issued to the sole shareholder (who
became an officer and director of the Company) in the merger. The AT&T note was
payable in equal monthly installments over four years, bearing interest at the
rate of 10% per annum for the first six months of the note. Thereafter the rate
was to be adjusted every six months equal to 1% plus the prime rate as listed in
the Wall Street Journal on such date of adjustment. AT&T subsequently entered
into an agreement with the Company to restructure the note. On November 27,
2001, the note was converted into a package of securities consisting of a
promissory note in the principal amount of $10 million, 1 million shares of
Class A common stock and warrants to purchase 1 million shares of Class A common
stock. The $10 million note is secured by the same security interests that
secured the $35 million note. The warrants have an exercise price equal to $6.10
per share, subject to adjustment. See Note (8) Notes Payable for a description
of the restructuring, the promissory note and the warrants.

                                      -56-
<PAGE>

Upon the closing of the acquisition of STI, the Company paid to the sole
shareholder (who became an officer and director of the Company) of STI $835,000
in cash and issued an unsecured note for $9,188,000 and 1,876,618 shares of
EasyLink Class A common stock, valued at $30.8 million, as consideration for the
acquisition of STI. The value of the common stock issued to STI is based on the
average market price of EasyLink's common stock, as quoted on the Nasdaq
national market, for the two days immediately prior to, the day of, and the two
days immediately after the announcement of the transaction on February 8, 2001.
The $9,188,000 note was payable in four equal semi-annual installments over two
years and may be prepaid in whole or in part at any time and from time to time
without payment of premium or penalty. The note was non-interest bearing unless
the Company fails to make a required payment within 30 days after the due date
therefor. Thereafter, the note will bear interest at the rate of 1% per month.
The note also contains certain customary covenants and events of default. The
holder of the note subsequently entered into an agreement with the Company to
restructure the note. On November 27, 2001, the note was converted into a
package of securities consisting of a senior convertible note in the principal
amount of approximately $2.68 million and has an initial conversion price equal
to $10.00 per share, approximately 268,000 shares of Class A common stock and
warrants to purchase approximately 268,000 shares of Class A common stock. The
warrants have an exercise price equal to the average of the closing prices of
the Company's Class A common stock over the 30 trading days ending two days
before the closing of the restructuring of $6.10 per share. See Note (8) Notes
Payable for a description of the restructuring, the senior convertible note and
the warrants.

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

The Company allocated a portion of the purchase price to the fair market value
of the acquired assets and liabilities assumed of STI and the EasyLink Services
business. The excess of the purchase price over the fair market value of the
acquired assets and liabilities assumed of STI and the EasyLink Services
business has been allocated to goodwill ($24 million), assembled workforce ($3
million), technology ($11 million), trademarks ($16 million) and customer lists
($11 million). Goodwill, trademarks and customer lists are being amortized over
a period of 10 years, the expected estimated period of benefit, and assembled
workforce and technology are being amortized over 5 years, the estimated period
of benefit. The purchase price that was allocated was based upon the final
outcome of the valuation and appraisals of the fair value of the acquired assets
and assumed liabilities at the date of acquisition, as well as the
identification and valuation of certain intangible assets such as customer
lists, in-place workforce, technology and trademarks, etc. The fair value of the
technology, assembled workforce, trademarks, customer lists and goodwill was
determined by management using the excess earnings method, a risk-adjusted cost
approach and the residual method, respectively. Amortization expense for the
year ended December 31, 2001 was approximately $7 million.

Additionally, upon the closing of the STI acquisition, the President and sole
shareholder of STI entered into an employment agreement with the Company and
became President of International Operations as well as a member of the
Company's Board of Directors.

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

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

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

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

<PAGE>


The following unaudited pro-forma consolidated amounts give effect to the 2001
acquisitions as if they had occurred on January 1, 2001, by consolidating their
results of operations with the results of the Company for the years ended
December 31, 2001. The unaudited pro-forma consolidated results are not
necessarily indicative of the operating results that would have been achieved
had the transactions been in effect as of the beginning of the periods presented
and should not be construed as being representative of future operating results.
The pro forma basic and diluted net loss per common share is computed by
dividing the net loss attributable to common stockholders by the
weighted-average number of common shares outstanding. Diluted net loss per share
equals basic net loss per share, as common stock equivalents are anti-dilutive
for all pro forma periods presented.

                                                                   December 31,
-------------------------------------------------------------------------------
(In thousands, except per share amounts)                                2001
                                                                   ------------

Revenues.....................................................      $    150,465
Loss from continuing operations..............................      $   (148,198)
Loss from discontinued operations............................      $    (63,027)
Extraordinary gain...........................................      $        782
Net loss attributable to common stockholders.................      $   (210,443)
Basic and diluted net loss per common share:
Loss from continuing operations..............................      $     (15.23)
Loss from discontinued operations............................             (6.47)
Extraordinary gain...........................................              0.08
Net loss.....................................................      $     (21.62)
Weighted average shares used in net loss
per common share calculation (1).............................             9,734

         (1)    The Company computes net loss per share in accordance with
         provisions of SFAS No. 128, "Earnings per Share." Basic net loss per
         share is computed by dividing the net loss for the period by the
         weighted-average number of common shares outstanding during the period.
         The calculation of the weighted average number of shares outstanding
         assumes that 2,601,628 shares of EasyLink's common stock issued in
         connection with its acquisitions were outstanding for the entire period
         or date of inception, if later. The weighted average common shares used
         to compute pro forma basic net loss per share includes the actual
         weighted average common shares outstanding for the periods presented,
         respectively, plus the common shares issued in connection with the 2001
         acquisitions from January 1, 2001 or date of inception if later.
         Diluted net loss per share is equal to basic net loss per share as
         common stock issuable upon exercise of the Company's employee stock
         options and upon exercise of outstanding warrants are not included
         because they are antidilutive. In future periods, the weighted-average
         shares used to compute diluted earnings per share will include the
         incremental shares of common stock relating to outstanding options and
         warrants to the extent such incremental shares are dilutive.

                                        -57-
<PAGE>

(3)      Other Acquisition Related Events

Allegro

The Company acquired The Allegro Group, Inc. ("Allegro"), for approximately
$20.4 million including acquisition costs pursuant to the terms of an Agreement
and Plan of Merger dated August 20, 1999 (the "Merger Agreement"), among
EasyLink, AG Acquisition Corp., a wholly-owned subsidiary of the Company
("Acquisition Corp."), Allegro and the shareholders of Allegro. Pursuant to the
terms of the Merger Agreement, Allegro merged with and into Acquisition Corp.
and became a wholly owned subsidiary of the Company. The acquisition was
accounted for as a purchase business combination. The consideration payable in
connection with the acquisition of Allegro consisted of the following:
approximately $3.2 million in cash and 110,297 shares of Class A common stock
valued at approximately $17.1 million. The Company also incurred acquisition
costs of approximately $150,000. In addition, one-time signing bonuses of
$800,000, which is included in the operating expenses in the statement of
operations, were paid to employees of Allegro who were not shareholders of
Allegro, pursuant to employment agreements entered into with them upon the
closing date. In connection with their employment agreements with the Company,
EasyLink also granted options to Allegro employees to purchase approximately
62,500 shares of Class A common stock at an exercise price of $160.00 per share,
the then fair value. These options vest quarterly over four years subject to
continued employment.

The Company was obligated to pay additional consideration (the "Contingent
Consideration") upon completion of its audited financial statements for the year
ended December 31, 2000 based on the achievement of certain performance
standards for such year. The Contingent Consideration was up to $3.2 million
payable in cash, additional bonus payments up to $800,000, and up to $16.0
million payable in shares of Class A common stock based on the market value of
such stock at the time of payment (but such market value shall be deemed to be
not less than $80.00 per share). On November 2, 2000, the Company settled its
contingent consideration obligation with Allegro. The Company paid to the former
shareholders of Allegro 28,319 shares of Class A common stock valued at $139,000
on December 31, 2001 pursuant to this settlement. At the time the consideration
became issuable, the Company adjusted the purchase price and recorded additional
goodwill.

The consideration payable was determined as a result of negotiations between the
Company and Allegro. The number of shares of Class A common stock issued to
Allegro shareholders, was determined based on the exchange rate of 277.05561
shares of Class A common stock for each share of Allegro common stock. Funds
paid in connection with the acquisition of Allegro were provided from cash on
hand.

The Company has allocated a portion of the purchase price to the net book value
of the acquired assets and assumed liabilities of Allegro as of the date of
acquisition. The excess of the purchase price over the net book value of the
acquired assets and liabilities of Allegro of $20.1 million has been allocated
to goodwill ($19.4 million) and other intangible assets of approximately
$700,000, consisting of employee workforce, trade names and contracts. Goodwill
and other intangible assets will be amortized over a period of three years, the
expected period of benefit.

The Company's 1999 consolidated statement of operations reflects a write-off of
the amount of the purchase price allocated to acquired in-process technology of
$900,000. The valuation of the write-off of acquired in-process technology was
based on management's determination that the new versions of MailZone technology
acquired from Allegro had not been developed into the platform required by the
Company at the date of acquisition.

TCOM

On October 18, 1999, the Company acquired TCOM, Inc. ("TCOM"), a software
technology development firm, specializing in the design of carrier class
applications for the telecommunications and computer telephony industries. The
Company was not continuing the business operations of TCOM but made the
acquisition in order to obtain technology and development resources. The
acquisition had been accounted for an acquisition of assets. The Company paid $2
million in cash and issued 43,983 shares of Class A common stock valued at
approximately $6.1 million. In addition, the Company paid to the former
employees of TCOM bonuses totaling $400,000, payable in six-month installments
after the closing date in the amounts of $74,000, $88,000, $116,000 and
$122,000, provided such employees continue their employment through the
applicable payment dates. As of December 31, 2001, the amount was fully repaid.
The excess of the purchase price over the net book value of the assets acquired
and assumed liabilities of TCOM of approximately $8.1 million has been allocated
to other intangible assets (workforce). Such amounts will be ratably amortized
over a period of three years, the expected period of benefit.

                                      -58-
<PAGE>

The Company was obligated to pay additional consideration to the sellers of TCOM
based upon the achievement of certain objectives over an 18-month period. The
additional consideration was to consist of up to $1.0 million payable in cash
and up to $2.75 million payable in shares of Class A common stock based on its
market value of such stock at the time of payment, although the market value
would be deemed to be not less than $40.00 per share. On November 1, 2000, the
Company settled its contingent consideration obligation with TCOM. The Company
agreed to pay the former shareholders of TCOM a total of $3.75 million,
comprised of a cash payment of $1 million and $2.75 million in Class A common
stock, on April 18, 2001, determined based on the market price at that time, but
not less than $40.00 per share. The Company adjusted the purchase price for the
$1 million payment and is amortizing such costs over the remaining life of the
other intangible assets, namely workforce.

During the first quarter of 2001, management determined that a portion of the
carrying value of the other intangible assets associated with TCOM had become
impaired due to the restructuring of the workforce that had generated those
intangible assets upon acquisition in October 1999. As a result, an impairment
charge of $4.3 million was recorded as part of the restructuring charge.

During the second quarter of 2001, the Company settled its remaining obligations
relating to the contingent obligations owed to the former owners of TCOM by
issuing 162,083 shares of its Class A common stock valued at approximately $1.3
million and paying cash of $300,000. The Company determined that the value of
the other intangible assets, primarily workforce, had become further impaired
due to the resignation of the remaining workforce, and accordingly recorded an
additional impairment charge of approximately $1.3 million during the second
quarter of 2001 as part of the restructuring charge. After giving effect to this
write-off, the net goodwill balance was reduced to $0.

NetMoves Impairment Charge

EasyLink continually evaluates the carrying value of its long-lived assets. If
it is determined that the carrying value may require adjustment and the
estimated fair value of the asset is less than its recorded amount, an
impairment charge is recorded. During the fourth quarter of 2001, the Company
determined that the carrying values of certain of its long-lived assets required
adjustment. The long-lived asset impairment charges of $60 million recorded in
the fourth quarter related to goodwill associated with the Company's fiscal 2000
acquisition of NetMoves Corporation ("NetMoves") and reduced the goodwill net
book value to $17 million. NetMoves had experienced declines in operating and
financial metrics over the previous several quarters in comparison to the
metrics forecasted at the time of its respective acquisition. The amount of the
impairment charge was determined by comparing the carrying value of goodwill to
fair value at December 31, 2001, in accordance with the Company's formal
impairment policy which is further described in Note 1.

Messaging Acquisitions

During the third quarter of 2000, the Company acquired two companies by issuing
71,020 shares of Class A common stock valued at approximately $4.3 million based
upon the Company's average trading price at the date of acquisition. The excess
of the purchase price over the fair market value of the assets acquired and
liabilities assumed has been allocated to goodwill and is being amortized over a
period of three years, the expected period of benefit. These acquisitions were
accounted for as a purchase business combination. During the second quarter of
2001, approximately $826,000 of goodwill was written off as management
determined that the carrying value of the goodwill associated with one of these
acquisitions had become permanently impaired. After giving effect to the
write-off, the net goodwill balance attributable to that acquisition was reduced
to $0.

(4)      Sale of Businesses

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


On March 30, 2001, the Company sold its advertising network to Net2Phone, Inc.
Net2Phone paid the Company $3 million in cash upon the closing. The Company
received an additional $500,000 in April 2001 based upon the achievement of
certain milestones by the Company. The consideration paid to EasyLink was
determined as a result of negotiations between Net2Phone, Inc. and EasyLink. In
connection with the sale, the parties entered into a hosting agreement whereby
the Company would receive payments for hosting the consumer mailboxes for a
minimum of one year. As a result of the sale, the Company transferred net
assets, including certain domain names and partner agreements (see Note 10), and
liabilities related to the advertising network to Net2Phone, and recorded a loss
on the sale of the advertising network of $1.8 million during the fourth quarter
of 2001.

During the second quarter of 2001, the Company completed the migration of the
hosting of these consumer mailboxes to a third party provider who is paid for
this service. The hosting agreement was terminated as of September 30, 2001.

(5)      Balance Sheet Components

Property and equipment, including equipment under capital leases, are stated at
cost and are summarized as follows, in thousands:

                                      -59-
<PAGE>

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                                ------------
                                                                            2002           2001
                                                                           --------       ---------
<S>                                                                        <C>            <C>
Computer equipment and software, including amounts
   related to capital leases of $3,842 and $5,175, respectively .....      $ 38,882       $  37,845
Furniture and fixtures...............................................         1,081             844
Web development......................................................           181             181
Leasehold improvements...............................................           814             476
                                                                           --------       ---------
             Subtotal................................................        40,958          39,346
Less accumulated depreciation and amortization,
including amounts related to capital leases
of $3,023 and $3,118, respectively...................................        26,125          17,390
                                                                           --------       ---------
             Total...................................................      $ 14,833       $  21,956
                                                                           ========       =========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                                 ------------
                                                                             2002           2001
                                                                           --------       ---------
<S>                                                                        <C>            <C>
Domain names.........................................................      $  2,424       $   2,424
Less accumulated amortization........................................         2,210           2,210
                                                                           --------       ---------
Domain assets, net...................................................      $    214       $     214
                                                                           ========       =========
</TABLE>

Accrued expenses consist of the following, in thousands:

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                                 ------------
                                                                            2002           2001
                                                                           --------       ---------
<S>                                                                        <C>            <C>
Carrier charges......................................................      $  6,408       $  12,725
Payroll and related costs............................................         3,072           7,313
Sales/Use/VAT taxes payable..........................................         1,902           2,832
Professional services, consulting fees and
sales agents' commissions............................................         1,649           2,801
Interest.............................................................         2,038           1,678
Software and hardware maintenance....................................           551             981
Payments due to former owners of acquired companies..................             -             689
Other................................................................         5,233           3,683
                                                                           --------       ---------
Total................................................................      $ 20,853       $  32,702
                                                                           ========       =========
</TABLE>

(6)      Investments

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

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

<PAGE>


During 1999, the Company acquired an equity interest in 3Cube, Inc. ("3Cube"),
which was accounted for under the cost method. Under the agreement, the Company
paid $1.0 million in cash and issued 8,008 of its Class A common stock, valued
at approximately $2.0 million, in exchange for 307,444 shares of 3Cube
convertible preferred stock which represents an equity interest of less than 20%
of 3Cube. On June 30, 2000, the Company made an additional investment in 3Cube,
Inc. by issuing 25,505 shares of Class A common stock valued at approximately
$1.5 million in exchange for 50,411 shares of 3Cube Series C Preferred Stock. At
December 31, 2000, EasyLink owned preferred stock of 3Cube, representing an
ownership interest of 21% of the combined common and preferred stock outstanding
of 3Cube, Inc. Accordingly, the Company now accounts for this investment under
the equity method of accounting. The change from the cost method to the equity
method of accounting resulted in a decrease of the carrying value of the
investment by $2.1 million in 2000. In addition, as a result of sequential
declines in operating results of 3Cube, management made an assessment of the
carrying value of its equity investment and determined that it was in excess of
its estimated fair value. Accordingly, in December 2000, EasyLink wrote down the
value of its investment in 3Cube by $200,000 as it determined that the decline
in its value was other-than-temporary. During the first quarter of 2001, the
Company further reduced its investment in 3Cube by $59,000 to $2 million,
representing the value the Company received in August 2001 upon the liquidation
of its investment.

                                      -60-
<PAGE>

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

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

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

As of December 31, 2001, all of the Company's investments were written down to
minimal amounts due to other than temporary declines in the value of its
investments.

(7)      Goodwill and Intangible Assets

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" ("Statement
141"), and Statement No. 142, "Goodwill and Other Intangible Assets" ("Statement
142"). Statement 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001. Statement 141 also
specifies criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, noting
that any purchase price allocable to an assembled workforce may not be accounted
for separately. Statement 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 definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with Financial
Accounting Standards Board No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" ("Statement 121").

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

<PAGE>

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

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

                                      -61-
<PAGE>

As of January 1, 2002, the date of adoption, the Company had unamortized
goodwill in the amount of $68.8 million, which is subject to the transition
provisions of Statement 142. Amortization expense related to goodwill of
continuing operations was $40.4 million and $38.8 million for the years ended
December 31, 2001 and 2000. During the quarter ended June 30,2002, the Company
completed its assessment with the assistance of an independent appraiser in
accordance with Statement 142 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 in
accordance with Statement 142 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, broken down as follows: $7.5 tradename, $7.6
customer base, $1.1 technology, and $62.6 goodwill.

The current economic and market conditions have lead to forecasts with lower
growth rates and a significantly lower market cap 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 trade name 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.

                                      -62-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31,
                                                                                         -----------------------
(In thousands, except per share amounts)                                         2002                2001             2000
                                                                               --------           ---------         ---------
<S>                                                                            <C>                <C>               <C>
Loss from continuing operations..............................                  $ (85,848)         $(144,038)        $(158,903)
Add back: Goodwill amortization..............................                          -             40,376            38,761
Adjusted loss from continuing operations.....................                    (85,848)          (103,662)        $(120,142)

Loss from discontinued operations............................                          -            (63,027)        $ (70,624)
Add back: Goodwill amortization..............................                          -              3,851            19,963
Adjusted loss from discontinued operations...................                          -            (59,176)          (50,661)
Extraordinary gain...........................................                          -                782                 -

Adjusted net loss............................................                  $ (85,848)         $(162,056)         (170,803)

Basic and diluted net loss per share:
Loss from continuing operations..............................                  $   (5.13)         $  (15.26)        $  (27.79)
Goodwill amortization from continuing operations.............                          -               4.28              6.78
Adjusted loss from continuing operations.....................                  $   (5.13)            (10.98)           (21.01)

Loss from discontinued operations............................                          -              (6.68)           (12.35)
Goodwill amortization from discontinued operations...........                          -               0.41              3.49
Adjusted loss from discontinued operations...................                          -              (6.27)            (8.86)

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

Adjusted net loss............................................                  $   (5.13)         $  (17.17)        $  (29,87)

Weighted average basic and diluted shares outstanding .......                     16,733              9,442             5,718
</TABLE>

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

Although SFAS No. 142 requires disclosure of these amounts to reflect the impact
of adoption on the Company's results for the years ending December 31, 2001 and
2000, had goodwill not been amortized and been added back, the effect would have
resulted in additional impairment charges being recorded in each of the
respective years.

Included in the Company's balance sheet as of December 31, 2002 and 2001 are the
following (in thousands):

                             As of December 31, 2002

<TABLE>
<CAPTION>
                                                                                 Accumulated
                                                                    Gross Cost   Amortization     Net
                                                                    ----------   ------------   -------
<S>                                                                  <C>          <C>           <C>
Goodwill.....................................................        $152,659     $(146,393)    $ 6,266
                                                                     ========     =========     =======
Intangibles with finite lives:
   Technology................................................          16,550       (10,550)      6,000
   Trademarks................................................          16,000       (10,400)      5,600
   Customer lists............................................          11,000        (9,600)      1,400
   Software development and licenses.........................           4,580        (3,032)      1,548
                                                                     --------     ---------     -------
                                                                     $ 48,130     $ (33,582)    $14,548
                                                                     --------     ---------     -------
</TABLE>

                                      -63-
<PAGE>

                             As of December 31, 2001

<TABLE>
<CAPTION>
                                                                                   Accumulated
                                                                    Gross Cost     Amortization    Net
                                                                    ----------     ------------  -------
<S>                                                                  <C>            <C>          <C>
Goodwill.....................................................        $152,959       $ (83,824)   $69,135
                                                                     ========       =========    =======
Intangibles with finite lives:
   Technology................................................          16,550          (5,334)    11,216
   Trademarks................................................          16,000          (1,333)    14,667
   Customer lists............................................          11,000            (917)    10,083
   Software development and licenses.........................           4,580          (1,744)     2,836
                                                                     --------       ---------    -------
                                                                     $ 48,130       $  (9,328)   $38,802
                                                                     ========       =========    =======
</TABLE>

Goodwill and Other Intangible Asset amounts at December 31, 2001 have been
reclassified to conform to the December 31, 2002 classifications in accordance
with the provisions of SFAS No. 142.

The Company's estimated amortization expense is $3.1 million, $2.6 million, $2.2
million, $0.5 million and $0.2 million in 2003, 2004, 2005, 2006 and 2007,
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. Trademarks and 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.

(8)      Notes Payable

7% Convertible Subordinated Notes

On January 26, 2000, the Company issued $100 million of 7% Convertible
Subordinated Notes ("the Notes"). Interest on the Notes is payable on February 1
and August 1 of each year, beginning on August 1, 2000. The Notes are
convertible by holders into shares of EasyLink Class A common stock at a
conversion price of $189.50 per share (subject to adjustment in certain events)
beginning 90 days following the issuance of the Notes.

The notes will mature on February 1, 2005. Prior to February 5, 2003 the Notes
may be redeemed at the Company's option ("the Provisional Redemption"), in whole
or in part, at any time or from time to time, at certain redemption prices, plus
accrued and unpaid interest to the date of redemption if the closing price of
the Class A common stock shall have equaled or exceeded specified percentages of
the conversion price then in effect for at least 20 out of 30 consecutive days
on which the NASDAQ national market is open for the transaction of business
prior to the date of mailing the notice of Provisional Redemption. Upon any
Provisional Redemption, the Company will be obligated to make an additional
payment in an amount equal to the present value of the aggregate value of the
interest payments that would thereafter have been payable on the notes from the
Provisional Redemption Date to, but not including, February 5, 2003. The present
value will be calculated using the bond equivalent yield on U.S. Treasury notes
or bills having a term nearest the length to that of the additional period as of
the day immediately preceding the date on which a notice of Provisional
Redemption is mailed.

On or after February 5, 2003, the Notes may be redeemed at the Company's option,
in whole or in part, in cash at the specified redemption prices, plus accrued
interest to the date of redemption.

In connection with the issuance of these Notes, the Company incurred
approximately $3.8 million of debt issuance costs. Such costs have been
capitalized and are being amortized ratably over the original term of the Notes.
As a result of the exchange note agreements entered into in 2001 and discussed
below, the Company recorded a charge of $2.2 million to reduce debt issuance
costs relating to that portion of the notes that were exchanged. This charge has
been netted against the gain on debt restructuring and settlements included in
the 2001 statement of operations.

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

On February 1, 2001, the Company entered into a note exchange agreement (the
"Note Exchange Agreement"). Under the terms of the agreement, EasyLink issued
$11,694,000 principal amount of a new series of 10% Senior Convertible Notes due
January 8, 2006 in exchange for the cancellation of $38,980,000 principal amount
of its 7% Convertible Subordinated Notes due February 1, 2005.

<PAGE>


On February 8, 2001, the Company entered into an additional note exchange
agreement. Under the terms of the agreement, EasyLink issued $4,665,000
principal amount of a new series of 10% Senior Convertible Notes due January 8,
2006 in exchange for the cancellation of $15,550,000 principal amount of its 7%
Convertible Subordinated Notes due February 1, 2005.

On February 14, 2001, the Company entered into an additional note exchange
agreement. Under the terms of the agreement, EasyLink issued $7,481,250
principal amount of a new series of 10% Senior Convertible Notes due January 8,
2006 in exchange for the cancellation of $21,375,000 principal amount of its 7%
Convertible Subordinated Notes due February 1, 2005 (the "Subordinated Notes").
Pursuant to this note exchange agreement, on or about May 23, 2001, $2,531,250
in principal amount of these Senior Convertible Notes were exchanged for 142,071
shares of Class A common stock (the "Exchange Shares") leaving $4,950,000 in
principal amount of this series of Senior Convertible Notes outstanding.

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

                                      -64-
<PAGE>

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

$11,694,000 of the Exchange Notes is convertible at any time at the option of
the holder into Class A common stock at an initial conversion price equal to
$13.00 per share. The conversion price is subject to anti-dilution adjustments.

$4,665,000 of the Exchange Notes is convertible at any time at the option of the
holder into Class A common stock at an initial conversion price equal to $17.50
per share. The conversion price is subject to anti-dilution adjustments.

$7,481,250 of the Exchange Notes is convertible at any time at the option of the
holder into Class A common stock at an initial conversion price equal to $15.00
per share. Also, $2,531,250 of the Exchange Notes was cancelled in exchange for
the issuance of Exchange Shares as described above. The conversion price is
subject to anti-dilution adjustments.

The Companies may, at their option, prepay the Exchange Notes, in whole or in
part, at any time (i) on or after the third anniversary of the closing date of
the financing, (ii) if the closing price of the Class A common stock on the
NASDAQ stock market, or other securities market on which the Class A common
stock is then traded, is at or above $5.00 per share (such amount to be
appropriately adjusted in the event of a stock split, stock dividend, stock
combination or recapitalization or similar event having a similar effect) for 30
consecutive trading days or (iii) EasyLink desires to effect a merger,
consolidation or sale of all or substantially all of its assets in a manner that
is prohibited by the Note Purchase Agreement between EasyLink and the initial
purchasers of the Exchange Notes (the "Note Purchase Agreement") and the holders
of the Exchange Notes fail to consent to a waiver of such prohibition to permit
such merger, consolidation or sale.

All of the above exchange transactions (other than the exchange of $2,531,250 of
the Senior Convertible Notes described above, which closed on or about May 23,
2001) under the Exchange Note Agreements closed on March 28, 2001.

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

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

In future periods, all payments under the terms of the Exchange Notes shall be
accounted for as reductions of the carrying amount of the Exchange Notes, and no
interest expense shall be recognized on the Exchange Notes for any period
between the exchange dates and maturity dates of the Exchange Notes.

Other Senior Convertible Notes

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

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

<PAGE>


The Companies may, at their option, prepay the Notes, in whole or in part, at
any time (i) on or after the third anniversary of the closing date of the
financing, (ii) if the closing price of the Class A common stock on the NASDAQ
stock market, or other securities market on which the Class A common stock is
then traded, is at or above $5.00 per share (such amount to be appropriately
adjusted in the event of a stock split, stock dividend, stock combination or
recapitalization or similar event having a similar effect) for 30 consecutive
trading days or (iii) EasyLink desires to effect a merger, consolidation or sale
of all or substantially all of its assets in a manner that is prohibited by the
Note Purchase Agreement dated as of March 13, 2001 between EasyLink and the
initial purchasers of the Notes and the holders of the Notes fail to consent to
a waiver of such prohibition to permit such merger, consolidation or sale.

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

                                      -65-
<PAGE>

The $10.26 million principal amount of Notes issued pursuant to the January 8,
2001 agreement are secured by a pledge of the Company's and its wholly-owned
subsidiary WORLD.com, Inc.'s share interest in its majority owned subsidiary
India.com, Inc. The security interest will be released, among other
circumstances, (i) upon repayment of the Notes and accrued interest thereon,
(ii) upon a sale, transfer or other disposition of the shares as permitted under
the Note Purchase Agreement and the prepayment of Notes as become subject to
prepayment in accordance with the Note Purchase Agreement, or (iii) if EasyLink
raises at least $35 million in cash proceeds from the sale of assets (including
the pledged shares) or from the issuance of certain additional debt or equity
financings on or before April 30, 2001.

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

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

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

Notes issued in STI/EasyLink Acquisition

In connection with the acquisition of STI, the Company assumed a $35 million
note from STI and issued a $9.2 million unsecured note to the former shareholder
of STI as partial payment (see Note 2 for additional information).

Zones, Inc. Promissory Note

On July 13, 2001, EasyLink entered into an agreement with Zones, Inc. (formerly
Multiple Zones, Inc.) regarding payment of a $1 million promissory note.
Pursuant to the agreement, EasyLink paid Zones $200,000 in cash on July 16,
2001. Additionally, Zones agreed to convert $400,000 of the original promissory
note into a number of shares of EasyLink Class A common stock based upon the
average sales price of the Class A Common Stock over the ten (10) trading days
immediately preceding the earlier of (a) the filing of a registration statement
for the resale of the shares, and (b) the date on which EasyLink enables
Multiple Zones to resell the shares or receive the economic benefit of such
resale, but in any event not more than 125,000 shares. EasyLink also undertook
to file an S-3 registration statement with the United States Securities and
Exchange Commission ("SEC"), or such other registration statement as necessary
to register the Settlement Shares with the SEC to permit public resale of those
shares by Multiple Zones as soon as practicable after execution of the
Settlement Agreement, but in no event later than September 30, 2001. EasyLink
also agreed to pay to Multiple Zones an additional $430,000 upon the earlier of
(i) the closing of the sale of Multiple Zones Mauritius, Ltd. or Multiple Zones
Pvt., Ltd. or their respective successors; or (ii) October 31, 2001.

Under an Amended and Restated Settlement Agreement and Release between the
Company and Zones, Inc. dated October 8, 2001, the Company and Zones amended
their original July 13, 2001 settlement agreement. Under the October 8, 2001
agreement, the Company paid Zones the remaining $430,000 cash payment owed to
Zones, and the parties also fixed the number of shares of Class A common stock
issuable by the Company to Zones at 103,359. The shares were issued in 2001.

GN Store Nord A/S

During July 2001, the Company received a $1.1 million loan from the parent of GN
Comtext, GN Store Nord A/S, in connection with assets acquired. During the
quarter ended September 30, 2001, receivables due from GN Comtext of
approximately $200,000 were netted against the principal amounts due to them.
The loan was paid December 2001.

Restructuring and Settlements of Certain Debt and Lease Obligations

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

<PAGE>


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 Company also recorded a net gain
of $8.6 million upon the completion of the restructuring in accordance with FASB
No. 15 during the fourth quarter of 2001.

The restructure notes bear interest at a rate of 12% per annum and mature five
years from the date of the debt restructuring. The Company may elect to defer
payment of accrued interest on a portion of the restructure notes until various
dates commencing June 2003 and may elect to pay accrued interest on other
restructure notes in shares of Class A common stock having a market value at the
time of payment equal to 120% of the interest payment due. $9.1 million in
principal amount of the restructure notes are convertible, at the option of the
holder, into shares of Class A Common Stock of the Company at a conversion price
of $10.00 per share, subject to adjustment in certain events. The Company will
not be required to make scheduled principal payments on any of the notes until
June 2003. A portion of the notes are subject to mandatory or optional
prepayment prior to June 30, 2002 upon completion of certain equity financings
payable 50% in Class A common stock and 50% in cash. All of the notes are
callable at any time for cash. The warrants allow the holders to purchase shares
of Class A Common Stock of the Company at an exercise price equal to $6.10 per
share. The number of shares issuable upon exercise and the exercise price of the
warrants are subject to adjustment in certain events. The warrants are
exercisable for ten years after the date of the grant.

                                      -66-
<PAGE>

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

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

$5.875 million of the financing was represented by the investment of cash in
exchange for 1,468,750 shares of Class A common stock. Approximately $1.3
million of this financing was represented by the investment of cash in exchange
for senior convertible notes that are convertible into approximately 520,000
shares of Class A common stock, subject to adjustment in certain events. These
notes are convertible at $2.50 per share. The beneficial conversion feature of
$1.1 million is being amortized over a period of 5 years. Approximately $3.0
million of this financing was represented by the exchange of $1.4 million of
cash equipment purchase obligations held by lessors and $1.6 million of other
cash obligations held by AT&T for an aggregate of 820,000 shares of Class A
common stock.

On July 15, 2002, the Company entered into a transfer and assignment agreement
to repurchase a 12% senior convertible note and a payment obligation in the
amount of $0.5 million for $90,000 in cash and 5,415 shares in Class A common
stock, valued at approximately $6,000. This transaction was accounted for in
accordance with Financial Accounting Standards Board Statement No. 15 ("FASB
No.15"), "Accounting by Debtors and Creditors for Troubled Debt Restructurings."
As a result of this transaction, the Company recorded a $0.4 million gain.

On September 27, 2002, the Company entered into a transaction agreement to
repurchase 10% senior convertible notes in the amount of $4.95 million for
$495,000. This transaction was accounted for in accordance with Financial
Accounting Standards Board Statement No. 15 ("FASB No.15"), "Accounting by
Debtors and Creditors for Troubled Debt Restructurings." As a result of this
transaction, the Company recorded a $6.2 million gain in 2002 which includes the
impact of a $1.7 million reversal of capitalized interest previously recognized
in connection with the February 14, 2001 exchange agreement related to such
notes.

Notes payable include the following, in thousands

<TABLE>
<CAPTION>
                                                                              December 31, 2002      December 31, 2001
                                                                           ----------------------  ----------------------
                                                                           Capitalized             Capitalized
                                                                             Interest   Principal    Interest   Principal
                                                                           -----------  ---------  -----------  ---------
<S>                                                                        <C>          <C>        <C>          <C>
2000 7% Convertible Subordinated Notes due February 2005                   $         -  $  24,095  $         -  $  24,095
2001 10% Senior Convertible Notes due January 2006                               5,528     31,059        8,615     36,009
2001 12% AT&T restructure note 13 quarterly payments beginning June 2003         5,160     10,000        5,160     10,000
2001 12% note payable to former shareholder of STI 13 quarterly
         payments beginning June 2003                                              997      2,683        1,385      2,683
2001 12% Restructure notes 13 quarterly payments beginning June 2003                 -      6,132           --      6,435
2001 Restructuring balloon payments due October 2004                                 -        795           --        846
Other                                                                                -        786           --        855
                                                                           -----------  ---------  -----------  ---------
Total notes payable and capitalized interest                                    11,685     75,550       15,160      80,923
Less current portion                                                             4,283      4,152        1,410          -
                                                                           -----------  ---------  -----------  ---------
Non current portion                                                        $     7,402  $  71,398  $    13,750  $  80,923
                                                                           ===========  =========  ===========  =========
</TABLE>

                                      -67-
<PAGE>

(9)      Revenues

The following are the components of revenues, in thousands:

                                      For the year ended December 31,
                              --------------------------------------------
                                 2002              2001          2000
                              -----------       -----------   ------------
Business messaging            $   113,874       $   121,716   $     28,967
Advertising..............               -             1,616         22,370
Subscriptions............               -                 -            719
Other....................             480               597            642
                              -----------       -----------   ------------
Total revenues...........     $   114,354       $   123,929   $     52,698
                              ===========       ===========   ============

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

(10)     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 March 30, 2001, 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.

The Consolidated Financial Statements of the Company have been restated to
reflect World.com as a discontinued operation in accordance with APB Opinion No.
30. Accordingly, 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 assets of discontinued operation," "Net
liabilities of discontinued operations," and "Net cash used in discontinued
operation," for all periods presented.

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

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

                          Statements of Operations Data
                             Year Ended December 31,

                                         2002        2001         2000
                                       ---------   ---------    ---------
Revenues.............................  $       -   $   6,247    $   8,527
                                       =========   =========    =========
Loss from discontinued operations....  $       -   $  63,027    $  70,625
                                       =========   =========    =========

                               Balance Sheet Data
                               As of December 31,

                                                      2002       2001
                                                    -------   ----------
Current assets..................................... $    57   $       74
Total assets.......................................     444          423
Current liabilities................................     579        1,873
Long-term liabilities and minority interest........     225          225
Net liabilities of discontinued operations          $  (360)  $   (1,675)

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

<PAGE>

India.com Financing

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

                                      -68-
<PAGE>

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

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

Pursuant to an Exchange Agreement Amendment entered into on July 17, 2001 (the
"Exchange Agreement Amendment") between the Company and the holders of India.com
preferred stock, all of the holders of the outstanding shares of India.com
preferred stock exercised their right to exchange their shares of India.com
preferred stock for shares of the Company's Class A common stock based on the
average of the closing market prices of the Company's stock over the five
trading days ending on September 13, 2001, subject to a floor on the exchange
price of $10.00 and a cap of $30.00 and subject to adjustment in certain
circumstances. Based on the average of the closing prices of the Company's
stock, the exchange price was $10.00 per share and 1,420,400 became issuable
upon consummation of the exchange. As of September 30, 2001, the closing of the
exchange transaction was subject to compliance with the requirements of the
NASDAQ stock market. In addition, if the shares of Class A common stock issued
in the exchange have not been registered for resale under an effective
registration statement by December 31, 2001, the Company has agreed to issue to
the former holders of India Preferred Stock an aggregate of 10,000 shares of its
Class A common stock per month for each month after December 31, 2001 until the
earlier of (i) the effectiveness of such a registration statement and (ii) the
date on which such shares are eligible for resale pursuant to Rule 144
promulgated under the Securities Act. The Company entered into the Exchange
Agreement Amendment in connection with the elimination of its obligations under
the $5 million aggregate principal amount of bridge notes and the warrants to
purchase an aggregate of 100,000 shares of the Company's Class A common stock
issued to India.com.

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

Software Tool and Die

On March 16, 2000, the Company acquired a domain name and made a 10% investment
in Software Tool and Die, a Massachusetts company, in exchange for $2.0 million
in cash and 18,569 shares of its Class A common stock valued at approximately
$2.9 million. Software Tool and Die is an Internet Service Provider and provides
Web hosting services. The Company concluded that the carrying value of this
cost-based investment was permanently impaired based on the achievement of
business plan objectives and milestones and the fair value of the investment
relative to its carrying value. During the fourth quarter of 2000, the Company
recorded an impairment charge of $4.2 million due to an other-than-temporary
decline in the value of this investment. This amount is included in the loss
from discontinued operations line in the 2000 statement of operations.

iFan, Inc.

In November 1999, the Company acquired iFan, Inc. ("iFan") a Web site with
various domain names. The acquisition has been accounted for as an acquisition
of assets. iFan had limited operations. The Company issued 7,270 shares of Class
A common stock valued at approximately $1.6 million. The value was determined by
using the average of the Company's Class A common stock surrounding the closing
date, which occurred simultaneously with the announcement date. The Company is
also obligated to pay $150,000 to the former owners for certain indebtedness. In
addition, all iFan stock options were converted into 1,697 EasyLink
non-qualified stock options at a weighted-average exercise price of $114.10 per
share. The value ascribed to the options using the Black Scholes pricing model
($370,000) was part of the $2.1 million purchase price. The excess of the
purchase price over the net book value of the domain assets has been allocated
to other intangible assets (non compete agreements). Such amount is being
ratably amortized over a period of three years, the expected period of benefit.
In December 2000, the Company wrote off $160,000 of impaired domain names as
part of its restructuring program.

<PAGE>


eLong.com, Inc.

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

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

                                      -69-
<PAGE>

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

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

Sale of eLong.com Inc.

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

Asian Impairment Charges

The Company's management performs on-going business reviews and, based on
quantitative and qualitative measures, assesses the need to record impairment
losses on long-lived assets used in operations when impairment indicators are
present. Where impairment indicators were identified, management determined the
amount of the impairment charge by comparing the carrying value of goodwill and
other long-lived assets to their fair values. These evaluations of impairments
are based upon an achievement of business plan objectives and milestones of each
business, the fair value of each ownership interest relative to its carrying
value, the financial condition and prospects of the business and other relevant
factors. The business plan objectives and milestones that are considered include
among others, those related to financial performance, such as achievement of
planned financial results and completion of capital raising activities, if any,
and those that are not primarily financial in nature, such as launching or
enhancements of a web site or product, the hiring of key employees, the number
of people who have registered to be part of the associated business's web
community, and the number of visitors to the associated business's web site per
month. Management determines fair value based on the market approach, which
includes analysis of market price multiples of companies engaged in lines of
business similar to the business being evaluated. The market price multiples are
selected and applied to the business based on the relative performance, future
prospects and risk profile of the business in comparison to the guideline
companies. As a result, during management's quarterly review of the value and
periods of amortization of both goodwill and other long-lived assets, it was
determined that the carrying value of goodwill and certain other intangible
assets were not fully recoverable.

<PAGE>

The business for which impairment charges were recorded (eLong.com) operates in
the Chinese portal market, which has experienced a significant and continuing
decline in revenue multiples over the past several quarters in comparison to the
metrics in place at the time the acquisition was valued. In addition, both
Chinese and US portals have experienced declines in operation and financial
metrics over the past several quarters, primarily due to the continued weak
overall demand of on-line advertising and marketing services combined with lower
than expected e-commerce transactions, in comparison to metrics forecasted at
the time of their respective acquisitions. These factors significantly impacted
current projected revenue generated from this business. The impairment analysis
considered that this business was recently acquired and that the intangible
assets recorded upon acquisition of this business were being amortized over a
three-year useful life. The amount of the impairment charge was determined by
comparing the carrying value of goodwill and other long-lived assets to fair
value at December 31, 2000. The methodology used to test for and measure the
amount of impairment was based on the same methodology the Company used during
its initial acquisition value of eLong.com. As a result management determined
that the carrying value of eLong.com should be adjusted. Accordingly, during the
fourth quarter of 2000, the Company recorded an impairment charge of
approximately $7.8 million to adjust the carrying value of eLong. The impairment
factors evaluated by management may change in subsequent periods, given that the
business operates in a highly volatile business environment. This could result
in material impairment charges in the future.

Asia.com Acquisitions

During the second quarter of 2000, Asia.com acquired three companies for
approximately $18.4 million, including acquisition costs. Payment consisted of
cash approximating $500,000, 192,618 shares of EasyLink Class A common stock
valued at approximately $11.6 million and 467,345 shares of Asia.com Class A
common stock valued at approximately $6.1 million, all of which were based upon
the Company's average trading price at the date of acquisition. These
acquisitions have been accounted for as purchase business combinations. The
excess of the purchase price over the fair market value has been allocated to
goodwill ($17.8 million) and is being amortized over a period of three years,
the expected estimated period of benefit. During the fourth quarter of 2000,
approximately $12 million of goodwill was written off as the Company determined
that the carrying value of the goodwill associated with one of these
acquisitions, focused in the wireless sector had become permanently impaired.
The impairment results from the November 2, 2000 decision, as approved by the
Board of Directors, to sell all assets not related to its core outsourcing
business, including its Asia-based businesses. After giving effect to the
writeoff, the net goodwill balance at December 31, 2000, was $3.2 million.

                                      -70-
<PAGE>

Under a stock purchase agreement associated with one of the acquisitions, the
Company agreed to pay a contingent payment of up to $5 million if certain
wireless revenue targets are reached after the closing. The contingent payment
was payable in EasyLink Class A common stock, cash or, under certain
circumstances, Asia.com Class A common stock. Management currently does not
expect to achieve these wireless revenue targets and, accordingly, does not
expect to issue any additional consideration.

Mauritius Entity

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

In June 2000, the Company acquired, through the Mauritius entity, the remaining
20% of the Indian subsidiary for $2.2 million. The acquisition was accounted for
as a purchase business combination. The excess of the purchase price over the
fair market value of the assets acquired has been allocated to goodwill ($2.2
million), and is being amortized over a period of five years, the expected
estimated period of benefit.

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

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

India Acquisition and Divestiture

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

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

(11)     Partner Agreements

The Company entered into partner agreements in connection with the advertising
network business. Included in these agreements are percentage of revenue sharing
agreements, miscellaneous fees and other customer acquisition costs with
EasyLink Partners. The revenue sharing agreements vary for each party but
typically are based on selected revenues, as defined, or on a per sign-up basis.
At December 31, 2002 and 2001, the Company's liabilities were approximately $0.1
million to various EasyLink Partners under such agreements.

Prior to 2000, the Company had issued stock to some of its EasyLink Partners and
capitalized such issuances when the measurement date for such stock grants was
fixed and there was a sufficient disincentive to breach the contract in
accordance with Emerging Issues Task Force Abstract No. 96-18, "Accounting for
Equity Instruments That are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services." Such amounts are amortized ratably
over the length of the contract commencing on the site launch date.

<PAGE>


In August 1998, the Company entered into a two-year agreement with CNN. In
consideration of the advertising, subscription and customer acquisition
opportunities, CNN received 25,353 shares of Class A common stock upon the
commencement of the contract at $35.00 per share, the fair market value of
EasyLink's common stock on the date of grant, or $887,000. CNN also has the
right to receive a portion of the Company's selected revenues under the
agreement, as defined. The value of the stock issuance has been recorded in the
balance sheet as partner advances and is being amortized ratably to amortization
expense over the contract term. The launch of the services coincided with the
contract date. The Company recorded approximately $270,000 and $444,000 of
amortization expense in 2000 and 1999, respectively.

The Company issued an additional 48,562 and 57,763 shares of its common stock at
varying prices in 1999 and 1998 respectively, in connection with certain
strategic partnership agreements. When stock issuances are either contingent
upon the achievement of certain targets or the measurement date is not fixed,
the Company expenses the issuance of such stock at the time such stock is issued
or the targets are achieved at the then fair market value of the Company's
stock. Such amounts aggregated approximately $2.5 million and $2.8 million for
the years ended December 31, 1999 and 1998 respectively, and are included in
sales and marketing expenses in the statement of operations. The Company no
longer issues stock in connection with its strategic partnership agreements.

                                      -71-
<PAGE>

Prior to May 1, 1999, the Company was required to issue to CNET, Snap and NBC
Multimedia shares of its Class A common stock for each member who registers at
their sites. On May 1, 1999, the Company entered into an agreement to settle in
full its contingent obligation to issue shares of its Class A common stock to
CNET, Snap and NBC Multimedia as described above. Pursuant to this agreement,
the Company issued upon the closing of its initial public offering in June 1999,
236,891 shares of Class A common stock at a value of $70.00 per share in the
aggregate to CNET and Snap and 21,000 shares of Class A common stock at a value
of $70.00 per share to NBC Multimedia. The Company capitalized $18 million in
connection with the issuance of these shares and is ratably amortizing the
amount over the period from the closing of the initial public offering (June 23,
1999) through May 2001. The Company recorded approximately $2.3 million, $9.2
million and $5.0 million of amortization expense for the years ended December
31, 2001, 2000 and 1999, respectively. The remaining $1.5 million of unamortized
costs were written off as a part of the loss on sale of the advertising network
during 2001.

Certain agreements were assigned to Net2Phone in conjunction with the sale of
the advertising network.

(12)     Leases

The Company sold certain assets for approximately $1.3 million during 2000 and
these assets were leased back from the purchaser over terms of 3 to 5 years.

On March 30, 2000, the Company entered into a $12 million Master Lease Agreement
with GATX Technology Services Corporation ("GATX") for equipment lease financing
(hardware and software). Terms of individual leases signed under the Master
Lease Agreement called for a 36-month lease term with rent payable monthly in
advance. The effective interest rate was 12.1% and was adjustable based on
prime. GATX held a first priority security interest in the equipment under the
facility. For certain leases entered into under the $12 million master lease
agreement, the Company has exercised an option to extend the term for an
additional 24 months.

Under terms of the Master Lease Agreement, the Company had the option to
purchase the equipment at the then fair market value of the equipment at lease
expiration. In December 2000, GATX reduced the $12 million line to $10.4
million, the amount that was drawn down and outstanding at December 31, 2000.

On March 31, 2000, the Company entered into a $2 million Master Lease Agreement
with Leasing Technologies International, Inc. The lease line provided for the
lease of new, brand name computers, office automation and other equipment. Terms
of individual leases signed under the Master Lease Agreement called for a
36-month lease term, rent payable monthly in advance. The effective interest
rate was 14.7% and was adjustable based on prime. In addition, a security
deposit equal to one month's rent was payable at each individual lease
inception. In December 2000, Leasing Technologies reduced the $2 million line to
$1.2 million, the amount that was drawn down and outstanding at December 31,
2000.

Under terms of the Master Lease Agreement at the end of the lease term, the
Company had the option to either purchase or return the equipment at a set
percent of the original price, or extend the lease term by twelve months. In the
latter case, the lease terms provided for a discounted monthly rental and a
bargain purchase option at the expiration of the twelve-month extension.

On November 27, 2001, the Company closed on the restructuring of these
obligations. These obligations were converted into a package of securities
consisting of senior convertible notes and other obligations. See Note 8 Notes
Payable for a description of the debt restructuring. In addition, the Company
settled certain leased equipment obligations having an original equipment cost
of $22.5 million for an aggregate purchase price of approximately $3.5 million.

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, 2002, 2001 and 2000 was approximately
$2.2 million, $4.3 million, and $6.0 million, respectively.

The Company's lease obligations are collateralized by certain assets at December
31, 2002. Future minimum lease payments under non-cancelable operating leases
(with initial or remaining lease terms in excess of one year) and future minimum
capital lease payments as of December 31, 2002 are as follows, in thousands:

                                      -72-
<PAGE>

                            Year ending December 31,
<TABLE>
<CAPTION>
                                                                                    Capital leases     Operating leases
                                                                                    --------------     ----------------
<S>                                                                                 <C>                <C>
2003............................................................................    $          454     $          3,163
2004............................................................................               162                3,221
2005............................................................................                34                2,901
2006............................................................................                 -                2,070
2007............................................................................                 -                1,845
2008 and later..................................................................                 -                7,192
                                                                                    --------------     ----------------
          Total minimum lease payments..........................................               650     $         20,392
                                                                                    ==============     ================

Less amount representing interest (at a weighted-average interest rate of 9.17%)               (41)
                                                                                    --------------
Present value of net minimum capital lease payments.............................               609
Less current portion of obligations under capital leases........................               413
                                                                                    --------------

Obligations under capital leases, excluding current portion.....................    $          196
                                                                                    ==============
</TABLE>

(13)     Related Party Transactions

Federal Partners, L.P. Financings

On January 8, 2001, we issued $5,000,000 principal amount of 10% Senior
Convertible Notes due January 8, 2006 to Federal Partners, L.P. The Clark
Estates, Inc. provides management and administrative services to Federal
Partners. Federal Partners and accounts for which The Clark Estates, Inc.
provides management and administrative services are beneficial holders of 9.9%
of the Company's common stock, including shares issuable upon conversion of
senior convertible notes held by Federal Partners but excluding shares issuable
upon the conversion or exercise of other notes, warrants or options. On March
20, 2001, we issued to Federal Partners, L.P. 300,000 shares of our Class A
Common Stock for a purchase price of $3,000,000, and we 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, we
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 174,632 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.

In connection with the issuance of the senior convertible notes on January 8,
2001, we granted to Federal Partners, L.P. the right to designate one director
to our Board of Directors so long as Federal Partners, L.P. and other persons
associated with it owns at least 300,000 shares of Class A Common Stock,
including shares issuable upon conversion of or in payment of interest on the
senior convertible notes. Federal Partners, L.P. designated Stephen Duff and he
was appointed to our Board on January 8, 2001. Mr. Duff is a Senior Investment
Manager for The Clark Estates, Inc. and is Treasurer and a limited partner of
Federal Partners, L.P. The Clark Estates, Inc. provides management and
administrative services for Federal Partners, L.P. Through his limited
partnership interest in Federal Partners, L.P., Mr. Duff has an indirect
interest in $10,000 principal amount of the senior convertible notes issued on
January 8, 2001, in 600 of the shares of Class A Common Stock issued to Federal
Partners, L.P. on March 20, 2001 and in 850 of the shares of Class A Common
Stock issued to Federal Partners, L.P. in connection with the November 27, 2001
financing.

Acquisition of Swift Telecommunications, Inc.

We 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
Services paid $835,294 in cash, issued 1,876,618 shares of Class A Common Stock
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
Services 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. The $9.2 million note was payable in four
equal semi-annual installments over two years. The note was non-interest bearing
except in certain circumstances. 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 and warrants to purchase 268,295
shares of Class A common stock in exchange for Mr. Abi Zeid's $9.2 million note.
See Note 8 Notes Payable.

<PAGE>


In connection with the acquisition by STI on January 31, 2001 of the EasyLink
services business from AT&T Corp., Mr. Abi Zeid pledged to AT&T Corp. under a
Pledge Agreement dated January 31, 2001 all of the shares of EasyLink Services
Class A Common Stock that he was entitled to receive pursuant to the acquisition
to secure a $35 million note issued to AT&T Corp. by STI and assumed by EasyLink
Services as part of the purchase price for the EasyLink Services business. As a
result of the debt restructuring completed on November 27, 2001, these shares
now secure the $10 million principal amount of restructure notes issued to AT&T
Corp. in exchange for the $35 million note held by it.

In connection with the acquisition of STI on February 23, 2001, the Company also
entered into a conditional commitment to acquire Telecom International, Inc.
("TII"). TII was an affiliate of STI prior to the acquisition of STI by the
Company. George Abi Zeid is a principal beneficial shareholder of TII. The
purchase price for TII was originally agreed to be US$117,646 in cash, a
promissory note in the aggregate principal amount of approximately $1,294,118
and 267,059 shares of the Company's Class A common stock. In order to facilitate
the debt restructuring and to reduce the Company's debt obligations and cash
commitments, the parties agreed to modify the Company's commitments in respect
of TII. In lieu of acquiring TII, the Company purchased certain assets owned by
TII for six monthly payments of $10,000 commencing May 27, 2002 and one payment
of $190,000 on November 27, 2002. The Company also agreed to reimburse TII for
up to 50% of TII's payments on certain accounts payable up to a maximum
reimbursement of $200,000, to cancel a $236,490 payable owed by STI to the
Company and to issue up to 20,000 shares of Class A common stock to TII. In
addition, the Company issued 300,000 shares of Class A common stock to TII.

                                      -73-
<PAGE>

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

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

Fax-2 Acquisition and Divestiture

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

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

(14)     Capital Stock

Reverse Stock Split

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

Authorized Shares

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

Common Stock

Voting Rights

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

<PAGE>


Liquidation Preference

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

Private Placements of Common Stock

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

                                      -74-
<PAGE>

India.com, Inc. Preferred Stock Exchange

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

Settlements

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

Common Stock and Warrants issued in Debt Restructuring and Related Financing

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

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

Undesignated Preferred Shares

The Company is authorized, without further stockholder approval; to issue
authorized but unissued shares of preferred stock in one or more classes or
series. At December 31, 2002 and 2001, 60,000,000 authorized shares of
undesignated preferred stock were available for creation and issuance in this
manner.

(15)     AT&T Warrant

Under a letter agreement dated May 26, 1999, AT&T Corp. ("AT&T") and the Company
agreed to negotiate in good faith to complete definitive agreements to establish
a strategic relationship. On July 26, 1999, the Company entered into an interim
agreement to provide the Company's e-mail services as part of a package of AT&T
or third party branded communication services that AT&T may offer to some of its
small business customers. The Company has not entered into a definitive
agreement to establish the proposed strategic relationship, and, effective March
30, 2000, the May 26, 1999 letter agreement and the July 26, 1999 Interim
Agreement were terminated. Under the May 26, 1999 letter agreement, Mail.com
issued warrants to purchase 100,000 shares of Class A common stock at $110.00
per share. AT&T had the option to exercise the warrants at any time on or before
December 31, 2000. Since AT&T did not exercise the warrants on or before
December 31, 2000, the warrants expired and were cancelled.

The Company recorded a deferred cost of approximately $4.3 million in the
aggregate as a result of the issuance of these warrants to AT&T. As a result of
the termination of the May 26 letter agreement and the July 26 interim
agreement, $3.3 million of deferred costs were expensed during 2000.
<PAGE>


(16)     Stock Options

During 1998, 40,298 options were issued to a key executive at an exercise price
of $20.00 per share, all of which were granted in 1998. Such options were
outside of the Company's Stock Option Plans and contingent upon the Company
achieving specified advertising revenue targets, as defined. For the year ended
December 31, 1998, the Company recorded deferred compensation expense of
approximately $1.1 million in the aggregate in connection with these grants,
representing the difference between the deemed fair value of the Company's stock
at the date of each grant and the $20.00 per share exercise price of the related
options. This amount is presented as a reduction of stockholders' equity
(deficit) and is being amortized over the three-year vesting period from the
achievement of the performance targets, which was concurrent with each option
grant. The Company has amortized $274,000, $365,000 and $71,000 of deferred
compensation related to this grant for the years ended December 31, 2000, 1999
and 1998, respectively. During the fourth quarter of 2000, the officer's
employment terminated and the remaining $387,000 of unamortized deferred
compensation representing the unvested options forfeited was offset against to
additional paid-in capital.

In 2001, the Company recorded compensation expense of approximately 0.5 million
for a transfer of common stock and stock options from an officer to certain
employees. (See Note 13, Related Party Transactions -- Acquisition of Swift
Telecommunications Inc.)

                                      -75-
<PAGE>

During 2000, certain non-bonus eligible employees purchased 635 common stock
options for $100 per share in cash having an exercise price of $146.30 per
share, the fair market value at the date of the grant.

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

In connection with the Company's debt restructuring, the Company issued upon the
closing of the restructuring, warrants to purchase 1.8 million shares of Class A
common stock at $6.10 per share. See Note 8 Notes Payable for a description of
the restructuring and the warrants.

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,
                                               -------------------------------------------------------------------------------
                                                        2002                       2001                        2000
                                               -----------------------   ------------------------    -------------------------
                                                              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.......................    1,855,781      $  13.51     1,334,429    $   28.60         977,695   $    53.40
                                               ---------      --------   -----------    ---------    ------------   ----------
Options granted............................    1,285,300      $   1.04       973,017    $    4.64       1,487,938   $    53.00
Options canceled...........................     (367,635)     $  20.44      (449,665)   $   40.49        (991,945)  $    91.10
Options exercised..........................            -             -        (2,000)   $    5.00        (139,295)  $    18.20
                                               ---------      --------   -----------    ---------    ------------   ----------
Options outstanding at
 end of period.............................    2,773,446      $    .67     1,855,781    $   13.50       1,334,429   $    28.60
                                               =========      ========   ===========    =========    ============   ==========
Options exercisable at period end..........    1,174,560                     810,483                      631,506
                                               =========                 ===========                 ============
Weighted average fair value of
 options granted during the
 period....................................    $     .93                 $      3.92                 $      50.20
                                               =========                 ===========                 ============
</TABLE>

The following table summarizes information about stock options outstanding and
exercisable at December 31, 2002:

<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
---------------------------------------------       --------------   -----------    -----------   ------------   ---------
<S>                                                      <C>         <C>            <C>              <C>         <C>
$.63-.81.....................................               25,000          9.90    $       .70              -   $       -
$.98-1.04....................................            1,289,051          9.00    $       .98         91,997   $    1.00
$2.20-3.00...................................              600,259          8.30    $      2.22        424,088   $    2.20
$3.40-5.10...................................              141,198          5.30    $      4.49        123,593   $    4.53
$5.31-7.80...................................               42,815          6.00           6.20         23,359   $    6.19
$8.13-11.25..................................               51,393   $      3.70    $      9.93         47,015   $   10.00
$12.15-16.88.................................              493,571          6.50    $     15.36        341,631   $   15.73
$20.00-23.36.................................               31,376          2.20    $     21.01         31,376   $   21.01
$32.44-40.00.................................               43,468          5.10    $     35.00         43,422   $   34.99
$50.00-74.61.................................               34,506          5.90    $     52.10         31,373   $   51.45
$118.60-175.00...............................               19,813          6.70    $    155.64         15,754   $  155.57
$190.00-200.00...............................                  977          6.10    $    192.86            952   $  192.94
                                                    --------------   -----------    -----------   ------------   ---------
                                                         2,773,427          7.90    $      6.80      1,174,560   $   11.92
                                                    ==============   ===========    ===========   ============   =========
</TABLE>

<PAGE>


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

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

                                      -76-
<PAGE>

(17)     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 representing 314,642,
75,209 and 15,120 shares of Class A common stock for the year ended December 31,
2002, 2001 and 2000 were $437,000, $412,000 and $534,000, respectively.

Upon the acquisition of STI, the Company has various 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 participants
contribution. Vesting of the Company's matching contribution is immediate. The
Company's matching contributions for the year ended December 31, 2002 and 2001
were $454,000 and $220,000, respectively.

Employee Stock Purchase Plan

On March 14, 2000, the Board of Directors adopted, and on May 18, 2000, the
shareholders approved the EasyLink Employee Stock Purchase Plan (the "ESPP").
Eligible employees can contribute, through a payroll deduction in 1% increments,
from a minimum of 1% to a maximum of 10% of base salary or wages. Each purchase
period lasts for six months beginning on the first day of January and the first
day of July. The purchase price is set at 85% of the lower of the fair market
value of EasyLink Class A common stock on the first day of the purchase period
or on the last day of the purchase period. The fair market value will be
determined based on the closing sales price on the NASDAQ National Market. If
EasyLink shares cease to be traded on the NASDAQ National Market, a committee of
at least two members of the board of directors will determine the fair market
value in the manner prescribed by the plan. During 2001 and 2000, employees
purchased 3,869 and 6,044 shares at an average price of $4.91 and $6.10 per
share, respectively. At December 31, 2001, approximately 94,000 shares were
reserved for future issuances.

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

(18)     Restructuring Charges

During 2002, 2001 and 2000, restructuring charges of $2.3 million, $25.3 million
and $5.3 million, respectively, were recorded by the Company in accordance with
the provisions of EITF 94-3, and Staff Accounting Bulletin 100. During 2002, the
Company's restructuring initiatives are related to the relocation and
consolidation of its New Jersey-based office facilities into one location and a
similar consolidation of its office facilities in England. The relocation
process will begin in the first quarter of 2003. The restructuring charges are
comprised of abandonment costs with respect to leases, including the write-off
of leasehold improvements. During 2001, the Company's restructuring initiatives
are related to our strategic decisions to exit the consumer messaging business
and to focus on the Company's outsourced messaging business. The Company's
restructuring program included an incremental reduction in the workforce of
approximately 150 employees. Employees affected by the restructuring were
notified by direct personal contact and by written notification. The remaining
employee benefit termination amounts will be paid out in 2002. In addition,
asset disposals of $24.1 million reflect write-downs of excess fixed assets and
other assets to their net realizable values. The lease abandonments represent
the cost to exit the facility leases. The remaining amounts are to be paid out
over the next 3 years which corresponds to the terms of the lease.

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

<TABLE>
<CAPTION>
                                         For the year ended December 31, 2002

                              Beginning     Current year-    Current year-    Ending
                               balance        provision       utilization     balance
                              ---------     -------------    -------------   --------
<S>                           <C>           <C>              <C>             <C>
Employee termination
benefits                      $     228     $           -    $          88   $    140
Lease abandonments                  539             2,143              507      2,175
Asset disposals                       -               162              162          -
Other exit costs                     32                15                -         47
                              ---------     -------------    -------------   --------
                              $     799     $       2,320    $         757   $  2,362
                              =========     =============    =============   ========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                         For the year ended December 33, 2001

                              Beginning     Current year-    Current year-    Ending
                               balance        provision       utilization     balance
                              ---------     -------------    -------------   --------
<S>                           <C>           <C>              <C>             <C>
Employee termination
benefits                      $     559     $         879    $       1,210   $    228
Lease abandonments                3,136               335            2,932        539
Asset disposals                       -            24,123           24,123          -
Other exit costs                    203                 -              171         32
                              ---------     -------------    -------------   --------
                              $   3,898     $      25,337    $      28,436   $    799
                              =========     =============    =============   ========
</TABLE>

                                      -77-
<PAGE>

(19) Income Taxes
There is no provision for federal, state or local, and foreign income taxes for
all periods presented, since the Company has incurred losses since inception. At
December 31, 2002 and 2001, the Company had approximately $188.4 and $178.7
million, respectively, of federal net operating loss carryforwards available to
offset future taxable income. Such carryforwards expire in various years through
2022. The Company has recorded a full valuation allowance against its deferred
tax assets since management believes that, after considering all the available
objective evidence, it is not more likely than not that these assets will be
realized. The tax effect of temporary differences that give rise to significant
portions of federal deferred tax assets principally consists of the Company's
net operating loss carryforwards.

Under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"),
the utilization of net operating loss carryforwards may be limited under the
change in stock ownership rules of the Code. As a result of numerous historical
equity transactions, management believes the Company has experienced an
"ownership change," as defined by Section 382. The Company is in the process of
determining when such an ownership change would have occurred. Accordingly, the
utilization of net operating loss carryforwards would be subject to an annual
limitation and would be significantly limited in offsetting future taxable
income.

The effects of temporary differences and tax loss carryforwards that give rise
to significant portions of federal deferred tax assets and deferred tax
liabilities at December 31, 2002 and 2001 are presented below, in thousands.

                                                  December 31,
                                                      2002         2001
                                                  ------------   ---------
         Deferred tax assets:
         Net operating loss carryforwards ......  $     79,548   $  75,026
         Deferred revenues .....................             -         422
         Accounts receivable principally due to
          allowance for doubtful accounts ......         2,277       6,294
         Non-cash compensation .................          3981         594
         Plant and equipment, principally due to
          differences in depreciation ..........         1,416         828
         Write down of assets and investments ..         7,038       4,894
         Accrued expenses ......................           590       2,583
         Restructuring reserve .................           801         973
         Other .................................           112         118
                                                  ------------
         Gross deferred tax assets .............        92,180      91,732
         Less: valuation allowance .............       (92,180)    (91,732)
                                                  ------------   ---------
                Net deferred tax assets ........  $          -   $       -
                                                  ============   =========

Of the total deferred tax assets of $92.2 million existing on December 31, 2002,
subsequently recognized tax benefits, if any, in the amount of approximately
$5.6 million will be applied directly to contributed capital when realized. This
amount relates to the tax effect of deductions for stock options included in the
Company's net operating loss carryforward.

(20)     Valuation and Qualifying Accounts

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

                                      -78-
<PAGE>

<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, 2000......................    $        197   $    1,493    $         403   $     1,316    $    777
For the year ended
December 31, 2001......................    $        777   $    7,224    $       8,731   $     2,185    $ 14,547
For the year ended
December 31, 2002......................    $     14,547   $    2,596    $           -   $     9,091    $  8,052
</TABLE>

(21) Geographic Information

Summarized information by geographic location is as follows:

                                           Year Ended December 31,
                                 ------------------------------------------
                                    2002          2001             2000
                                 -----------   ------------    ------------

North America:
Revenues                         $    89,356   $    100,442    $     52,698
Operating loss                       (84,543)      (168,019)       (151,498)
Total assets                          58,704        161,366         306,917
Long-lived assets                     34,317        129,331         210,819

Europe:
Revenues                              20,940         19,032              -
Operating loss                        (1,798)        (3,755)             -
Total assets                           2,453          7,758              -
Long-lived assets                        938          1,599              -

Asia:
Revenues                               4,058          4,455              -
Operating loss                          (592)          (467)             -
Total assets                            (146)         1,118              -
Long-lived assets                        606            712              -

(22)     Commitments and Contingencies

Master Carrier Agreement

In connection with the acquisition of the EasyLink Services business from AT&T
Corp., The Company entered into a Master Carrier Agreement with AT&T. Under this
agreement, AT&T will provide the Company with a variety of telecommunications
services that are required in connection with the provision of the Company's
services. The term of the agreement for network connection services is 36 months
through May 2005 and the term of the agreement for private line and satellite
services is 36 months, through February 2004. Under the agreement, the Company
has a minimum revenue commitment for network connection services equal to $3
million for each of the three years of the contract. In addition, we have a
minimum revenue commitment for private line and satellite services equal to
$375,000 per month during the three-year term. If the Company terminates the
network connection services or the private line and satellite services prior to
the term or AT&T terminates the services for our breach, the Company must pay to
AT&T a termination charge equal to 50% of the unsatisfied minimum revenue
commitment for these services for the period in which termination occurs plus
50% of the minimum revenue commitment for each remaining commitment period in
the term.

Other Telecommunications Services

The Company has committed to purchase from MCI Worldcom a minimum of $75,000 per
month in other telecommunications services through January 2005.

Legal Proceedings

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

                                      -79-
<PAGE>

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

In connection with the termination of an agreement to sell the portal operations
of the Company's discontinued India.com business, the Company brought suit
against a broker that it had engaged in connection with the proposed sale of the
portal operations alleging, among other things, breach of contract and
misrepresentation. The broker brought a counterclaim against the Company for a
brokerage fee that would have been payable on the closing of the proposed sale.
The court entered a judgment in the amount of $931,000 against the Company. This
judgment has been subsequently vacated by the Court and additional proceedings
are pending before the Court. See Note (24) - Legal Proceedings.

(23) Quarterly Financial Information - Unaudited

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

<TABLE>
<CAPTION>
                                                                  2002                                           2001
                                        -------------------------------------------- ----------------------------------------------
                                        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 ............................   $ 26,003   $  28,017  $   30,029   $  30,305   $ 33,801   $  36,548  $   33,858   $  19,722
Cost of revenues ....................     13,434      14,012      14,282      15,872     17,480      18,178      22,122      18,134
                                        --------   ---------  ----------   ---------   --------   ---------  ----------   ---------
Gross profit ........................     12,569      14,005      15,747      14,433     16,321      18,370      11,736       1,588
Operating expenses(1) ...............     93,926      18,009      15,706      16,046     89,651      30,571      50,044      49,990
                                        --------   ---------  ----------   ---------   --------   ---------  ----------   ---------
(Loss) income from operations .......    (81,357)     (4,004)         41      (1,613)   (73,330)    (12,201)    (38,308)    (48,402)
Gain/(loss) from debt restructuring .          -       6,558           -           -      8,648      (1,116)      1,079      39,349
Other income/(expense), net(2) ......     (2,315)       (796)     (1,320)     (1,039)    (2,259)     (2,128)     (9,917)     (5,453)
                                        --------   ---------  ----------   ---------   --------   ---------  ----------   ---------
(Loss) income from continuing
 operations .........................    (83,672)      1,758      (1,279)     (2,652)   (66,941)    (15,445)    (47,146)    (14,506)
                                        --------   ---------  ----------   ---------   --------   ---------  ----------   ---------
Gain/(loss) from discontinued
 operations .........................          -           -           -           -      4,137      (1,141)    (11,960)    (54,063)
Extraordinary gain ..................          -           -           -           -          -         782           -            -
                                         -------   ---------  ----------   ---------   --------   ---------  ----------   ---------
Net (loss) income ...................    (83,672)      1,758      (1,279)     (2,652)   (62,804)    (15,804)    (59,106)    (68,569)
                                         =======   =========  ==========   =========   ========   =========  ==========   =========
Basic and diluted (loss) income
 per share:
(Loss) income from continuing
 operations .........................   $  (4.86)  $    0.10  $    (0.08)  $   (0.16)  $  (5.32)  $   (1.66) $    (5.36)  $   (2.06)
Gain/(loss) from discontinued
operations ..........................          -           -           -           -       0.33       (0.12)      (1.36)      (7.66)
Extraordinary gain ..................          -           -           -           -          -        0.08           -            -
                                        --------   ---------  ----------   ---------   --------   ---------  ----------   ---------
Net (loss) income ...................   $  (4.86)  $    0.10  $    (0.08)  $   (0.16)  $  (4.99)  $   (1.70) $    (6.72)  $   (9.72)
                                        ========   =========  ==========   =========   ========   =========  ==========   =========
</TABLE>

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

         (1)      Included in operating expenses are impairment and
         restructuring charges of $79,394 in Q4 2002, $60,000 in Q4 2001, $50 in
         Q3 2001, $15,248 in Q2 2001, $12,239 in Q1 2001. Also included in
         operating expenses is a gain on sale of business of $0.3 million and a
         loss on sale of business of $1.8 million in Q1 2001.

         (2)      Included in other income/(expense) are impairment charges of
         $1,515 in Q4 2002, $7,463 in Q2 2001, $2,668 in Q1 2001.

(24)     Subsequent Events - Unaudited


<PAGE>

Debt Settlements

The Company recently announced that it is seeking to eliminate substantially all
of its indebtedness for borrowed money. Pursuant to these efforts, the Company
eliminated approximately $7.1 million principal amount of debt after December
31, 2002 through the date hereof in exchange for the payment of approximately
$0.8 million in cash and the issuance or commitment to issue approximately 1.1
million shares of our Class A common stock. These transactions will result in a
gain of approximately $6.6 million which will be recorded in the first quarter
of 2003. As a result of this transaction, the Company also eliminated $0.7
million of capitalized interest and $0.2 million of accrued interest associated
with the debt eliminated. The Company may issue additional shares or securities
convertible into or exercisable for shares of Class A common stock in connection
with raising any capital needed to fund cash payments for any additional debt
that it may eliminate. Holders of substantially all indebtedness on which the
Company currently owes accrued but unpaid interest payments have agreed to defer
such payments pending completion of our debt restructuring in most cases until
April 30, 2003 or May 31, 2003.

                                      -80-
<PAGE>

Legal Proceedings

On February 27, PTEK Holdings, Inc., one of the Company's principal competitors,
announced that it had entered into an agreement with AT&T to purchase 1,423,980
shares of outstanding Class A common stock of the Company held by AT&T and a
promissory note of the Company held by AT&T. The promissory note, with a
principal amount of $10 million, represents approximately 13% of the aggregate
principal amount of debt that the Company has been seeking to eliminate pursuant
to its debt restructuring plan. In response to PTEK's announcement, the Company
commenced on March 17, 2003 an action against AT&T Corp., PTEK Holdings, Inc.
and PTEK's subsidiary Xpedite Systems, Inc. The suit seeks, among other things,
to enjoin AT&T from selling the promissory note held by AT&T to PTEK, to compel
AT&T to participate in the Company's current debt restructuring and to enjoin
Xpedite and PTEK from contacting the Company's creditors and making false
statements to the Company's customers and creditors regarding the Company and
its financial position. The Company believes that if the sale of the note to
PTEK is permitted to occur, the Company's current debt restructuring may be at
substantial risk. The Court has ordered limited document discovery and has
established a timetable for considering the Company's motion, including a
hearing on May 1, 2003 at which oral argument will be made. No assurance can be
given as to the outcome of this matter.

In connection with the termination of an agreement to sell the portal operations
of the Company's discontinued India.com business, the Company brought suit
against a broker that it had engaged in connection with the proposed sale of the
portal operations alleging, among other things, breach of contract and
misrepresentation. The broker brought a counterclaim against the Company for a
brokerage fee that would have been payable on the closing of the proposed sale.
The Court entered a judgment in the amount of $931,000 against the Company. In
response to the judgment, the Company filed a motion to alter the judgment in
which the Company, among other things, requested that the Court vacate the
judgment or reduce the amount of damages. On February 20, 2003, the Court
vacated the original judgment and entered a declaratory judgment in the
Company's favor that the Company does not owe the broker any fee or other
compensation arising from the failed sale of the portal operations. On March 13,
2003, the broker filed a motion to amend the judgment or for a new trial
requesting, among other things, re-instatement of the original judgment or, in
the alternative, a new trial. The Court has subsequently ordered a settlement
conference to be held on April 1, 2003. Although we intend to defend vigorously
the matter described above, we cannot assure you that the settlement conference
will be successful and, if it is not, that our ultimate liability, if any, in
connection with the claim will not exceed our reserves or have a material
adverse effect on our results of operations, financial condition or cash flows.


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

Not applicable.

                                      -81-
<PAGE>

                                    Part III

The information required by Items 10 through 13 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, 2002.

Stephen Ketchum submitted his resignation as a director of EasyLink due to other
business commitments, effective March 31, 2003.

Item 14  Controls and Procedures

Based on their evaluation, as of a date within 90 days of the filing date of
this Form 10-K, EasyLink's Chief Executive Officer and Chief Financial Officer
have concluded that EasyLink's disclosure controls and procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as
amended) are effective. There have been no significant changes in internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

                                     Part IV

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

Exhibits.

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

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

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

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

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

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

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

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

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

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)

<PAGE>


3.4      By-Laws. (Incorporated by reference to Exhibit 4.3 of Mail.com, Inc.'s
Registration Statement on Form S-8 filed June 19, 2000)

3.5      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)

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 Mail.com, Inc. and Gerald Gorman dated
April 1, 1999. (Incorporated by reference to Exhibit 10.1 to the Registrant's
Registration Statement on Form S-1 (File No. 333-74353) (the "IPO Registration
Statement"))

                                      -82-
<PAGE>

10.2     Employment Agreement between Mail.com, Inc. and Gary Millin dated April
1, 1999. (Incorporated by reference to Exhibit 10.2 to the IPO Registration
Statement)

10.3     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)

10.4     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)

10.5     Stock Option Agreement between Mail.com, Inc. and Gary Millin dated
December 31, 1996. (Incorporated by reference to Exhibit 10.8 to the IPO
Registration Statement)

10.6     Stock Option Agreement between Mail.com, Inc. and Gary Millin dated
June 1, 1996. (Incorporated by reference to Exhibit 10.9 to the IPO Registration
Statement)

10.7     Stock Option Agreement between Mail.com, Inc. and Gary Millin dated
February 1, 1997. (Incorporated by reference to Exhibit 10.10 to the IPO
Registration Statement)

10.8     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)

10.9     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)

10.10    1996 Employee Stock Option Plan. (Incorporated by reference to Exhibit
10.14 to the IPO Registration Statement)

10.11    1997 Employee Stock Option Plan. (Incorporated by reference to Exhibit

10.15    to the IPO Registration Statement)

10.12    1998 Employee Stock Option Plan. (Incorporated by reference to Exhibit

10.16    to the IPO Registration Statement)

10.13    1999 Employee Stock Option Plan. (Incorporated by reference to Exhibit

10.17 to the IPO Registration Statement)

10.14    Lease between Mail.com, Inc. and Braun Management and six amendments
thereto, the most recent dated May 21, 1998. (Incorporated by reference to
Exhibit 10.18 to the IPO Registration Statement)

10.15    Lease between Mail.com, Inc. and Spitfire Marketing Systems Inc. dated
August 14, 1998. (Incorporated by reference to Exhibit 10.19 to the IPO
Registration Statement)

10.16    Space License Agreement and three amendments thereto between Mail.com,
Inc. and Telehouse International Corporation of America, Inc., the most recent
amendment dated March 9, 1999. (Incorporated by reference to Exhibit 10.20 to
the IPO Registration Statement)

10.17    Lease between Mail.com, Inc. and 55 Madison Associates dated September
15, 1998. (Incorporated by reference to Exhibit 10.21 to the IPO Registration
Statement)

10.18    Lease Agreement between Mail.com, Inc. and Leastec Sylvan Credit dated
June 20, 1996. (Incorporated by reference to Exhibit 10.22 to the IPO
Registration Statement)

10.19    Master Lease Agreement between Mail.com, Inc. and RCC dated July 17,
1998. (Incorporated by reference to Exhibit 10.23 to the IPO Registration
Statement)

10.20    Lease Agreement between Mail.com, Inc. and Pacific Atlantic Systems
Leasing, dated January 22, 1999. (Incorporated by reference to Exhibit 10.24 to
the IPO Registration Statement)

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

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


<PAGE>

10.23    Accession Agreement among Mail.com, Inc. and Primus Capital Fund IV
Limited Partnership and the Primus Executive Fund Limited Partnership dated
August 31, 1998. (Incorporated by reference to Exhibit 10.27 to the IPO
Registration Statement)

10.24    Letter Agreement among Gerald Gorman, Primus Capital Fund Limited
Partnership and the Primus Executive Fund Limited Partnership dated August 31,
1998. (Incorporated by reference to Exhibit 10.28 to the IPO Registration
Statement)

10.25    Class E Preferred Stock Investors' Rights Agreement dated March 10,
1999. (Incorporated by reference to Exhibit 10.29 to the IPO Registration
Statement)

                                      -83-
<PAGE>

10.26    Observer Rights Agreement among the Company, Primus, et. al., and
Sycamore Ventures dated August 31, 1998. (Incorporated by reference to Exhibit
10.30 to the IPO Registration Statement)

10.27    Investors' Rights Agreement between NBC Multimedia, Inc., CNET, Inc.
and Mail.com, Inc. dated March 1, 1999. (Incorporated by reference to Exhibit
10.31 to the IPO Registration Statement)

10.28    Lycos Term Sheet Agreement dated October 8, 1997 and the amendments
thereto. (Incorporated by reference to Exhibit 10.32 to the IPO Registration
Statement)

10.29    CNET Warrants dated March 1, 1999. (Incorporated by reference to
Exhibit 10.33 to the IPO Registration Statement)

10.30    NBC Multimedia Warrants dated March 1, 1999. (Incorporated by reference
to Exhibit 10.34 to the IPO Registration Statement)

10.31    Stock Purchase Agreement between Mail.com, Inc. and CNN Interactive
dated July 7, 1998. (Incorporated by reference to Exhibit 10.35 to the IPO
Registration Statement)

10.32    Agreement between CNET, Inc., and Mail.com, Inc. dated May 13, 1998.
(Incorporated by reference to Exhibit 10.36 to the IPO Registration Statement)

10.33    Letter Agreement between CNET, Inc., Snap Internet Portal Service and
Mail.com, Inc. dated as of June 16, 1998. (Incorporated by reference to Exhibit
10.37 to the IPO Registration Statement)

10.34    Letter Agreement between CNET, Inc., Snap Internet Portal Service, NBC
Multimedia, Inc. and Mail.com, Inc. dated as of February 8, 1999. (Incorporated
by reference to Exhibit 10.38 to the IPO Registration Statement)

10.35    Agreement between NBC Multimedia, Inc. and Mail.com, Inc. dated
February 8, 1998. (Incorporated by reference to Exhibit 10.39 to the IPO
Registration Statement)

10.36    Equipment Financing Agreement between Pentech Financial Services, Inc.
and Mail.com, Inc. dated May 1, 1999. (Incorporated by reference to Exhibit
10.41 to the IPO Registration Statement)

10.37    Equipment Financing Lease--EMC Corporation. (Incorporated by reference
to Exhibit 99.1 of Mail.com, Inc.'s Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1999)

10.38    Equipment Financing Lease--Pentech Financial Services,
Inc.(Incorporated by reference to Exhibit 99.2 of Mail.com, Inc.'s Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1999)

10.39    Equipment Financing Lease--Pentech Financial Services, Inc.
(Incorporated by reference to Exhibit 99.3 of Mail.com, Inc.'s Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1999)

10.40    Investor Rights Agreement dated July 14, 1999 between Mail.com, Inc.
and 3Cube, Inc. (Incorporated by reference to Exhibit 99.4 of Mail.com, Inc.'s
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999)

10.41    Agreement and Plan of Merger dated as of August 20, 1999 among
Mail.com, Inc., AG Acquisition Corp., The Allegro Group, Inc. and the
Shareholders of The Allegro Group, Inc. (Incorporated by reference to Exhibit
2.1 of Mail.com, Inc.'s Current Report on Form 8-K filed August 23, 1999)

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

10.43    Data Center Office Lease with AT&T. (Incorporated by reference to
Exhibit 10.ii(D)(2) of Mail.com, Inc.'s Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1999)

10.44    Lease Agreement between Mail.com and Forsyth/McArthur Associates.
(Incorporated by reference to Exhibit 10.ii(D)(3) of Mail.com, Inc.'s Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 1999)

10.45    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)

10.46    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)

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

                                      -84-
<PAGE>

10.48    Registration Agreement dated as of January 26, 2000 by and between
Mail.com, Inc., Salomon Smith Barney Inc., PaineWebber Incorporated, SG Cowen
Securities Corporation and Sands Brothers & Co., Ltd. (Incorporated by reference
to Exhibit 10.56 of Mail.com, Inc.'s Post-Effective Amendment No. 1 to Form S-4
registration Statement (File No. 333-94807) filed on February 3, 2000).

10.49    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")).

10.50    1996 Stock Option/Stock Issuance Plan (Incorporated by reference to
Exhibit 10.4 to the NetMoves Registration Statement).

10.51*   Telecommunications Services Agreement, between LDDS WorldCom and
NetMoves Corporation, dated December 1, 1996 (Incorporated by reference to
Exhibit 10.8 to the NetMoves Corporation's Report on Form 10-Q for the quarter
ended March 31, 1997).

10.52*   Agreement between MCI Telecommunications Corporation and NetMoves
Corporation, effective March 1, 1996 (Incorporated by reference to Exhibit 10.9
to the NetMoves Registration Statement).

10.53    Lease Agreement, dated May 28, 1992, between Metro Four Associates
Limited Partnership, Thornall Associates and NetMoves Corporation (the "Metro
Four Lease "), as extended and amended prior to May 5, 1997 (Incorporated by
reference to Exhibit 10.10 to the NetMoves Registration Statement).

10.54    Amendment to Metro Four Lease, dated May 5, 1997. (Incorporated by
reference to Exhibit 10.9 to NetMoves Corporation's Annual Report on Form 10-K
for the year ended December 31, 1997)

10.55    Loan and Security Agreement, dated September 26, 1997, between NetMoves
Corporation and Silicon Valley Bank. (Incorporated by reference to Exhibit 10.10
to NetMoves Corporation's Annual Report on Form 10-K for the year ended December
31, 1997)

10.56    Letter Agreement, dated November 1, 1994 between Telstra Incorporated
and NetMoves Corporation (Incorporated by reference to Exhibit 10.12 to the
NetMoves Registration Statement).

10.57    Series B Preferred Stock Warrant between NetMoves Corporation and
Comdisco, Inc., dated May 30, 1991 (Incorporated by reference to Exhibit 10.14
to the NetMoves Registration Statement).

10.58    Series B Preferred Stock Warrant between NetMoves Corporation and
Comdisco, Inc., dated September 16, 1992 (Incorporated by reference to Exhibit
10.15 to the NetMoves Registration Statement).

10.59    Loan and Security Agreement, dated March 27, 1998, between NetMoves
Corporation and Silicon Valley Bank. (Incorporated by reference to Exhibit 10.20
to NetMoves Corporation's Annual Report on Form 10-K for the year ended December
31, 1998)

10.60    Purchase Agreement, dated December 24, 1998, between NetMoves
Corporation and the Tail Wind Fund Ltd. (Incorporated by reference to Exhibit
10.1 to NetMoves Corporation's Registration Statement on Form S-3, Registration
No. 333-70915)

10.61    Common Stock Warrant between NetMoves Corporation and the Tail Wind
Fund Ltd., dated December 28, 1998 (Incorporated by reference to Exhibit 10.2 to
NetMoves Corporation's Registration Statement on Form S-3, Registration No.
333-70915)

10.62    Registration Rights Agreement between Mail.com and certain former
stockholders of eLong.com, Inc. listed therein, dated as of March 14, 2000.
(Incorporated by reference to Exhibit 10.70 to Mail.com's Annual Report on Form
10-K for the year ended December 31, 1999)

10.63    Registration Rights Agreement between Mail.com and STD d/b/a Software
Tool & Die, dated as of March 16, 2000. (Incorporated by reference to Exhibit
10.71 to Mail.com's Annual Report on Form 10-K for the year ended December 31,
1999)

10.64    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)

10.65    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)

10.66    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).

<PAGE>

10.67    Options Assumed by Mail.com, Inc. pursuant to an Agreement and Plan of
Merger dated as of March 14, 2000. (Incorporated by reference to Exhibit 99.1 of
Mail.com, Inc.'s Registration Statement on Form S-8 filed June 19, 2000)

10.68    Lease agreement between Mail.com as guarantor and Newcourt Leasing
Corporation. (Incorporated by reference to Exhibit 10.ii(D)(1) of Mail.com,
Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2000)

10.69    Lease agreement between Mail.com as guarantor and Newcourt Leasing
Corporation. (Incorporated by reference to Exhibit 10.ii(D)(2) of Mail.com,
Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2000)

                                      -85-
<PAGE>

10.70    Master Lease agreement between Mail.com and Leasing Technologies
International, Inc. (Incorporated by reference to Exhibit 10.ii(D)(3) of
Mail.com, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2000)

10.71    Master Lease agreement between Mail.com and GATX Technology Services
Corporation. (Incorporated by reference to Exhibit 10.ii(D)(4) of Mail.com,
Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2000)

10.72    Master Lease agreement between Mail.com and Newcourt Leasing
Corporation. (Incorporated by reference to Exhibit 10.ii(D)(5) of Mail.com,
Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2000)

10.73    Note Purchase Agreement dated as of January 8, 2001, by and among
Mail.com, Inc., Mail.com Business Messaging Services, Inc., The Allegro Group,
Inc. and the purchasers listed therein. (Incorporated by reference to Exhibit
99.1 of Mail.com, Inc.'s Current Report on Form 8-K filed January 10, 2001)

10.74    Pledge Agreement dated as of January 8, 2001, by and among Mail.com,
Inc. and World.com, Inc. as pledgors, the holders of Notes listed therein and
The Clark Estates, Inc. as collateral agent on behalf of the holders of Notes.
(Incorporated by reference to Exhibit 99.2 of Mail.com, Inc.'s Current Report on
Form 8-K filed January 10, 2001)

10.75    Registration Rights Agreement dated as of January 8, 2001, by and among
Mail.com, Inc. and the holders of Notes listed therein. (Incorporated by
reference to Exhibit 99.3 of Mail.com, Inc.'s Current Report on Form 8-K filed
January 10, 2001)

10.76    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)

10.77    Form of Notice To Record Shareholders of Mail.com, Inc. (Incorporated
by reference to Exhibit 99.1 of Mail.com, Inc.'s Current Report on Form 8-K
filed January 17, 2001)

10.78    Note Exchange Agreement dated as of January 31, 2001, by and among
Mail.com, Inc., Mail.com Business Messaging Services, Inc., The Allegro Group,
Inc. and the purchasers listed therein. (Incorporated by reference to Exhibit
99.1 of Mail.com, Inc.'s Current Report on Form 8-K filed February 7, 2001)

10.79    Registration Rights Agreement dated as of January 31, 2001, by and
among Mail.com, Inc. and the holders of Exchange Notes listed therein.
(Incorporated by reference to Exhibit 99.2 of Mail.com, Inc.'s Current Report on
Form 8-K filed February 7, 2001)

10.80    Amended and Restated Promissory Note dated January 31, 2001 in the
original principal amount of $35 million issued by Mail.com, Inc. and accepted
by AT&T Corp. (Incorporated by reference to Exhibit 99.1 ofMail.com, Inc.'s
Current Report on Form 8-K filed February 8, 2001)

10.81    Promissory Note dated January 31, 2001 in the original principal amount
of $14 million issued by Swift Telecommunications, Inc. in favor of Mail.com,
Inc. (Incorporated by reference to Exhibit 99.3 of Mail.com, Inc.'s Current
Report on Form 8-K filed February 8, 2001)

10.82    Note Exchange Agreement dated as of February 8, 2001, by and among
Mail.com, Inc., Mail.com Business Messaging Services, Inc., The Allegro Group,
Inc. and the purchasers listed therein. (Incorporated by reference to Exhibit
99.1 of Mail.com, Inc.'s Current Report on Form 8-K filed February 13, 2001)

10.83    Registration Rights Agreement dated as of February 8, 2001, by and
among Mail.com, Inc. and the holders of Exchange Notes listed therein.
(Incorporated by reference to Exhibit 99.2 of Mail.com, Inc.'s Current Report on
Form 8-K filed February 13, 2001)

10.84    Note Exchange Agreement dated as of February 14, 2001, by and among
Mail.com, Inc., Mail.com Business Messaging Services, Inc., The Allegro Group,
Inc. and the purchasers listed therein. (Incorporated by reference to Exhibit
99.1 of Mail.com, Inc.'s Current Report on Form 8-K filed February 26, 2001)

10.85    Registration Rights Agreement dated as of February 14, 2001, by and
among Mail.com, Inc. and the holders of Exchange Notes listed therein.
(Incorporated by reference to Exhibit 99.2 of Mail.com, Inc.'s Current Report on
Form 8-K filed February 26, 2001)

10.86    Bridge Funding and Amendment Agreement by and among India.com, Inc.,
Mail.com, Inc. and the holders of India.com, Inc. Preferred Stock signatories
thereto, together with the Forms of Bridge Notes and Warrants issuable pursuant
thereto attached as Exhibits thereto. (Incorporated by reference to Exhibit 99.3
of Mail.com, Inc.'s Current Report on Form 8-K filed February 26, 2001)

<PAGE>


10.87    Amendment No. 1 to Pledge Agreement by and among India.com, Inc.,
Mail.com, Inc., the collateral agent thereunder and the other parties thereto.
(Incorporated by reference to Exhibit 99.4 of Mail.com, Inc.'s Current Report on
Form 8-K filed February 26, 2001)

10.88    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)

10.89    Promissory Note in the original principal amount of $9,188,235 in favor
of George Abi Zeid. (Incorporated by reference to Exhibit 99.1 of Mail.com,
Inc.'s Current Report on Form 8-K filed March 9, 2001)

                                      -86-
<PAGE>

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

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

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

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

10.94    Note Purchase Agreement dated as of March 13, 2001, by and among
Mail.com, Inc., Mail.com Business Messaging Services, Inc., The Allegro Group,
Inc. and the purchasers listed therein. (Incorporated by reference to Exhibit
99.1 of Mail.com, Inc.'s Current Report on Form 8-K filed March 26, 2001)

10.95    Registration Rights Agreement dated as of March 13, 2001, by and among
Mail.com, Inc. and the holders of Notes listed therein. (Incorporated by
reference to Exhibit 99.2 of Mail.com, Inc.'s Current Report on Form 8-K filed
March 26, 2001)

10.96    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)

10.97    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)

10.98*   Transition Services Agreement dated January 31, 2001 between AT&T Corp.
and Swift Telecommunications, Inc. (Incorporated by reference to Exhibit 2.2 of
Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

10.99*   Master Carrier Agreement dated January 31, 2001 between AT&T Corp. and
Swift Telecommunications, Inc. (Incorporated by reference to Exhibit 2.3 of
Mail.com, Inc.'s Current Report on Form 8-K filed March 9, 2001)

10.100   Shareholding Interest Transfer Agreement by and among eLong, Inc.,
eLong.com (Beijing), Ltd., Asia.com, Inc., and Easylink Services Corporation
(Incorporated by reference to Exhibit 2 of EasyLink Service Corporation's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001)

10.101   Exchange Agreement Amendment dated as of July 10, 2001, by and among
EasyLink Services Corporation and the investors signatory thereto. (Incorporated
by reference to Exhibit 99.1 of EasyLink Services Corporation's Current Report
on Form 8-K filed July 24, 2001)

10.102   Modification Agreement, effective as of June 1, 2001, by and among GATX
Technology Services Corporation and EasyLink Services Corporation. (Incorporated
by reference to Exhibit 99.1 of EasyLink Services Corporation's Current Report
on Form 8-K filed September 28, 2001)

10.103   Modification Agreement, effective as of June 1, 2001, by and between
GATX Technology Services Corporation, as successor in interest to Pacific
Atlantic Systems Leasing, and EasyLink Services Corporation. (Incorporated by
reference to Exhibit 99.2 of EasyLink Services Corporation's Current Report on
Form 8-K filed September 28, 2001)

10.104   Modification Agreement, effective as of June 1, 2001, between EasyLink
Services Corporation, as successor to Mail.com, Inc., and Associates Leasing,
Inc. (Incorporated by reference to Exhibit 99.3 of EasyLink Services
Corporation's Current Report on Form 8-K filed September 28, 2001)

10.105   Modification Agreement, effective as of June 1, 2001, by and among
Forsythe McArthur Associates, Inc. and EasyLink Services Corporation.
(Incorporated by reference to Exhibit 99.4 of EasyLink Services Corporation's
Current Report on Form 8-K filed September 28, 2001)

10.106   Modification Agreement, effective as of June 1, 2001, by and among
Pentech Financial Services, Inc. and EasyLink Services Corporation.
(Incorporated by reference to Exhibit 99.5 of EasyLink Services Corporation's
Current Report on Form 8-K filed September 28, 2001)

<PAGE>

10.107   Modification Agreement, effective as of June 1, 2001, by and among
Phoenix Leasing Incorporated, EasyLink Services USA, Inc. and EasyLink Services
Corporation. (Incorporated by reference to Exhibit 99.6 of EasyLink Services
Corporation's Current Report on Form 8-K filed September 28, 2001)

10.108   Modification Agreement, effective as of June 1, 2001, by and among
MicroTech Leasing Corp. and EasyLink Services Corporation. (Incorporated by
reference to Exhibit 99.7 of EasyLink Services Corporation's Current Report on
Form 8-K filed September 28, 2001)

10.109   Letter Agreement, effective as of June 1, 2001, by and between AT&T
Corp. and EasyLink Services Corporation. (Incorporated by reference to Exhibit
99.8 of EasyLink Services Corporation's Current Report on Form 8-K filed
September 28, 2001)

                                      -87-
<PAGE>

10.110   Letter Agreement, effective as of June 1, 2001, by and between George
Abi Zeid and EasyLink Services Corporation. (Incorporated by reference to
Exhibit 99.9 of EasyLink Services Corporation's Current Report on Form 8-K filed
September 28, 2001)

10.111   Letter Agreement, dated September 12, 2001, by and between Transamerica
Business Credit Corporation and EasyLink Services Corporation. (Incorporated by
reference to Exhibit 99.10 of EasyLink Services Corporation's Current Report on
Form 8-K filed September 28, 2001)

10.112   Letter Agreement, dated as of June 1, 2001, by and between Leasing
Technologies International, Inc. and EasyLink Services Corporation.
(Incorporated by reference to Exhibit 99.11 of EasyLink Services Corporation's
Current Report on Form 8-K filed September 28, 2001)

10.113   Modification Agreement, effective as of June 1, 2001, by and among
Fleet Business Credit, LLC, formerly Fleet Business Credit Corporation and
EasyLink Services Corporation., formerly Mail.com, Inc. (Incorporated by
reference to Exhibit 99.12 of EasyLink Services Corporation's Current Report on
Form 8-K filed September 28, 2001)

10.114   Modification agreement dated as June 1, 2001 by and between AT&T Corp.
and EasyLink Services Corporation. (Incorporated by reference to Exhibit 99(1)
of EasyLink Service Corporation's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2001)

10.115   Modification agreement dated as June 1, 2001 by and among Leasing
Technologies International, Inc. and EasyLink Services Corporation.
(Incorporated by reference to Exhibit 99(2) of EasyLink Service Corporation's
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001)

10.116   Press Release dated January 15, 2002. (Incorporated by reference to
Exhibit 99.1 of EasyLink Services Corporation's Current Report on Form 8-K filed
January 15, 2002)

10.117   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)

10.118   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)

10.119   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)

21**     Subsidiaries of EasyLink Services Corporation

23**     Consent of KPMG LLP.

*        Confidential treatment granted.

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


Financial Statement Schedules

None

Reports on Form 8-K-

The Corporation filed no reports on Form 8-K during the quarter ended December
31, 2002.

                                      -88-
<PAGE>

                                   Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 31, 2003.

                                EasyLink Services Corporation
                                (Registrant)

                                By /s/ THOMAS MURAWSKI
                                ------------------------------------------------
                                (Thomas Murwaski, Chief Executive Officer
                                  and President)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on March 31, 2003.

/s/    GERALD GORMAN            Chairman, Director
------------------------
(Gerald Gorman)

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

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

/s/    DEBRA L. MCCLISTER       Executive Vice President and Chief Financial
------------------------         Officer
(Debra L. McClister)            (Principal Accounting and Financial Officer)

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

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

                                      -89-
<PAGE>

CERTIFICATION

I, Thomas Murawski, certify that:

(1) I have reviewed this annual report on Form 10-K of EasyLink Services
Corporation ("Easylink");

(2) based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which such
statements were made, not misleading;

(3) based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition and results of operations of EasyLink as of,
and for, the periods presented in this annual report;

(4) EasyLink's other certifying officer and I:

(A) are responsible for establishing and maintaining internal controls;

(B) have designed such internal controls to ensure that material information
relating to EasyLink and its consolidated subsidiaries is made known to us by
others within those entities, particularly during the period in which this
annual report is being prepared;

(C) have evaluated the effectiveness of EasyLink's internal controls as of a
date within 90 days prior to the filing date of this annual report (the
"Evaluation Date"); and

(D) have presented in this annual report our conclusions about the effectiveness
of our internal controls based on our evaluation as of the Evaluation Date;

(5) EasyLink's other certifying officer and I have disclosed to EasyLink's
auditors and audit committee of EasyLink's Board of Directors (or persons
fulfilling the equivalent function):

(A) all significant deficiencies in the design or operation of internal controls
which could adversely affect EasyLink's ability to record, process, summarize
and report financial data and have identified for EasyLink's auditors any
material weaknesses in internal controls; and

(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in EasyLink's internal controls; and

(6) EasyLink's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

Date: March 31, 2003                       /s/ THOMAS MURAWSKI
                                           -------------------------------------
                                           Thomas Murawski
                                           Chief Executive Officer and President

                                      -90-
<PAGE>

                                 CERTIFICATION

I, Debra McClister, certify that:

(1) I have reviewed this annual report on Form 10-K of EasyLink Services
Corporation ("Easylink");

(2) based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which such
statements were made, not misleading;

(3) based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition and results of operations of EasyLink as of,
and for, the periods presented in this annual report;

(4) EasyLink's other certifying officer and I:

(A) are responsible for establishing and maintaining internal controls;

(B) have designed such internal controls to ensure that material information
relating to EasyLink and its consolidated subsidiaries is made known to us by
others within those entities, particularly during the period in which this
annual report is being prepared;

(C) have evaluated the effectiveness of EasyLink's internal controls as of a
date within 90 days prior to the filing date of this annual report (the
"Evaluation Date"); and

(D) have presented in this annual report our conclusions about the effectiveness
of our internal controls based on our evaluation as of the Evaluation Date;

(5) EasyLink's other certifying officer and I have disclosed to EasyLink's
auditors and audit committee of EasyLink's Board of Directors (or persons
fulfilling the equivalent function):

(A) all significant deficiencies in the design or operation of internal controls
which could adversely affect EasyLink's ability to record, process, summarize
and report financial data and have identified for EasyLink's auditors any
material weaknesses in internal controls; and

(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in EasyLink's internal controls; and

(6) EasyLink's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

Date: March 31, 2003                       /s/ DEBRA McCLISTER
                                           ---------------------------
                                           Debra McClister
                                           Executive Vice President and Chief
                                            Financial Officer

                                      -91-