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
                     For the transition period from      to

                         COMMISSION FILE NUMBER: 0-21823

                                 FIBERCORE, INC.
                                 ---------------
             (Exact name of registrant as specified in its charter)

                 Nevada                                    87-0445729
--------------------------------------      ------------------------------------
    (State or other jurisdiction of              (IRS Employer Identification
     incorporation or organization)                           No.)

                        253 Worcester Road, P.O. Box 180
                               Charlton, MA 01507
                               ------------------
              (Address and Zip Code of principal executive offices)

                                 (508) 248-3900
                                 --------------
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock,
                                                             par value $.001
                                                             per share
                                                             ---------------
                                                            (Title of Class)

Indicate by check mark 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),

                              Yes   [X]      No    [ ]

and

(2) has been subject to such filing requirements for the past 90 days.

                              Yes   [X]      No    [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act

                              Yes   [ ]      No    [X]

(a)For accelerated filers (as defined in 17 CFR 240.12b-2):

(i)90 days after the end of the fiscal year covered by the report for fiscal
years ending on or after December 15, 2002 and before December 15, 2003;

(ii)75 days after the end of the fiscal year covered by the report for fiscal
years ending on or after December 15, 2003 and before December 15, 2004; and

(iii)60 days after the end of the fiscal year covered by the report for fiscal
years ending on or after December 15, 2004; and

(b)90 days after the end of the fiscal year covered by the report for all other
registrants.

(3)Transition reports on this Form shall be filed in accordance with the
requirements set forth in Rule 13a-10 (17 CFR 240.13a-10) or Rule 15d-10 (17 CFR
240.15d-10) applicable when the registrant changes its fiscal year end.

(4)Notwithstanding paragraphs (2) and (3) of this General Instruction A., all
schedules required by Article 12 of Regulation S-X (17 CFR 210.12-01 -
210.12-29) may, at the option of the registrant, be filed as an amendment to the
report not later than 30 days after the applicable due date of the report.

The aggregate market value of voting stock held by non-affiliates of the
registrant as of April 23, 2003: $ 6,511,610 Number of shares outstanding as of
April 23, 2003: 68,876,094
<PAGE>

                                 FIBERCORE, INC.
                                TABLE OF CONTENTS

                                                                           PAGE
                                                                           ----

PART I........................................................................3
      ITEM 1.  BUSINESS.......................................................3
      ITEM 2.  PROPERTIES....................................................16
      ITEM 3.  LEGAL PROCEEDINGS.............................................17
      ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
               HOLDERS.......................................................33
PART II......................................................................34
      ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS...........................................34
      ITEM 6.  SELECTED FINANCIAL DATA.......................................35
      ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS.....................................36
      ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....51
      ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................52
      ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
               AND FINANCIAL DISCLOSURE......................................88
PART III.....................................................................89
      ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............89
      ITEM 11. EXECUTIVE COMPENSATION........................................91
      ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
               AND MANAGEMENT................................................96
      ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................98
      ITEM 14. CONTROLS AND PROCEDURES.......................................98
PART IV......................................................................99
      ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON 8-K....99
SIGNATURES AND CERTIFICATIONS...............................................100

                                       -2-
<PAGE>

                                     PART I
                                     ------

ITEM 1.  BUSINESS
         --------

GENERAL

The Company was incorporated as FiberCore Incorporated in Nevada in November
1993, and commenced commercial operations at that time. In July 1995, we merged
with and into Venturecap, Inc., an inactive Nevada corporation traded on the OTC
Bulletin Board. Following the merger, Venturecap changed its name to FiberCore,
Inc. On November 16, 2000, our common stock became quoted on the Nasdaq SmallCap
Market. Our executive offices are located at 253 Worcester Road, Charlton,
Massachusetts, 01507 and our telephone number is (508) 248-3900. Our World Wide
Web site address is www.FiberCoreUSA.com.

FiberCore, Inc. ("FiberCore" "FCI" "we" "our" or the "Company") is engaged in
the business of developing, manufacturing, and marketing single-mode and
multimode optical fiber and optical fiber preforms for the telecommunications
and data communications industry. Preforms are the basic component from which
optical fiber is drawn and subsequently cabled by our customers. The Company's
principal operating units are FiberCore Jena A.G. ("FCJ"), the Company's wholly
owned subsidiary in Germany and Xtal FiberCore Brasil S.A. ("Xtal"), the
Company's 90% owned subsidiary in Campinas, Brazil, which was acquired in June
2000.

FCJ was the Company's first operating entity, which is located in Jena, Germany.
FCJ produces both single-mode and multimode fiber and preforms, with an emphasis
on the multimode market. FCJ ships products to customers throughout the world
with its major markets in Europe and North America. The Company has expanded the
operations of FCJ with the construction of a new building 4 km from the original
facility. The first phase of this expansion was completed early in 2002 with all
equipment operational by mid-year. A second phase of expansion, predominantly
the acquisition and installation of equipment to complete the utilization of the
new building, began in early 2002. Completion of this phase has been suspended
due to the reduced demand levels in the industry. When both phases are complete,
total capacity will have been increased by more than 200% from 2001 levels.

Xtal Fibras Opticas S.A. ("Xtal") was acquired from Algar S.A. - Empreendimentos
e Participacoes in June 2000 and is located in Campinas, Brazil. Xtal produces
both single-mode and multimode fiber and single-mode preforms, with an emphasis
on the single-mode market. Xtal ships products worldwide with its primary
markets in the Americas and Asia Pacific regions. The Company had plans to
expand the operations of Xtal, and substantial investment was made toward this
end before these plans were indefinitely delayed due to the decline in the
single mode market in South America and worldwide, which began during the second
half of 2001.

FiberCore USA, Inc., a newly created wholly owned subsidiary of the Company,
entered into an agreement in 2001 pursuant to which the Retirement Systems of
Alabama ("RSA") would partially finance construction of the Company's first U.S.
manufacturing plant in Auburn, Alabama. This facility was designed to primarily
produce multimode fiber. The Company did not begin work on this facility and has
cancelled the project at this time. Additionally, the financing agreement with
RSA expired during 2002 when the project was not initiated.

In March 2001, the Company formed FiberCore Thailand, ("FCT"), a wholly owned
subsidiary. The Company intends to manufacture single-mode fiber and preform for
sale primarily to the Asian/Pacific

                                      -3-
<PAGE>

market in a new facility to be built in Thailand. The Company has made a deposit
of approximately $315,000 for land in Thailand, which it intends to use to build
the plant. Discussions are underway with various banks and potential investors,
including the Industrial Finance Corporation of Thailand and DEG (a German
investment and development company), to finance the project. The Company has
been granted certain tax incentives by the Board of Investment of Thailand that
will run 8 years from the start of operations, with a 5-year extension at
reduced incentive levels, as well as an exemption from import duties for
equipment and materials used in the manufacturing facility. The Company is
proceeding slowly with this project and is currently limiting further investment
until the market for its products strengthens in the Asia Pacific region but
there can be no assurance that such strengthening will ever occur.

In February 2002, the Company formed FiberCore Africa (Proprietary) Limited,
("FC Africa"), a joint venture with the Industrial Development Corp ("IDC") of
South Africa and local investors to build a manufacturing facility for
single-mode fiber in the Cape Town, South Africa area. This facility is expected
to serve the African market, as well as the Middle East and other export markets
when it is operational. This project has also been delayed due to industry
conditions.

FiberCore Asia Sdn. Bhd. ("FC Asia"), incorporated as a joint venture in
Malaysia and presently 51% owned by the Company with the right to increase the
ownership up to 58%, was established to build and operate a local manufacturing
facility for the production of optical fiber and preform in Malaysia's
Multimedia Super Corridor, with tax-free status for five years extendable to 10
years. The Company and its partners have indefinitely delayed this project due
to recent economic conditions in the area and the other projects the Company is
currently engaged in. The Company believes that the economies in this region
will improve, and the Company, together with its joint venture partners, plans
to develop a significant presence in the region at that time. In 2002, the
Company reversed the related balance sheet accounts of FC Asia due to the
uncertainty that this facility will ultimately be built. The contractual
arrangements are still in place to allow future activity under the joint venture
if and when conditions improve.

The Company's other subsidiaries serve fiber-related activities. Through
FiberCore Machinery ("FCM"), a wholly owned subsidiary of FCJ that was formed in
March 2000, the Company designs, manufactures and installs specialty equipment
used to manufacture optical fiber and preforms. Currently, FCM primarily
supplies preform- manufacturing equipment to the Company's fiber manufacturing
operations.

In May 2000, FiberCore Quarz GmbH ("FCQ") was formed in Germany as a wholly
owned subsidiary of the Company. In April of 2001, FiberCore Glas GmbH ("FCG")
was formed in Germany as a wholly owned subsidiary of FCJ. FCQ and FCG will be
utilizing the Company's newly patented Plasma Outside Vapor Deposition ("POVD")
technology to complement the outside supply of synthetic silica tubes that
periodically is in short supply. In the first phase of implementation, the
Company established a limited production facility in Jena-Maua, Germany. In July
2001 FCQ purchased an existing building located near the new FCJ plant to
establish this production operation. The facility and equipment has been
financed through a combination of German grants, loans and internal financing.
The plant has begun limited operations in early 2003 and will ramp-up production
during the year. In addition to assuring an internal source of supply, the POVD
technology will reduce the cost of tubes to the Company, its subsidiaries, and
affiliates. Initially the technology will be introduced to the manufacturing of
single-mode fiber and, at a later date, to multimode fiber.

On June 1, 2001, the Company acquired the capital stock of Data Communications
Inc. ("DCI"), a privately held company located in Hyannis, Massachusetts, to
boost the breadth of the Company's

                                      -4-
<PAGE>
technical capabilities used in support of bringing optical fiber closer to the
end-user. DCI was merged into FiberCore's Automated Light Technologies ("ALT")
subsidiary and the merged entity was subsequently renamed DCI FiberCore, Inc. In
July 2002, the subsidiary was renamed FiberCore Systems, Inc. ("FCS"). FCS
designs, installs and maintains low cost fiber optic networks, primarily in the
northeast U.S., for local area network applications, such as those used in
hospitals, universities, government and commercial buildings. The Company plans
to expand marketing of FCS services to other areas of the US, Brazil, and the
Middle East toward specific targeted projects.

Middle East Fiber Cables is a cable manufacturer, located in Saudi Arabia, in
which the Company holds a 7% interest.
<TABLE>
<S>                            <C>                         <C>                     <C>                       <C>
                                          ---------------------
                                          |  FiberCore, Inc.  |
                                          |        USA        |
                                          ---------------------
                                                    |
           -------------------------------------------------------------------------------------------------------------
           |               |              |                          |                        |                        |
----------------------     |  -------------------------   ----------------------   -----------------------   ----------------------
|  FiberCore Jena *  |     |  | Xtal FiberCore Brasil*|   | FiberCore Asia ****|   | FiberCore Thailand**|   |  FiberCore USA **  |
|       (100%)       |     |  |          (90%)        |   |        (51%)       |   |        (100%)       |   |       (100%)       |
|       Germany      |     |  |         Brazil        |   |      Malaysia      |   |       Thailand      |   |         USA        |
|    MM / SM Fiber   |     |  |    Single-mode Fiber  |   |  Single-mode Fiber |   |   Single-mode Fiber |   |    MM / SM Fiber   |
|     & Preforms     |     |  |        (some MM)      |   |      & Preform     |   |       & Preform     |   |                    |
----------------------     |  -------------------------   ----------------------   -----------------------   ----------------------
           |               |
       ------------------  ---------------------------------------------------------------------------------------------
       |                |                        |                   |                       |                         |
----------------  --------------------  --------------------  ----------------  ----------------------------  ---------------------
|   FiberCore  |  |FiberCore Glas ***|  |FiberCore Quarz***|  |   MEFC ***   |  |FiberCore Systems, Inc.***|  |FiberCore Africa **|
| Machinery ***|  |      (100%)      |  |      (100%)      |  |     (7%)     |  |        (100%) USA        |  |       (60%)       |
|    (100%)    |  |     Germany      |  |     Germany      |  | Saudi Arabia |  |     Network Design,      |  |    South Africa   |
|   Germany    |  |Silica Jacketing &|  |Silica Jacketing &|  | Optical Fiber|  |     Install, Maintain    |  | Single-mode Fiber |
|  Equipment   |  | Deposition Tubes |  | Deposition Tubes |  |    Cable     |  |   Monitoring Equipment   |  |                   |
----------------  --------------------  --------------------  ----------------  ----------------------------  ---------------------
</TABLE>
   *  Fiber
  **  Fiber (planned)
 ***  Fiber related
****  Inactive

RECENT DEVELOPMENTS

Independent Auditors Deliver Going Concern Opinion, Potential Change of Control
-------------------------------------------------------------------------------
and Nasdaq Delisting
--------------------

As of the date of this Annual Report on form 10-K, the Company was in violation
of certain covenants and is currently in default under loan agreements with the
Holders of its Convertible Debentures and with Algar. These default conditions
cause a cross-default on the Fleet credit facility of $8,500,000 and on a
$1,500,000 loan from Tyco International Finance Alpha GmbH and Fleet and/or Tyco
could accelerate the maturity date of their respective loans and the entire
balances could become immediately due. In the event of a default of the Fleet
Credit Facility, Fleet could exercise the provisions of a guarantee given by
Tyco International Group S.A. to be paid in full by Tyco and Tyco would then
assume Fleet's position as a creditor of the Company. In this case, Tyco would
also have the right to assume control of the Company's Board of Directors. Also,
as shown in the financial statements, the Company's current liabilities exceeded
its current assets by $27,352,000 at December 31, 2002, including $9,250,000 of
long-term debt that has been classified as current as a result of being in
default. The Company must raise approximately $5 million in additional financing
soon and/or restructure some of its obligations to address its liquidity crisis.
The Company is also attempting to renegotiate the terms on approximately $18
million in short-term debt and notes payable, including the $9.25 million
discussed above, and an additional $3 - $5 million is planned to be shifted to
long-term debt based on financing activities associated with the Phase 2
expansion of our German operation. These factors by, among others, have led our
auditors in their opinion included herein, to question our ability to continue
as a going concern. The Company's continuation as a going concern is

                                      -5-
<PAGE>

dependent upon its ability to generate sufficient cash flow to meet its
obligations on a timely basis and to obtain additional financing or refinancing
as may be required.

On April 17, 2003, the Company received a notification of delisting from Nasdaq.
The Company had not yet filed this Annual Report on Form 10-K with the SEC as of
this date due to delays in finalizing the results from its foreign subsidiaries.
The Company had previously filed for an extension to file this Annual Report on
Form 12b-25, which expired on April 15, 2003. As a result of not timely filing
its 10-K, the Company received a Nasdaq staff determination on April 17, 2003
indicating that the Company fails to comply with the filing requirements for
continued listing set forth in Marketplace Rule 4310(c)(14), and further that
the Company is late in paying fees to Nasdaq which is a failure to comply with
Marketplace Rule 4310 (c) (13), and that its securities would, therefore, be
delisted from the Nasdaq SmallCap Market at the opening of business on April 28,
2003. Accordingly, the trading symbol for the Company's securities was changed
from FBCE to FBCEE at the opening of business on April 22, 2003. The Company has
filed for a hearing to contest this determination. This hearing is scheduled for
May 22, 2003. The delisting action has been stayed until the hearing date. If
the Company is delisted, it would cause an additional event of default under the
terms of the Convertible Debentures which, if no intervening waivers were
granted would lead to an additional cross-default under the terms of the Fleet
facility. If delisted, the Company will endeavor to facilitate trading of its
common stock on the OTC-Bulletin Board.

Sale of Securities
------------------

The Company has completed the following sales of securities during the past
fiscal year:

      $5,500,000 in 5% convertible subordinated debentures for capacity
      expansion and productivity initiatives in Germany, initial funding for
      FiberCore Africa (Proprietary) Limited ("FiberCore Africa") and other
      corporate purposes. Repayment of the $5,500,000 is scheduled at a rate of
      $500,000 per month, commencing April 1, 2002. $1,500,000 was repaid in
      cash in the second quarter. Pursuant to the Company's option under the
      agreement the Company elected to make the scheduled payments due July 1,
      August 1 and September 1 via the issuance of stock. Under the agreement,
      upon 30 days prior notice to the holders of the debentures, the Company
      can elect to pay a scheduled payment in stock. If the Company elects to
      make a payment in stock, the holders of the debentures can elect to either
      increase the payment by up to 100% or decrease the payment by up to 50%.
      For the months of July, August and September 2002, a total of $1,533,330
      in principal was paid in common stock to the debenture holders. In
      addition, $112,426 in accrued interest was paid in stock. The total number
      of shares issued for the principal and interest payments during the third
      quarter amounted to 7,293,682 shares, including 1,648,913 shares of
      restricted stock at an average price per share of $.22564 per share.
      According to the Company's transfer agent, 331,288 shares are still held
      by the holders as of May 5, 2003. Warrants were issued in connection with
      the 5% convertible subordinated debentures. The fair value of the warrants
      was recorded as debt discount on the accompanying consolidated balance
      sheet. The debt discount is being amortized over the period of the loan
      using an effective interest rate method. The Company has the option, under
      certain circumstances, of continuing to issue shares in payment of the
      Debentures if the shares have been previously registered pursuant to an
      effective registration statement. The Company is currently unable to pay
      in registered shares because it does not have an effective registration
      statement registering sufficient shares for such purpose. The Company did
      not have sufficient excess funds to make the October 1, 2002, November 1,
      2002 and December 1, 2002 monthly redemptions of the Debentures and
      received a waiver with respect to such redemptions through December 2,
      2002. The Company has not made any monthly redemptions since that date and
      is engaged in on-going discussions with the holders of the Debentures. The
      Company has not

                                      -6-
<PAGE>

      received a waiver from the holders for the past due payments and is
      currently in default under the terms of the debentures. The Company
      currently has $2,467,000 in outstanding debentures.

FIBER OPTIC PREFORM MANUFACTURING TECHNOLOGIES

Optical fibers are solid strands of hair-thin, high quality glass that are then
bundled together in cables, through which information is transmitted via light
pulses from one point to another. At the transmission point, electrical impulses
representing the information are converted into light waves by a laser or light
emitting diode. At the point of reception, the light waves are converted back
into electrical impulses by a photo-detector. Each fiber consists of a central
core of high-purity glass encased in a glass cladding of a lower refractive
index. The light signals are transmitted through the core and the cladding is
designed to reduce signal loss from the fiber to the outside.

Communication by means of light waves guided through glass fibers offers a
number of advantages over conventional means of transmitting information through
metallic conductors. Glass fibers carry significantly more information
(bandwidth) than metallic conductors but, unlike metallic conductors, are not
subject to electromagnetic or radio frequency interference. Signals of equal
strength can be transmitted over much longer distances through optical fibers
than through metallic conductors and require the use of fewer repeaters (devices
which strengthen a signal). Further, fiber-optic cables, which typically
consists of numerous optical fibers encased in one or more plastic sheaths, are
substantially smaller and lighter than metallic conductor cables of the same
capacity, so they can be less expensive and more easily installed, particularly
in limited conduit or duct spaces.

There are two basic types of communication optical fibers: multimode fiber and
single-mode fiber. Multimode fiber has a larger core (the area where the light
travels) than single-mode fiber, has less information carrying capacity
(bandwidth), and is more expensive, but it is easier to use. It is generally
used over relatively short distances in wiring buildings, groups of buildings as
well as campus networks. The electronics and the connectors required to work
with multimode fiber are less costly than the electronics required for
single-mode fiber. For example, the light source for multimode fiber can be
light emitting diodes as well as recently introduced low cost VCSEL (vertical
cavity, surface emitting lasers) while single-mode fiber requires more costly
laser light sources. Single-mode fiber is used in long-distance trunk lines
(cables between cities), fiber-to-the-curb (cable from a central office to the
curb in front of an office building or home) and fiber-to-the home applications.

The three basic technologies widely used to manufacture multimode and
single-mode optical fiber are:

      1)    Outside Vapor Deposition ("OVD").

      2)    Inside Vapor Deposition ("IVD"), which is also known as Modified
            Chemical Vapor Deposition ("MCVD"). Due to its flexibility, relative
            ease of operation and relatively lower capital investment this
            process is the most widely used around the world by independent
            manufacturers.

      3)    Axial Vapor Deposition ("AVD" or "VAD"), also known as the "Japanese
            process".

                                      -7-
<PAGE>

The raw material (basic production unit) from which fiber "is drawn" is a
preform. A preform is a cylindrical high purity glass rod with a high refractive
index glass material in the central part of the rod (the "core") and a low
refractive index glass material in the outer part of the rod (the "clad"). The
rod can range from a few to over 80 millimeters in diameter and one to several
meters in length. From one such preform many thousands of meters of optical
fiber can be drawn. Optical fiber cable is produced from optical fiber by first
coloring the coated fiber and then encasing the fiber in a protective jacket.

PROPRIETARY MANUFACTURING PROCESS AND PRODUCTS

The Company manufactures both multimode and single-mode preforms and fibers
using a number of patented and proprietary manufacturing processes. The Company
does not manufacture optical fiber cable.

The Company's patented technology can be best described as a "rod-and-tube"
process, or as a hybrid of the OVD, MCVD, AVD, and the Company's latest POVD
(Plasma Outside Vapor Deposition) processes. The Company's processes include
manufacturing of core glass via MCVD and over-jacketing it with available high
quality synthetic silica tubes, or internally manufactured cladding material via
its recently patented POVD process. The Company has also invented a plasma
process to manufacture the core material at dramatically faster deposition rates
than the MCVD process, and deposition efficiencies of well over 90% compared to
those experienced with the MCVD process of approximately 50%. The higher
deposition efficiencies mean the Company will require less raw material to
manufacture its products.

The Company has begun implementing its POVD technology into manufacturing, and
expects significant cost reduction in the future from this and other recently
invented technologies and processes to more efficiently produce optical fiber
preform and fiber.

Fibercore System Products
-------------------------

DCI FiberCore ("DCI") was created through the acquisition of Data Communications
Inc. in June 2001. Data Communications Inc. was merged into the Company's ALT
subsidiary and the combined entity was re-named DCI FiberCore, Inc. In July
2002, DCI was renamed FiberCore Systems, Inc. ("FCS"). FCS designs, installs and
maintains low cost optical fiber networks primarily in the Northeast U.S., for
local area network applications, such as those used in hospitals, universities,
government and commercial buildings. FCS has also begun diversifying sales
activities in North America, South America, Europe and the Middle East. Some of
these projects include a new FTTH (fiber-to-the-home) project in Brazil, FTTH
project in Northwest U.S. and design and installation of an optical fiber
network at the Company's new facility in Germany.

FCS has also been involved in design, installation and maintenance of Wide Area
Networks, and non-fiber optic networks.

RESEARCH AND DEVELOPMENT

The Company has set-up a new limited production facility in Jena-Maua, Germany,
in 2002, utilizing its recently patented Plasma Outside Vapor Deposition
("POVD") technology. Additional equipment may be installed in the future, based
on operating results from the initial production operation. The Company's POVD
technology is protected by U.S. Patent No. 6,253,580 and U.S. Patent No.
6,536,240 B1. The Company has filed the corresponding patent applications in
many foreign countries through the Patent

                                      -8-
<PAGE>

Cooperation Treaty (PCT) and expects that counterpart filings will be issued in
the near future, while the first POVD patent has been issued in South Africa
already. The Company has also filed for several new patents, dealing with the
POVD enhancements, including an "All Plasma" single-step preform manufacturing
process which has not been commercialized yet.

The Company conducts research and development ("R&D") activities primarily at
its manufacturing facilities. The Company's research and development activities
are designed to improve the production process of fiber and preforms with
special emphasis on cost reduction and the development of new processes and
products. R&D efforts relative to process improvement and product cost reduction
have taken a higher level of priority due to the recent slowdown in the
single-mode market. Some of the other development programs consist of:

      1)    Metropolitan Area Network fibers that are more suitable for shorter
            distances such as Internet access, Feeder Loop (also known as
            "Metropolitan Area Network"), Fiber to the Curb and Fiber to the
            Home application

      2)    Single-mode Fiber for Undersea Applications: special dispersion
            compensating fiber pairs that will be utilized in long-distance
            underwater networks. Because of the recent slow down in the
            single-mode fiber market, this program has been temporarily delayed.

      3)    High Performance Multimode Fibers for Gigabit and 10 Gigabit
            Ethernet Applications has been developed and is now in production
            and being sold.

      4)    Improved radiation resistant fiber and coatings for military
            applications has been put in production.

The Company's R&D expenditures have decreased by 14.3% during 2002 from the
prior year and had increased 50% during 2001 as compared to the year 2000. Such
expenditures amounted to $1,876,848, $2,189,000 and $1,459,000 for the fiscal
years ended December 31, 2002, 2001 and 2000, respectively. Twenty-two (22) of
the Company's employees devote substantially all of their time to research and
development.

SALES AND MARKETING

Marketing Strategy
------------------

To capitalize on the anticipated long-term growth in fiber demand, the Company's
sales and marketing strategy has been to increase market penetration through
developing long-term, strategic relationship supply contracts for both preform
and fiber products as rapidly as practical, expanding the Company's global sales
and marketing programs, and emphasizing the performance and cost advantages of
the Company's patented technologies. The Company's strategy is to emphasize to
its customers the fact that it does not compete with them in cabling of the
optical fiber and therefore can act as a true partner in the customer's
business. Consistent with this strategy and with the downturn in demand for
single-mode fiber in North America and Europe starting in July of 2001, caused
by a sharp reduction in capital spending coupled with an overcapacity of
installed fiber, the Company increased sales and marketing efforts for multimode
fiber and preform and increased sales and marketing efforts in the Asia Pacific
region for all products. These efforts have been focused on establishing
strategic alliances in developing countries such as China and India where
management believes the demand remains stable. However, prices in these

                                      -9-
<PAGE>

countries have also been falling, as the large fiber manufacturers, including
those from Japan and Korea reduce inventories and reduce prices to obtain
business. Multimode fiber that was initially marketed in Europe and the Americas
is now also being marketed and sold into emerging countries such as China, India
and Korea. Unlike single-mode, the demand for the Company's multimode products
was not affected in 2002 due to the economic downturn, and shipments increased
from 2001 levels although prices were lower.

Management believes the telecommunications infrastructure of developing
countries is in the early stages of evolution and competition is not as well
established, although competition has been increasing rapidly due to the
downturn in other markets. In the past, developing countries would typically
purchase older, previously deployed communications technology and equipment.
However, the lack of a copper cable infrastructure, the desire to become more
technologically advanced, and the rapid growth in cellular communication and
electronic commerce have driven most developing countries to choose fiber in its
backbone rather than copper to develop a sophisticated communications network.
These countries must first install a fiber optic infrastructure of trunk and
feeder lines followed by fiber, copper or wireless to the subscriber loop. The
Company is initially targeting the large fiber optic cable manufacturing
companies in Asia, the Middle East, the Pacific Rim, and certain European and
Eastern European markets. Ten employees plus several strategically located
agencies devote substantially all of their time to sales and marketing, covering
several regions throughout the world, including the United States, South
America, Western and Eastern Europe, Asia Pacific, the Middle East and Africa.
In certain areas of these regions, independent sales representatives assist in
the sales and marketing efforts.

Strategic Relationships
-----------------------

The Company continues to increase market penetration in optical fiber markets
through strategic alliances and/or joint ventures. The Company has several
strategic customer relationships and has established two joint ventures. In
addition, discussions continue with potential foreign and domestic investors,
and joint venture partners, including cable manufacturers, to build plants for
producing optical fiber and optical fiber preform that would supply existing or
planned fiber optic cable plants. In most cases, the timetable for building
these plants has been extended into the future due to market conditions, but the
discussions continue.

These relationships are being structured for the Company to provide the preforms
and/or fiber and the related technology requirements, and the other partner to
provide the financing, operating, and local marketing expertise. Using this
approach, it may be possible for the Company to more rapidly obtain market share
with a relatively small capital investment.

Expansion
---------

The Company anticipates that product demand will continue to be generated from
its strategic alliances, as well as from independent manufacturers of fiber
optic cable. The Company intends to capitalize on the expected long-term growth
of the fiber optics industry by constructing a number of facilities to produce
optical fiber and optical fiber performs when demand strengthens. The Company
plans to use a well-balanced, phased-in approach for establishment of these
facilities.

In response to customer demand for the Company's fiber in 2000, the Company
implemented a capacity expansion program in 2000. The new facility in Maua,
Germany (4 km from the original Jena operation) completed construction and was
officially opened February 14, 2002. This new facility offers improved
manufacturing efficiency, thereby increasing the Company's competitiveness in
the marketplace, and more

                                      -10-
<PAGE>

than doubles the capacity of the original FCJ plant. The Company began the
second phase of the project to complete furnishing the new facility with
additional equipment to further increase capacity, but placed this activity on
hold due to market conditions.

The Company's Brazilian subsidiary, Xtal, has a current capacity of over
1,000,000 kms of single-mode fiber per year. The integration of FiberCore and
Xtal technologies increased Xtal's capacity from the 500,000 km per year level
that existed prior to its acquisition by FiberCore. The Company had initiated
expansion efforts in 2000, but stopped these activities in mid-2001 when the
market downturn began in South America. The plant has available excess building
space as well as land for new construction, which will allow the Company to add
processing equipment that can more than double the existing capacity if and when
demand requires it. In the longer term, the Company anticipates opening new
facilities in South Africa and Asia if and when market conditions improve.

COMPETITION

The Company is the only "pure" fiber supplier in the Western Hemisphere and
Europe. With Corning, Furukawa/OFS (formerly Lucent), Sumitomo and Alcatel all
involved in manufacturing cable and having limited (fiber) supply during periods
of market shortage (which was the case during 2000 and the first half of 2001),
many independent cablers have turned to FiberCore for fiber, which has altered
the competitive environment. Due to overcapacity and the reduced demand for
fiber, and the Company's desire to increase market share, the Company has
concentrated on manufacturing and selling fiber rather than preform. In the
second half of 2001 and into 2002, the major fiber producers, such as Corning,
the Japanese and Korean producers, who normally used most of their production to
supply their own cabling facilities and do not normally compete directly with
the Company, have entered into the independent market in a stronger way due to
the slowdown in the single-mode market. This has contributed to lower prices in
the fiber market and making contracts with new customers more competitive. Due
to the continued weak market, major fiber producers have adjusted their
capacities according to market demand, thereby shifting the regional competitive
situation. For example, Corning closed all their production facilities in Europe
and Alcatel shutdown their U.S. facility. Lower pricing has had an adverse
effect on FiberCore's results of operations. See "Recent Events" and "Liquidity"
sections (See Risk Factor 15 - "Substantial Competition")

Fiber
-----

The competition in multimode fiber products is limited to a few manufacturers in
North America and Europe, such as Corning, Inc., Furukawa/OFS (formerly Lucent
Technologies), Alcatel, and Draka (Plasma Optical Fiber). Management believes
that Corning, Inc., Furukawa/OFS, and Alcatel generally supply the majority of
their production to their own cabling facilities and/or joint venture partners.
Therefore, in the US and Europe, the Company concentrated on multimode fiber as
its primary product, due to the Company's unique technological and cost
advantage, coupled with the fact that the other three large U.S. producers do
not focus on the multimode fiber as their primary business. Furthermore,
FiberCore offers several types of multimode fibers for specific applications and
performance advantages. These include different glass composition for radiation
resistant fiber for Government applications, high performance multimode fiber
for emerging network protocols, such 10 Gigabit Ethernet, and special coatings
for customer specific applications. Additionally, because of manufacturing
flexibility, the Company is positioned to respond quickly to special customer
requirements and applications.

The competition in the single-mode fiber market is much more extensive than in
the preform market or the multimode fiber market. Most of the competition for
fiber comes from Corning, Inc. and Furukawa/OFS in

                                      -11-
<PAGE>

North America, Draka, OFS/Furukawa and Alcatel in Europe and from Corning,
Furukawa, Samsung and Sumitomo in Asia. Competition in the fiber market was
primarily based on availability and quality and during the last global shortage
enabled the industry to raise prices after many years of falling prices. The
downturn in the economy and the telecommunications industry that affected global
demand for single-mode fiber has also once again driven pricing to record low
levels, caused primarily by overcapacity in the industry. The Company believes
that single-mode pricing will start to increase again in late 2003 or early 2004
along with increased and growing demand. In the past, with some exceptions, the
Company's fiber has been generally priced at comparable levels to fiber
manufactured by the larger producers. Overall, changes in both product and
manufacturing have enabled the Company to keep pace with global pricing trends
and, if required, compete below market levels. The Company is focused on
marketing its line of high performance multimode products to support emerging
protocols for the FTTH (Fiber to the Home) applications, which have excellent
price/performance characteristics.

Preform
-------

Management believes that there is limited competition in the sale of preforms to
cable manufacturers who draw their own fiber. Such competition, however, is
expected to grow. The largest competitor in this product is Shin Etsu, a
Japanese company.

The predominant practice of most fiber manufacturers is to make fiber optic
preforms only for their internal use and not to sell preforms to other
fiber-optic manufacturers. Management believes these large companies will not
enter the preform market because of the built-in inherent disincentive in
selling preforms; they have already invested heavily in plant, equipment and
technology to convert preforms into fiber and/or cable, and by selling preforms
they would be giving up value-added margins. Most of the Company's customers are
not vertically integrated and require preforms that are in limited supply. This
is particularly true in Asia where the Company has made significant strides in
marketing its preforms to many of the newly established cable companies set up
to take advantage of the significant growth expected over the next 5 - 10 years.

CUSTOMERS, INVENTORY, BACKLOG AND ADVERTISING

A key element of the Company's marketing strategy is to maintain sufficient raw
material and finished goods inventories to enable the Company to fill customer
orders promptly. However, due to recent liquidity issues, the inventory has
fallen to lower than desired levels. (See Risk Factor 4 - "Liquidity")

Customers Representing Over 10% of Sales
----------------------------------------

For 2002 and 2001, only one customer exceeded the 10% level of overall sales.
Optical Cable Corporation represented 17.9% of sales in 2002 and Cabelte Cabos
Electricos S/A represented 19% of the Company's sales in 2001 and 11% in 2000.
In 2000, Furukawa Industrial S/A Produtos Eletricos was the only other company
that exceeded the 10% level with sales to them totaling 11% of total sales.

The Company continues to seek to decrease its dependency on any one customer by
expanding its presence in more markets and adding new customers each year. In
previous years, the loss of any of the largest customers (in percentage of
sales) would have had a material adverse effect on the Company. The broadening
of the Company's customer base presents less risk in the event that any of the
largest customers decide to cancel contracts or orders. However, the loss of
business in the second half of 2001 from Cabelte,

                                      -12-
<PAGE>

when combined with the overall market slowdown, particularly in South America,
had a significant negative impact on our business during that period and during
2002.

Backlog and Sales Activity
--------------------------

At December 31, 2002, the Company had a backlog of orders approximating $41
million, of which approximately $14 million is currently scheduled for 2003
shipments. This number may continue to change as a result of re-pricing
mechanisms in the Company's contracts and potential re-schedules due to changing
business conditions. All backlog numbers are calculated based on pricing levels
in effect as of the date indicated. The backlog does not include any orders
taken or anticipated in 2003. The decrease in the order backlog reflects the
weaker market for fiber since the middle of 2001, which has resulted in a shift
to an essentially spot market for fiber, and the reduction of prices and the
rescheduling of existing contracts from many of the Company's customers. It also
reflects the removal from our backlog of Cabelte, which filed for "Concordata"
(Brazilian reorganization/insolvency filing in February, 2003), and other South
American customers where there is great uncertainty on when they will resume
production. (See Risk Factor 12 - "Dependence on a Limited Number of Customers")

At the end of 2002, ten of the Company's employees were engaged in sales
activities, five in Europe, two in North America, one in South America, and two
in Asia, the Middle East and Africa along with several agencies located within
Asia. Assisted by local representatives, management intends to establish
strategic relationships with key managers of local CATV, telephone, and cable
companies. In addition, other management executives participate in negotiating
long-term supply agreements with current and potential customers.

PATENTS

In order to be competitive in the hi-tech industry, companies invest significant
resources in research and development. To protect these valuable intellectual
properties, companies file patent applications. The Company is also heavily
invested and highly dependent on its patents. The Company's long-term strategy
includes becoming a low-cost producer of fiber optic preforms and optical fiber
to independent manufacturers of fiber optic cable. To do this, the Company must
continually improve its manufacturing processes at its facilities by
implementing the Company's patented technologies, by developing new techniques
that lower production costs, and by offering new and competitive products. With
these patents, manufacturing efficiencies are increased, thereby reducing
manufacturing cost and improving overall profitability. The Company has been
able to expand its business and reduce the need for cash financing by leveraging
the Company's intellectual property. For example, in the South African joint
venture, the Company contributed the value of its technology in return for a 50%
interest in the joint venture while contributing cash for an additional 10%
interest. Similarly, because of increases in manufacturing efficiency provided
by the Company's patented technology, the Company has been able to increase
capacity with less equipment than would otherwise be required. By capitalizing
on its technology in this manner, the Company reduced its cash requirements and
the likelihood of additional shareholder dilution. The Company plans to use this
financing technique in future transactions when and as appropriate. The
Company's patents also help protect the Company from competition by preventing
others from using the technology covered by the patents. In 1997 and 1998, the
Company filed two patent applications in the U.S. for a process, which the
Company believes will improve the cost and efficiency of producing optical fiber
preforms.

                                      -13-
<PAGE>

The 1997 patent filing was approved by the U.S. Patent office on July 3, 2001
and issued with U.S. Patent Number 6,253,580. In October 2002, US patent office
notified the Company the 1998 filing was also allowed and the patent was issued
on March 25, 2003 with U.S. Patent Number 6,536,240. These two U.S. patents
related to the Company's unique POVD technology for making tubes and preforms.
The Company has filed the corresponding patent applications in many foreign
countries through the Patent Cooperation Treaty (PCT). U. S. Patent Number
6,253,580 was issued in Germany, Brazil, Japan, and the United Kingdom. The
Company expects that other counterpart filings will be issued in the near
future. In the mean time, these two POVD patents have been issued in South
Africa already. In March 2001, the Company filed another patent application that
resulted from the continuing POVD development efforts. During 2002, the Company
has filed two applications related to preform fabrication processes. Three more
patent disclosures have been prepared and are currently under review and
preparation for filing applications. In the past, the Company has not considered
licensing its technology, however, the Company is reviewing this policy and may
change it and licensing may be used to generate additional revenues.

The Company is the registered owner in the United States of three patents
covering its cable monitoring systems and fault locating methods. The Company
acquired from Norscan a patent issued by the United Kingdom for the same
technology. In addition, the Company has filed international patent applications
covering this technology in various other countries around the world, although
none have yet been granted. Pursuant to the Company's agreement with Norscan,
Norscan has the right to a Canadian patent re-issuance and may otherwise use the
technology in Canada. The Company has improved upon Norscan's technology and
obtained a European patent and United States patent, Patent No. 5,077,526, that
expires in 2008 covering the improvements. The Company also owns a United States
patent, Patent No. 4,947,469 expiring in 2007, and a European patent covering a
cable fault location method. In addition, the Company owns a United States
patent covering the provision of backup power to optical communications systems.
In 2002, the Company wrote down the value of these patents because it is
uncertain when the Company will be able to devote the proper resources to
commercializing these products.

The Company's ability to compete effectively will depend, in part, on its
ability to protect its intellectual property. There can be no assurance that the
steps taken by the Company to protect its intellectual property will be adequate
to prevent misappropriation or that others will not develop competitive
technologies or products. Furthermore, there can be no assurance that others
will not independently develop products that are similar or superior to the
Company's products or technologies, duplicate any of the Company's technologies,
or design around the patents issued to the Company. In addition, the validity
and enforceability of a patent can be challenged after its issuance. While the
Company does not believe that its patents infringe upon the patents or other
proprietary rights of any other party, other parties may claim that the
Company's patents do infringe upon such patents or other proprietary rights.
There can be no assurance that the Company would be successful in defending
against such a claim of infringement. Moreover, the expense of defending against
such a claim could be substantial and could have a material adverse effect on
our liquidity.

INTERNATIONAL OPERATIONS

The Company is subject to all the risks of conducting business internationally.
These risks include unexpected changes in legislative or regulatory requirements
and fluctuations in the United States Dollar, the Japanese Yen, the Euro, the
Brazilian Real, and other currencies in which the Company is doing business from
time to time. The business and operations of FCJ and Xtal are subject to the
changing economic and political conditions prevailing from time to time,
primarily in Germany and Brazil, respectively. In addition, Brazil's economy has
been subject to periods of high inflation. Brazil in the

                                      -14-
<PAGE>

past has been subject to political instability and is in a region that has
experienced political instability in other countries such as Argentina and
Venezuela. FiberCore Asia, the Company's joint venture in Malaysia, which has
been delayed, is subject to similar international risks. There is also the
threat of regional conflict. The Company's participation in MEFC is subject to
the risks of doing business in Saudi Arabia and the Middle East in general.
These risks include, but are not limited to, the threat of regional conflict. To
date, essentially all of the Company's revenues have come from its subsidiaries,
FCJ and Xtal. (See Risk Factor 22 - "Risks Associated with International
Operations")

TRADEMARKS

FCI is the owner of the registered trademarks InfoGlas(R), EconoGrade(R) and
ValuGrade(R) under which it markets its optical fiber products.

SEASONALITY

The Company's business does not have strong seasonal fluctuations and the
Company does not expect material seasonal variations to revenue.

RAW MATERIALS

The Company presently can purchase all its raw material requirements for its
optical fiber and preform business. The major component of a preform is silica
glass tubing, which is available in various sizes. Various high purity gases
such as oxygen, nitrogen, argon, helium, chlorine and chemicals such as silicon
tetrachloride, silicon tetrafluoride and germanium tetrachloride are used in the
process of manufacturing preform. During 2002, FCJ purchased approximately 95%
of its key glass-tube raw material from Heraeus Quarz Glas GmbH & Co. KG
("Heraeus") located in Hanau, Germany. Heraeus accounted for approximately 95%
of the German facility's glass tube requirements in 2001 and 2000 as well.
During 2001, Xtal purchased approximately 36% of its preform requirements from
Shin Etsu, a Japanese Company, and 55% of its requirement in 2001. In early
2001, the Company entered into a five-year contract with Heraeus to supply
tubes. Quantities under the contract, together with glass from other sources are
expected to satisfy most of the Company's current needs. The contract contains
mutual "take or pay" provisions to the extent that the Company purchases less
than or Heraeus delivers less than the agreed upon annual percentage covered by
the annual purchase order. For 2002 and 2003, the agreed upon percentage rates
are 80% and 70%, respectively. During 2002, the Company purchased less product
from Heraeus than called for under the terms of the contract. The Company is
working with Heraeus to achieve a satisfactory resolution for both companies in
light of the overall downturn in the optical fiber and preform business.

Xtal is party to a three-year take-or-pay contract, expiring in June 2003, with
Shin Etsu for the delivery of single-mode preforms to Xtal. In 2002, Xtal
purchased approximately $1,118,000 of product under the contact and in 2001
purchased approximately $10,900,000 of product. The contract calls for monthly
purchases of preform with 50% of the volume at a fixed price and 50% to be set
quarterly based on market prices. There are provisions in the contract that
provide for exceptions for both parties regarding the requirements to ship or
purchase preforms. In the fourth quarter of 2001 and for most of 2002, Xtal
elected not to take most of the contracted volume under one of these provisions.
Shin Etsu has contested Xtal's interpretation of the contract and has submitted
a claim to arbitration relative to this volume and additional volumes under a
non-related agreement, which is not a take-or-pay agreement. The arbitration
proceedings

                                      -15-
<PAGE>

are on going with a decision expected from the arbitration panel during the
second quarter of 2003. See "Legal Proceedings"

If the Company becomes unable to secure its raw material requirements, as
needed, there can be no assurance that the Company will be able to obtain raw
materials on commercially acceptable terms from others, and such failure to
obtain raw materials could have a material adverse effect on the Company. To
limit the possibility of future shortages of key materials, the Company has
successfully identified alternate suppliers. In addition, the Company plans to
augment its tube requirements through its own internally manufactured tubes,
using its new POVD technology. The Company believes this technology will yield a
significant competitive advantage through increased manufacturing efficiency and
reduced production costs. Both FCJ and Xtal have the capability to manufacture
the high-purity synthetic core glass using a purchased cladding tube to which
glass is deposited as well as adding purchased cladding tubes utilizing the
Company's patented production process. (See Risk Factor 14 - "Dependence on
Third Party Suppliers")

EMPLOYEES

At December 31, 2002, the Company employed 288 persons, of whom 3 are officers,
52 are in sales and administration, 214 are in manufacturing and 22 are
principally in research and development. Of the 288 employees, 18 are
headquartered in the United States, 67 in Brazil, 4 are in South Africa and 199
in Germany. Almost all of Xtal's production and industrial employees are members
of a union. The collective bargaining agreement covering substantially all
members (executives are not covered) provides for an annual distribution to
employees of a specified amount, as agreed by the Union and Xtal in the first
quarter of each year, for the following year. FCS employs a number of people
through various unions in connection with installation of fiber optic networks.
As of year-end, FCS employed 5 union employees. FCS pays wages for these
employees, however all benefits are provided through the unions. FCS pays union
dues to cover these costs. The Company is a party to a collective bargaining
agreement with these employees, however the employees are employed by job as
demand dictates. The Company is not party to any other collective bargaining
agreements and the Company does not maintain a pension plan. The Company
considers its relations with employees to be satisfactory and believes that its
employee turnover does not exceed the industry average.

ITEM 2.     PROPERTIES
            ----------

The Company leases 5,000 square feet of office space as its Corporate
Headquarters in Charlton, Massachusetts. The monthly rent is $2,750, and the
rental agreement is on a monthly basis.

The Company, through its subsidiaries, has two manufacturing facilities. FCJ's
original facility is located in Jena, Germany. That manufacturing facility is
leased at a monthly cost of approximately $24,000 and occupies approximately
38,700 sq. ft., including 23,500 sq. ft. of production space, 13,000 sq. ft. of
office and storage space and an additional 1,700 sq. ft. of outside facilities
for gas storage tanks. FCJ's new buildings, which the Company owns, occupy
approximately 107,000 sq. ft., including 76,000 of production space, 19,000 sq.
ft. of office and storage space and 12,000 of outside facilities for gas storage
tanks. FCJ owns all machinery and equipment, subject to certain restrictions, at
the Jena facility. In 2000, the term of the lease for the Jena original
operation was extended to December 31, 2003 and is renewable for additional
successive one-year terms, at the option of the Company; the Company intends to
remain in this facility and will use it in conjunction with a newly constructed
facility in Jena-Maua, which became operational in 2002. Xtal owns the land and
buildings at its facility in Campinas, Brazil, which includes

                                      -16-
<PAGE>

approximately 5 acres of land. The site is comprised of 6 separate buildings for
a total of 70,000 sq. ft. that contain 14,000 sq. ft. of production space,
21,000 sq. ft. of support and storage space, 14,000 sq. ft. of external
facilities for gas storage tanks and other space, and 21,000 sq. ft. of office
space. There is currently approximately 90,000 square feet of space available
for expansion at Xtal.

The Company maintains casualty and liability insurance at both facilities.

The Company has a deposit on 18 acres of land for the purpose of building a
facility in Thailand. The Company is proceeding slowly with this project and is
currently limiting further investment until the market for its products
strengthens in the Asia Pacific region but there can be no assurance that such
strengthening will ever occur.

ITEM 3.     LEGAL PROCEEDINGS
            -----------------

The Company is currently in litigation with Techman International Corp.
("Techman") and M. Mahmud Awan ("Awan") who controls Techman, relating to
certain investments, contracts and other claims. Both parties are seeking
approximately $500,000 in cash. In addition, the Company is suing Techman and
Awan for the return of shares that have been canceled by the Company because of
the failure of Techman and Awan to satisfy certain conditions related to their
issuance. The litigation is in the discovery and motion phase. The Company
believes that its claims against Techman and Awan are valid and that it will
ultimately prevail on its claims, but given the uncertainties inherent in
litigation, the outcome cannot be predicted with any reasonable certainty at
this time.

Xtal is party to a 3-year take-or-pay contract expiring in June 2003, with Shin
Etsu for the delivery of single-mode preforms to Xtal. In 2001 and 2002, Xtal
purchased approximately $10,900,000 and $1,118,000 respectively of product under
the contact. The contract calls for monthly purchases of preform with 50% of the
volume at a fixed price and 50% to be set quarterly based on market prices.
There are provisions in the contract that provide for exceptions for both
parties regarding the requirements to ship or purchase preforms. In the fourth
quarter of 2001 and during most of 2002, Xtal elected not to take most of the
contracted volume under one of these provisions. Shin Etsu is contesting Xtal's
interpretation of the contract and has submitted a claim to arbitration relative
to this volume and additional volumes under a non-related agreement that is not
a take-or-pay agreement. The total amount in dispute as of March 31, 2003 is
approximately $11,400,000 with approximately $8,750,000 related to the
take-or-pay contract. Xtal and the Company have submitted their position to the
arbitration panel and the process is on going. The Company anticipates a ruling
from the arbitration panel during the second quarter of 2003. However, if Xtal
were to ultimately lose, Xtal could be required to purchase the preforms in
question and/or pay damages as well as pay the costs of arbitration. In that
case, the legal costs of arbitration and any damages required would negatively
impact the Company's operating results, but the costs of the material required
to be purchased would become part of inventory/cost of sales. This could
potentially have a negative operating impact as well, depending on the price of
the preforms determined in the arbitration ruling versus the market price of the
preforms at the time of the ruling. If Xtal and the Company were to lose in
arbitration, and the judgment against the Company was substantial, it could have
a significant negative impact on the liquidity of the Company and could
potentially put the Company into a state of insolvency.

On August 2, 2002 a patent infringement suit was filed against the Company. The
complaint was filed in the United States District Court for the Northern
District of Georgia, Atlanta Division, case number 1:02CV2149. The action was
brought by Fitel USA Corp., and alleges infringement by the Company of three
patents held by Fitel. The plaintiff alleges in the complaint that the Company
has infringed and

                                      -17-
<PAGE>

continues to infringe on U.S. Patent No. 4,909,816, on U.S. Patent No. 5,298,047
and on U.S. Patent No. 5,418,881. The plaintiff sought an injunction permanently
prohibiting the Company from directly infringing on the named patents or
inducing or contributing to the infringement of the U.S. Patent No. 5,418,881 by
others, and sought unspecified compensatory and treble damages, attorneys fees
and costs, and such other and further relief as is just and proper. On December
13, 2002 the Court granted the Company's motion to dismiss for lack of
jurisdiction.

On December 18, 2002 Fitel USA Corp. re-filed the complaint in the United States
District Court Western District of North Carolina, case number S02CV163V. The
plaintiff makes the same allegations and seeks the same redress as outlined in
the previous filing. The Company believes these claims to be without merit, has
retained counsel and will vigorously defend itself in this case. If this suit is
not settled and goes to trial, the legal costs associated with defending itself
could be significant for the Company. If the Company were to ultimately lose
this suit, it could have a significant negative impact on the Company's ability
to compete in the marketplace for some period until the Company could adjust its
production processes, and could have a material negative effect on the liquidity
of the Company and could potentially put the Company into a state of insolvency.

In addition to the above, the Company is subject to various claims that arise in
the ordinary course of business. The Company believes such claims, individually
or in the aggregate, will not have a material adverse effect on the business of
the Company.

RISK FACTORS
------------

Set forth below and elsewhere in this Annual Report, and in other documents we
file with the SEC are some of the principal risks and uncertainties that would
cause our actual business results to differ from any forward-looking statements
or other projections contained in this report, or from prior actual results. In
addition, future results could be materially affected by general industry and
market conditions, general U.S. and world-wide economic and political
conditions, including a global economic slowdown, fluctuation of interest rates
or currency exchange rates, terrorism, political unrest or international
conflicts, natural disasters or other disruptions of expected economic
conditions. Additionally, our common stock is highly speculative and is subject
to numerous and substantial risks, some of which are set forth below. Therefore,
prospective investors should carefully consider the following risk factors as
well as the information contained elsewhere in this Annual Report. These risk
factors should be considered in addition to our cautionary comments concerning
forward-looking statements in this Report, including statements related to
markets for our products and trends in our business that involve a number of
risks and uncertainties. Our separate statement labeled Forward Looking
Statements should be considered in addition to the statements below.

                                      -18-
<PAGE>

      1)    THE COMPANY HAS EXPERIENCED SIGNIFICANT LOSSES DURING THE PAST 18
            MONTHS, HAS SUBSTANTIAL DEBT AND DOES NOT CURRENTLY HAVE THE
            FINANCIAL RESOURCES TO MEET ITS UPCOMING OBLIGATIONS. THESE
            CONDITIONS RAISE SUBSTANTIAL DOUBT ABOUT THE COMPANY'S ABILITY TO
            CONTINUE AS A GOING CONCERN.

The Company had a net loss in 2002 of $31,077,000 and losses of $5,548,000
during the last 2 quarters of 2001. The Company does not expect to return to
profitability until late 2003 or 2004. As shown in the financial statements, the
Company's current liabilities exceeded its current assets by $27,352,000 at
December 31, 2002, including $9,250,000 of long-term debt that has been
classified as current as a result of being in default. The Company had total
liabilities at December 31, 2002 of $71,126,000 including current liabilities of
$47,713,000. If the Company does not raise additional financing soon, reduce
costs and/or restructure its debts and obligations, there is substantial doubt
about the Company's ability to continue as a going concern. There can be no
assurances that the Company will be successful in these actions.

                                      -19-
<PAGE>

      2)    THE COMPANY HAS RECEIVED A NOTICE OF DELISTING FROM THE NASDAQ
            SMALLCAP MARKET AND COULD BE DELISTED PENDING THE RESULTS OF A
            HEARING ON MAY 22, 2003

Our common stock is quoted on the Nasdaq SmallCap Market, and has been subject
to frequent significant price fluctuations. Furthermore, we must meet certain
maintenance requirements, including a $1.00 minimum bid requirement, in order
for such securities to continue to be listed on the Nasdaq SmallCap Market. On
April 15, 2003, the last reported sale price of our common stock was $.19 per
share. If our securities are de-listed from the Nasdaq SmallCap market,
investors' interest in our securities could be reduced.

On June 3, 2002, we received a notice from the Nasdaq Stock Market stating that
for 30 consecutive trading days, the bid price for our common stock closed below
the minimum $1.00 per share requirement for continued listing on the Nasdaq
SmallCap Market. The notice indicated that pursuant to applicable rules, we were
provided with 180 days (i.e. until December 2, 2002), to regain compliance. If
at any time before December 2, 2002 the bid price of our common stock closed at
$1.00 per share or more for a minimum of 10 consecutive trading days, we would
have been in compliance with the minimum bid requirement.

As we were unable to demonstrate compliance by December 2, 2002, the Nasdaq
Stock Market reviewed our latest financial statements (as of September 30, 2002)
and determined that we continued to meet initial listing criteria. We would meet
these criteria if we would have any of the following: (i) stockholder's equity
of $5 million; (ii) market capitalization of $50 million; or (iii) net income of
$750,000 (excluding extraordinary or non-recurring items) in the most recently
completed fiscal year or in two of the last three most recently completed fiscal
years. As of September 30, 2002, we had stockholder's equity of $21,329,000. As
a result of meeting the initial listing criteria on December 2, 2002, the Nasdaq
Stock Market granted us an additional 180 calendar-day grace period (i.e. until
May 29, 2003) to demonstrate compliance with the minimum bid requirement. If the
Company is not in compliance by May 29, 2003, our stock would be de-listed,
absent successful appeal. The Nasdaq Stock Market has recently proposed new
rules that would allow for further extensions of time to demonstrate compliance
of the $1 minimum bid requirement if the Company continues to meet the initial
listing criteria. As of December 31, 2002 the Company had stockholder's equity
of $4,462,000. Therefore, the Company may not be able to meet this criterion on
May 29, 2003 without an equity infusion or an increase in its stock price.

Additionally, the Company on April 17, 2003 received a notification of delisting
from Nasdaq. The Company had not yet filed this Annual Report on Form 10-K with
the SEC as of this date due to delays in finalizing the results from its foreign
subsidiaries. The Company had previously filed for an extension to file this
Annual Report on Form 12b-25, which expired on April 15, 2003. As a result of
not timely filing its 10-K, the Company received a Nasdaq staff determination on
April 17 indicating that the Company fails to comply with the filing
requirements for continued listing set forth in Marketplace Rule 4310(c)(14),
and further that the Company is late in paying fees to Nasdaq which is a failure
to comply with Marketplace Rule 4310 (c) (13), and that its securities would,
therefore, be delisted from the Nasdaq SmallCap Market at the opening of
business on April 28, 2003. Accordingly, the trading symbol for the Company's
securities was changed from FBCE to FBCEE at the opening of business on April
22, 2003. The Company has filed for a hearing to contest this determination.
This hearing is scheduled for May 22, 2003. The delisting action has been stayed
until the hearing date.

                                      -20-
<PAGE>

De-listing could materially and adversely affect the trading market and prices
for our securities. A de-listing could also trigger an additional event of
default under the terms of the convertible debt issued to Riverview Group, LLC,
Laterman & Co. and Forevergreen Partners, which, if un-remedied, could trigger a
cross default on our credit agreement with Fleet National Bank. In the event of
a default of the Credit Facility, Fleet could exercise the provisions of a
guarantee given by Tyco International Group S.A. to be paid in full by Tyco and
Tyco would then assume Fleet's position as a creditor of the Company. In this
case, Tyco would also have the right to assume control of the Company's Board of
Directors. Events of default could result in acceleration of the maturity of our
debt to Riverview Group, LLC, Laterman & Co. and Forevergreen Partners or Fleet,
as the case may be. If delisted, the Company will endeavor to facilitate trading
of its common stock on the OTC-Bulletin Board.

      3)    WE ARE CURRENTLY IN DEFAULT UNDER THE TERMS OF OUR SUBORDINATED
            DEBENTURES AND SOME OF OUR LOAN AGREEMENTS. THIS COULD ADVERSELY
            AFFECT OUR LIQUIDITY AS WELL AS RESULT IN A CHANGE IN CONTROL OF THE
            COMPANY'S BOARD OF DIRECTORS.

The Company has approximately $2.5 million of principal outstanding against the
Convertible Subordinated Debentures issued in January and June of 2002 ("the
Debentures"). During the first nine months of 2002, the Company has paid $1.5
million in cash payments and reduced the outstanding balance since the start of
the third quarter by $1.53 million through the issuance of common stock, and has
the option, under certain circumstances, of continuing to issue shares in
payment of the Debentures if the shares have been previously registered pursuant
to an effective registration statement. The Company is currently unable to pay
in registered shares because it does not have an effective registration
statement registering sufficient shares for such purpose. The Company has not
had sufficient funds to make redemptions of the Debentures since September of
2002 and had received a waiver with respect to such redemptions required through
December 1, 2002. Such waiver, however, was conditioned on the Company reaching
an agreement with the holders of the Debentures on or prior to December 2, 2002
with respect to re-scheduling redemption payments and collateralizing the
Company's obligations. The Company has been engaged in discussions with the
holders of the Debentures to reach a revised agreement. However, the Company and
the holders of the Debentures have not reached a final agreement and therefore
the Company is currently in a state of default with the holders of the
Debentures. This causes a cross-default on the Fleet credit facility of
$8,500,000 and on a $1,500,000 loan from Tyco International Finance Alpha GmbH
and Fleet and/or Tyco could accelerate the maturity date of their respective
loans and the entire balances could become immediately due. If an event of
default on the Debentures continues, the holders have the right to accelerate
the maturity date and the entire balance of $2,467,000 could become immediately
due. The aforementioned defaults and cross defaults could have a negative effect
on our liquidity. There is no availability on the Fleet credit facility.

The Company has $1.25 million due to Algar associated with the purchase of Xtal
that was not paid on the due date of December 20, 2002. The Company has held
discussions with Algar to defer or otherwise adjust this requirement and these
discussions are continuing. However, the Company and Algar have not reached an
agreement and therefore the Company is currently in a state of default with
Algar under the terms of a Loan Agreement. This causes a cross-default on the
Fleet credit facility of $8,500,000 and on a $1,500,000 loan from Tyco
International Finance Alpha GmbH and Fleet and/or Tyco could accelerate the
maturity date of their respective loans and the entire balances could become
immediately due. In the event of a default of the Credit Facility, Fleet could
exercise the provisions of a guarantee given by Tyco International Group S.A. to
be paid in full by Tyco and Tyco would then assume Fleet's position as a
creditor of the Company. In this case, Tyco would also have the right to assume
control of the Company's Board of

                                      -21-
<PAGE>

Directors. The result of these current events of default with the Debenture
holders and with Algar has caused the Company to reclassify $7,750,000 of the
Fleet Credit Facility and a $1,500,000 loan from Tyco International Finance
Alpha GmbH from long-term to short-term debt.

      4)    WE NEED TO OBTAIN ADDITIONAL FINANCING OF APPROXIMATELY $5,000,000
            SOON TO ADDRESS OUR LIQUIDITY CRISIS.

Failure to obtain the financing contemplated by our business plan could have a
material adverse effect on our business, results of operations, and our
financial condition. We estimate that we need to obtain additional financing of
approximately $5,000,000 soon, primarily to complete payments on previous
expansion activity and process improvements in Germany and Brazil and for
working capital until the Company can again achieve a positive cash flow from
operations as the technology improvements are implemented. The Company currently
does not have sufficient cash reserves to meet its cash flow requirements in the
coming months without an infusion of capital and/or a rescheduling of
obligations. The amount of additional financing required assumes the use of cash
generated from operations. Accordingly, if the level of cash generated from
operations in 2003 is less than expected, we will need to obtain additional
financing. Our history of prior losses, as well as our current defaults under
our financing agreements could adversely affect our ability to obtain financing.
If the Company does not obtain the necessary financing, it and/or some of its
subsidiaries may have to file for reorganization or insolvency. Furthermore, to
the extent that we reduce our outstanding and authorized common stock as a means
of increasing the trading price of our common stock, this action may delay or
impede our ability to issue future shares of common stock in connection with any
future financing.

For 2000, net cash provided by operations was $9,171,000. For 2001, net cash
used in operations was $3,976,000 and for 2002, cash used in operations was
$350,000. Therefore, we may not be able to internally fund potential operating
losses and we cannot fund the current amount of capital expenditures payments
solely from our current cash and cash equivalents.

      5)    WE HAVE A HISTORY OF OPERATING LOSSES AND OUR ABILITY TO BECOME
            PROFITABLE AGAIN AND GENERATE SUFFICIENT PROFITS TO SUSTAIN THE
            GROWTH OF OUR BUSINESS IS UNCERTAIN.

We incurred operating losses from our inception in 1993 until the third quarter
of 2000, when we reported net income of $836,000. For the next three quarters we
remained profitable, generating total net income of $8,324,000. However, in the
third and fourth quarters of 2001 we reported a total net loss of $5,548,000 and
a net loss of $31,077,000 for the year 2002. Accordingly, operating results have
been subject to yearly and quarterly fluctuations, partially due to Company
performance and partially due to the economic cycles of the telecommunications
industry, and are expected to continue to fluctuate as a result of a number of
factors. These factors include fluctuations in product demand and product prices
and resulting gross margins, increased product and price competition, variations
in product costs and the mix of products sold, the size and timing of customer
orders and shipments, the ability to deliver products based on new and
developing technologies, and manufacturing capacity. Significant fluctuations in
operating results could contribute to volatility in the market price of our
common shares. Continued operating losses could decrease the market price of our
common stock, and limit our financing options. To be profitable we must
successfully overcome the risks disclosed in this section. We continue to be
subject to foreign currency risks and the risk of breach by significant
customers. We may never generate sufficient profits to sustain the growth of our
business. As of December 31, 2002, we had an accumulated deficit of
approximately $50,490,000.

                                      -22-
<PAGE>

      6)    UNLESS THE CURRENT CONDITIONS OF OUR INDUSTRY CHANGE, THE DECLINE IN
            PRICES AND THE OVERSUPPLY OF OPTICAL FIBER AND PREFORM WILL REDUCE
            OUR ABILITY TO ACHIEVE PROFITABILITY AND TO OBTAIN FINANCING.

We continue to be exposed to industry-wide risk of oversupply affecting the
telecommunications and data communications industry, which are beyond our
control and have affected and may continue to affect our operations. As a result
of overcapacity and the current economic and industry downturn in
telecommunications, pricing pressures increased in 2002 and are expected to
continue in 2003. To the extent that market supply continues to exceed market
demand for our products, prices for our products could be expected to decline
further from already depressed levels. Decreased growth in telecommunications in
general and in the growth of internet use, in particular, in the United States
and Western Europe could reduce demand for our products, which are used in the
transmission of data over the internet, and could result in a further decline in
prices for our products. Furthermore, developing countries, including China and
Malaysia and developing regions, including the Pacific Rim and Middle East, are
large consumers of fiber optics as they build telecommunications
infrastructures. A slowing of growth and modernization in these countries and
regions could decrease the demand for our products and result in a further
decline in prices. We may also be burdened by the costs associated with excess
capacity. These factors could prevent us from achieving profitability or could
result in substantially lower profitability than we have anticipated.

Specifically, at the present time, optical fiber manufacturers have experienced
an extensive and sustained downturn in the demand for their products, primarily
single-mode fiber. While other markets have experienced weakness, this downturn
has been most notable in the U.S., South American and European long-haul
markets, as the major telecom carriers have significantly reduced capital
expenditures. As a result, there is presently an oversupply of single-mode
fiber. In response to the overcapacity and the trimming of inventories, prices
for single-mode fiber have fallen by approximately 50% to 70% since mid 2001,
depending on the market.

Continued softening of markets and reduction of global diversification of our
revenue stream could have a continuing material adverse effect on our business,
results of operations, and/or financial condition.

      7)    WE MAY BE LIMITED IN OUR ABILITY TO OBTAIN ADDITIONAL CAPITAL ON
            COMMERCIALLY REASONABLE TERMS.

The Company, as of year-end 2002, has low cash reserves and limited ability to
access credit lines. The Company has a high debt-to-equity ratio (12.2 to 1),
has fully utilized its credit line with Fleet, has no access to new credit with
its bankers in Brazil, and currently has no availability against its credit
lines in Germany. During the fourth quarter of 2002, Crescent informed the
Company that it had decided not to extend the existing equity agreement, which
was scheduled to expire December 31, 2002, between Crescent and the Company,
providing for the sale of common stock to Crescent. At that time, Crescent
indicated that they had no current plans to sell any common stock in the Company
held by Crescent. Recent discussions with potential investors have indicated
that terms and conditions of any cash infusion, whether debt or equity, could be
more costly to the Company than prior financings, if available at all. If we are
delisted from the Nasdaq SmallCap Market, this situation could be made more
difficult. If delisted, the Company will endeavor to facilitate trading of its
common stock on the OTC-Bulletin Board. (See Risk Factor 2 - "Delisting")

                                      -23-
<PAGE>

      8)    IF WE DO NOT SUCCESSFULLY ADJUST OUR MANUFACTURING VOLUMES AND
            REDUCE OUR COSTS OF PRODUCTION, INCLUDING ACHIEVING SATISFACTORY
            MANUFACTURING YIELDS, OUR OPERATING RESULTS COULD BE MATERIALLY
            ADVERSELY AFFECTED.

In the current economic and industry downturn in telecommunications, we have
reacted to this situation by cutting costs, including reducing our capacity. We
have reduced staff and production volumes at our Brazilian operation by
approximately 65% and have also more recently reduced staff at our Jena, Germany
operations as well. In addition to staffing reductions, we have taken steps to
reduce expenditures in all other areas as well as at all of our locations.
Although we plan to complete our planned restructuring and cost reduction
activities, we may not realize all of the cost reductions anticipated, and they
still may not be sufficient to restore the Company to profitability given the
significant erosion in product prices and resulting margins. We cannot assure
you that our plans will be successful in offsetting the negative impact of the
market downturn, and we cannot assure you that further adjustments and charges
against income will not be necessary to respond to future market changes.

      9)    WE HAVE INCURRED, AND MAY INCUR IN THE FUTURE, RESTRUCTURING AND
            OTHER CHARGES, THE AMOUNTS OF WHICH ARE DIFFICULT TO PREDICT
            ACCURATELY.

The telecommunications industry was severely impacted in 2001 and 2002 by excess
manufacturing capacity, increased competition in the marketplace and growing
pressures on prices and profits. These trends are expected to continue during
2003, although at a slower rate. In 2002, we recorded charges for restructuring,
inventory write-downs and impairment of assets. If adverse trends continue, it
is possible that additional charges will be required.

      10)   SHAREHOLDERS MAY SUFFER DILUTION FROM ANY EQUITY OR CONVERTIBLE DEBT
            OFFERING AND FROM THE EXERCISE OF EXISTING OPTIONS, WARRANTS AND
            CONVERTIBLE NOTES; THE TERMS UPON WHICH WE WILL BE ABLE TO OBTAIN
            ADDITIONAL EQUITY CAPITAL COULD BE ADVERSELY AFFECTED.

Our common stock may become diluted if we sell additional shares of common stock
to any investor, if warrants and options to purchase our common stock are
exercised, if any of Riverview Group, LLC, Laterman & Co. and Forevergreen
Partners convert our $2,467,000 of outstanding convertible debt into shares of
our common stock, and if officers, directors and affiliates, Crescent, or
Gruntal exercise warrants and options to purchase shares of our common stock.
The registration of the resale of shares held by Tyco International Ltd. and its
affiliates could also place downward pressure on the price of our common stock.

Conversion or redemption of the convertible subordinated debentures issued to
Riverview Group, LLC, Laterman & Co. and Forevergreen Partners could further
dilute our common stock. The conversion price for $1,967,000 of the outstanding
convertible debt is $2.967 and the conversion price for $500,000 of the
outstanding convertible debt is $.5593. We may elect to pay the $500,000 monthly
mandatory redemption of our convertible subordination in shares of our common
stock under certain conditions. However, the Company does not currently meet all
the conditions necessary to pay in common stock. The Company has not made any
payments to these investors since September 2002 and is in discussions with the
investor

                                      -24-
<PAGE>

group to reach an amicable settlement. The results of such a settlement may
cause additional dilution to shareholders.

We may also elect to pay the semi-annual interest payments on our convertible
subordinated debentures in shares of our common stock, and elected to pay the
July 15, 2002 payment in stock. Further such elections could further dilute our
common stock.

The issuance of shares issuable to officers, directors and affiliates upon the
exercise of options and warrants could further dilute the price of our common
stock. Exercise of warrants held by Gruntal & Co. LLC and Crescent International
Ltd., and other investors could also result in dilution of common stock. In the
event that we are required to register the resale of shares owned by Tyco
International Ltd and its affiliates pursuant to our agreements with Tyco, the
volume of shares of our common stock available for sale could dramatically
increase and have a downward effect on the market price of our common stock.

      11)   THE SALE OF MATERIAL AMOUNTS OF OUR COMMON STOCK COULD REDUCE THE
            PRICE OF OUR COMMON STOCK AND ENCOURAGE SHORT SALES.

The introduction of additional shares into the market as a result of the sale of
our common stock by us or by substantial holders of our common stock may cause
the price of our common stock to decline. If the price of our common stock
trades at levels at which margin trading is permissible under applicable rules,
our stock may be subject to short sales, which could further decrease the price
of our common stock. In a short sale, a trader borrows securities, sells them,
and purchases securities on the market to replace the borrowed securities, at
what the trader hopes will be a lower price than the sale price. Short selling
can have a downward effect on the market price of our common stock.

      12)   WE ARE DEPENDENT ON A LIMITED NUMBER OF CUSTOMERS, THE LOSS OF WHOM
            COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS; WE MAY NOT BE
            ABLE TO EXPAND OUR CUSTOMER BASE IN THE NEAR FUTURE.

We continue to be dependent on a relatively few customers for the majority of
our sales. Accordingly, we must continue to expand our customer base, but we may
not be successful in doing so. We have experienced a significant and continuing
downturn in the South American market and while we have taken steps to reduce
the impact of this weakness by shifting sales to other markets, by managing
production levels to better match current and expected near-term demand levels,
and by shifting, to the extent possible, production to multimode from single
mode fiber, we cannot assure the success of our efforts. Despite all of these
actions taken, revenues from our Brazilian operations have declined by 80% from
2001 to 2002.

Over recent periods, most of our major customers have reduced their purchases of
our products and have expressed uncertainty as to their future requirements. As
a result, our sales have declined and it is difficult to predict future sales
accurately. The conditions that continue to contribute to this situation
include:

      o     the continuing downturn in the telecommunications industry;

      o     uncertainty regarding the capital spending plans of the major
            telecommunications carriers, upon which our customers and we depend
            for sales;

                                      -25-
<PAGE>

      o     the telecommunications carriers current limited access to the
            capital required for expansion and the current light demand for that
            expansion; and

      o     general market and economy uncertainty.

Our backlog consists of purchase contracts and orders. Several of the contracts
contain "take or pay" provisions and provide for periodic price reviews. While a
"take or pay" provision contractually obligates a customer to pay under the
contract whether or not the customer accepts shipment, we have elected to work
with our customers, on a case by case basis, given market conditions in the
industry, rather than take legal action. Unfortunately, the Company has seen
some customers go out of business or file for protection as a result of the
industry downturn, and this potential currently limits the effectiveness of the
"take or pay" provisions in some contracts.

For 2002 and 2001, only one customer exceeded the 10% level of overall sales.
Optical Cable Corporation represented 18% of sales in 2002 and Cabelte Cabos
Electricos S/A represented 19% of the Company's sales in 2001 and 11% in 2000.
In 2000, Furukawa Industrial S/A Produtos Eletricos was the only other company
that exceeded the 10% level with sales to them representing 11% of total sales.

      13)   IF THE FINANCIAL CONDITION OF OUR CUSTOMERS DECLINES, OUR CREDIT
            RISKS COULD INCREASE.

In 2002, some of our customers experienced financial difficulties and a few
filed with the courts seeking protection under reorganization or bankruptcy laws
in several countries. This included Cabelte, who had been the Company's largest
customer in 2001. While we experienced only minor losses as a result of the
inability to collect accounts receivable from these customers, we have lost the
value of continued business from these customers unless and until such time as
they successfully reorganize. If other customers were to experience these same
difficulties or file for protection with the courts, the Company could
experience reduced revenues and cash flows and additional losses. The Company
believes that it is adequately reserved against its accounts receivable based on
current knowledge of its customers financial condition and prospects, but cannot
be sure that it will not experience future losses in excess of those reserves.


      14)   OUR DEPENDENCE ON THIRD-PARTY SUPPLIERS COULD RESULT IN OUR
            INABILITY TO OBTAIN IN A TIMELY MANNER THE NECESSARY MATERIALS FOR
            OUR BUSINESS.

Our dependence on third party suppliers, particularly Heraeus Quarz Glas GmbH &
Co. K.G., subjects us to the risk that we may not be able to timely and
efficiently obtain material essential to our business. We rely on outside
parties for the manufacture of our raw materials, including our principal raw
material, glass tubing. Accordingly, we are dependent on the capabilities of
these outside parties for the successful manufacture of their products.
Currently, we purchase over 95% of our required glass tubing from Heraeus. Early
in 2001, we entered into a five-year supply contract with Heraeus. Under the
contract, the supply of glass was scheduled to increase by over 50% in 2002,
in-line with the anticipated customer needs at the time the contract was signed.
The Company did not require this quantity of glass due to the market downturn
and has been working with Heraeus to adjust contracted volumes and compensate
them for the lower demand requirements. To further complement our glass needs
and reduce our cost structure, our POVD patent was approved for using plasma in
the manufacture of high-purity synthetic glass as additional cladding material.

                                      -26-
<PAGE>

Xtal FiberCore Brasil, S.A. also has a similar dependency on raw materials. Xtal
had been highly dependent on Shin Etsu, a Japanese preform manufacturer who
would be a significant competitor if and when we begin selling preform to third
parties, for over 50% of its preform requirements when it was operating at full
capacity. Xtal FiberCore Brasil, S.A. attempted to re-negotiate its existing
contract with this preform manufacturer, given the weakness in the current
market environment, but Shin Etsu declined to renegotiate. Currently, Xtal is
involved in an arbitration proceeding in Japan with Shin Etsu, whereby Shin Etsu
is alleging that Xtal breached a multi-year supply agreement by failing to take
product as provided in the agreement. The amount of the alleged breach is
$11,400,000 worth of preform that Shin Etsu claims the Company was obligated to
purchase since September of 2001 through February of 2003. During the
arbitration process, Shin Etsu had continued to ship product as required by Xtal
during 2002. In addition, this supplier may not be able or willing to satisfy
our future requirements at competitive prices and/or we may not be able to
successfully re-negotiate our contract and/or reach an acceptable arbitration
resolution. As a result, we are planning to increase our own preform production.

Although we believe that the possibility of securing alternative suppliers as
well as our ability for glass manufacturing capability at our facilities in
Germany and Brazil should limit the risk, we may have problems in obtaining
glass tubing or other raw materials in the future. Our failure to obtain
sufficient glass and other raw materials could have a material adverse effect on
our business, results of operations, and financial condition.

      15)   WE HAVE SUBSTANTIAL COMPETITION, AND SEVERAL OF OUR COMPETITORS HAVE
            SIGNIFICANTLY GREATER RESOURCES THAN WE HAVE, ENABLING THEM TO
            PROVIDE MORE COMPETITIVELY PRICED PRODUCTS; THIS COMPETITION COULD
            HAVE A MATERIAL ADVERSE EFFECT ON OUR PERFORMANCE.

We are subject to intense competition, which could have a negative effect on our
performance. The optical fiber business is highly competitive, and there are
several competitors that have substantially greater resources than we do. These
competitors are providing, or are capable of providing, competitively priced
products that are similar to the products we produce. They may also introduce
new products that could directly compete with our products in all markets. If
these competitors were to aggressively target our market segments, we could be
materially adversely affected.

The competition for our multimode fiber products is primarily composed of
Corning, Inc., Alcatel, OFS/Furukawa and Draka (Plasma Optical Fiber). While we
believe that there is limited competition in the sale of preforms to cable
manufacturers who draw their own fiber, we anticipate that competition will
grow. The largest preform competitor is Shin Etsu. Competition in the
single-mode fiber optic market is significantly more extensive than either the
preform or the multimode fiber markets. In that market, our primary competitors
are Corning, Inc., OFS/Furukawa, Sumitomo, Samsung and Alcatel. However, we are
not active in the U.S. single-mode market, which has experienced a significant
downturn.

We must continue to invest in research and development, enhance our engineering,
manufacturing and marketing capabilities, and continue to improve in customer
service in order to maintain and improve our competitiveness. We must do this
with less resources than most all of our competitors. While we continue to
invest in each of these areas, we have also had to reduce our expenditures in
these areas and may not be able to maintain or improve our competitive position.

Our fiber optic products also compete with other existing products, including
products associated with copper wire and wireless communications. Over the past
two decades, optical fiber has successfully

                                      -27-
<PAGE>

competed with copper wire. Wireless communications depend heavily on a fiber
optic backbone. Any improvements in these competing products or the introduction
of new competing technologies may have a material adverse effect on our
marketability and profitability.

      16)   THE OPTICAL FIBER INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE,
            AND OUR FAILURE TO INTRODUCE NEW OR ENHANCED PRODUCTS ON A TIMELY
            BASIS COULD PREVENT OUR ABILITY TO REATTAIN PROFITABILITY.

The failure to introduce new or enhanced products on a timely and cost
competitive basis could have a material adverse effect on our business, results
of operations and financial condition. Rapid technological advances and evolving
industry standards characterize optical fiber products. Any failure by us to
anticipate or respond adequately to technological developments or end user
requirements could damage our competitive position in the marketplace and reduce
our revenues and/or profits. Our ability to attain and maintain profitably
depends, in large part, upon our timely access to, or development of,
technological advances and the ability to use those advances to improve existing
products, develop new products and manufacture those products efficiently. We
may not be successful in these endeavors. Failure to adjust to technological
developments could have a material adverse effect on our business, results of
operations, and financial condition.

      17)   CURRENT OR FUTURE LITIGATION MAY HARM OUR FINANCIAL CONDITION OR
            RESULTS OF OPERATIONS.

Pending, threatened or future litigation is subject to inherent uncertainties.
Our financial condition or results of operations may be adversely affected by
unfavorable outcomes, expenses and costs exceeding amounts estimated or insured.
In particular, we have been named as a defendant in two pending lawsuits and one
pending arbitration proceeding. As described in Legal Proceedings in our reports
filed with the SEC, our attempts at negotiations with Shin Etsu to resolve their
claims have been rejected and we are currently proceeding through the
arbitration process. We expect a ruling from the Arbitration Panel during Q2
2003. An adverse ruling could have a significant negative impact on our results
and could force the Company to file for protection with the courts, depending on
the size of any potential award to Shin Etsu. A negative ruling in the Fitel
suit could also have an adverse impact on operations, both financially and
potentially on our manufacturing operations, if it was found that the Company is
in violation of valid patents in its production process. Again, an adverse
ruling against the Company could have a negative impact on our results and could
force the Company to file for protection with the courts, depending on the size
of any potential award to Fitel.

      18)   WE MAY NOT HAVE ADEQUATE INSURANCE COVERAGE FOR CLAIMS AGAINST US.

We face the risk of loss resulting from, and adverse publicity associated with,
product liability, securities, fiduciary liability, intellectual property,
contractual, warranty, fraud and other lawsuits, whether or not such claims are
valid. In addition, our product liability, fiduciary, directors and officers,
property and comprehensive general liability insurance may not be adequate to
cover such claims or may not be available to the extent we expect. Our insurance
costs have increased substantially and may increase further. We may not be able
to get adequate insurance coverage in the future at acceptable costs. A
successful claim that exceeds or is not covered by our policy limits could
require us to pay substantial sums. In addition, we may not be able to insure
against certain risks or obtain some types of insurance, such as terrorism
insurance.

                                      -28-
<PAGE>

      19)   WE ARE DEPENDENT ON KEY PERSONNEL, THE LOSS OF WHOM COULD AFFECT THE
            SUCCESS OF OUR BUSINESS.

The loss of any of our key executives could have a material adverse effect on
our business. We do not have employment agreements with any of our executive
officers or key person life insurance on any officers or directors.

Our success depends, to a significant extent, upon the performance of our key
executive officers and key technical employees. Our future success will also
depend in large part upon our ability to attract and retain additional highly
skilled managerial, technical and marketing personnel. In addition, we are a
relatively small company and our recruitment efforts must compete with those of
larger and better-known competitors in our industry. We may not be successful in
attracting and retaining the necessary highly skilled personnel.

      20)   WE ARE CONTROLLED BY A FEW INDIVIDUALS WHO COULD CONTROL OR STRONGLY
            AFFECT THE VOTES OF SHAREHOLDERS FOR OUR DIRECTORS.

Several persons each own, on a fully diluted basis, over 5% of our common stock
and could influence the Company's decisions. Dr. Mohd Aslami, our President and
Chief Executive Officer, beneficially owns 9.4%, Charles De Luca, our Secretary,
beneficially owns 7.12%, and Tyco International Ltd., through its wholly owned
subsidiaries Tyco Electronics Corporation and Tyco Sigma Ltd. owns 14.84%. These
persons and Tyco International Ltd., acting alone or together, could control or
strongly affect the votes of shareholders for directors of FiberCore. Although
Tyco Electronics Corporation had entered into an agreement restricting itself
from exercising control over the election of directors, and us generally, until
May 2002, the agreement has now expired and Tyco's ability to singly or jointly
become more involved in our corporate governance is unrestricted. In addition,
we are currently in default on our credit facility with Fleet National Bank due
to cross default provisions, and Fleet could potentially foreclose on the
majority of our equity interest in our subsidiaries and substantially all of our
other assets (See Risk Factor 3 - "Change in Control")

In addition, Tyco International Group S.A. or TIGSA, an affiliate of Tyco
International Ltd., could gain control of our board of directors. TIGSA
guaranteed our obligations to Fleet National Bank under a $10,000,000 credit
facility between Fleet and us, dated as of December 20, 2000. Pursuant to the
Guarantor Indemnification Agreement between TIGSA, Dr. Mohd Aslami, Charles De
Luca, Steven Phillips (each a member of our board of directors), and us, dated
as of December 26, 2000, we issued one share of Series A Preferred Stock to
TIGSA. The certificate of designations governing the Series A Preferred Stock
enables TIGSA to effectively take control of our board of directors if there is
an event of default under the Guarantor Indemnification Agreement. Events of
default include our failure to timely pay TIGSA guarantee fees; our failure to
timely repay TIGSA if TIGSA is required to perform under its guaranty of our
obligations to Fleet; our failure to comply with specific covenants; the sale by
any of Dr. Mohd Aslami, Charles De Luca or Steven Phillips during any 12 month
period after December 26, 2001 (until termination of the Guarantor
Indemnification Agreement) of more than 10% of the total number of shares each
owned or had the option to obtain during the 12 month period; our admission that
we or any of our subsidiaries cannot pay our debts as they become due; our
making an assignment for the benefit of any of our creditors; the commencement
of bankruptcy proceedings against us or our subsidiaries or the appointment of a
receiver or trustee over a substantial part of our or any of our subsidiaries'
assets, which have not been discharged within 60 days; or the acceleration of
our indebtedness or the indebtedness of any of our subsidiaries for borrowed
money in an outstanding principal amount of $2,500,000.

                                      -29-
<PAGE>

Pursuant to the our credit facility with Fleet National Bank, Fleet has the
right to attach a lien on 65% of the equity in the our subsidiaries and
substantially all of the our other assets, including intellectual property, and
to increase the interest rate on our obligations to Fleet by 1%, if the credit
rating of TIGSA, falls below certain levels. Downgrades of Tyco's credit rating
in 2002 triggered Fleet's ability to attach the lien and increase the interest
rate. Fleet has exercised both such rights. If we were to default under the
credit facility in the manner that gave Fleet the right to foreclose on
collateral, Fleet could effectively control the operating subsidiaries of the
Company and therefore the majority of our business.

      21)   OUR PATENTS AND PROPRIETARY RIGHTS COULD BE CHALLENGED, AND OUR
            FAILURE TO PROTECT THEM COULD AFFECT OUR ABILITY TO COMPETE
            EFFECTIVELY WITH OUR COMPETITORS.

If we fail to adequately protect our intellectual property, we could experience
a material adverse effect on our business, results of operations, and financial
condition. The steps taken by us to protect our intellectual property may not be
adequate to prevent misappropriation of our intellectual property and others may
develop competitive technologies or products. Furthermore, other companies may
independently develop products that are similar or superior to our products or
technologies, duplicate any of our technologies, or design around the patents
issued us. In addition, the validity and enforceability of a patent can be
challenged after its issuance. While we do not believe that our patents infringe
upon the patents or other proprietary rights of any other party, other parties
may claim that our patents and manufacturing processes infringe upon their
patents or other proprietary rights. We may not be successful in defending
against any claims of infringement. Moreover, the expense of defending against
those claims could be substantial.

      22)   WE ARE SUBJECT TO RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS,
            INCLUDING POLITICAL AND ECONOMIC CHANGES IN THE COUNTRIES WE OPERATE
            IN, WHICH COULD AFFECT OUR PROFITABILITY.

We have a large portion of our customers and most of our operations, including
sales and manufacturing, are located outside the United States. As a result, we
face a number of risks, including:

      o     political and economic instability in foreign markets;

      o     tariffs and other trade barriers;

      o     difficulty of managing operations across international borders;

      o     changes in regulatory and tax requirements; and

      o     fluctuations in foreign currencies.

Economic, financial, and political changes could affect the conduct of our
business internationally, particularly at our German, Brazilian, and planned
South African facilities, thereby affecting the profitability of our business.
For example, we could be subject to unexpected changes in legislative or
regulatory requirements and fluctuations in the United States dollar, the
Brazilian real, the euro and other currencies in which we do business including
the South African Rand. While the Company has engaged in foreign currency
hedging transactions in the past, the Company is currently limited in its
ability to hedge its exposure due to credit limitations. The business and
operations of FiberCore Jena AG, Xtal FiberCore Brasil, S.A., currently, and, in
the future, FiberCore Africa are subject to the changing economic and

                                      -30-
<PAGE>

political conditions prevailing from time to time in Germany, Brazil, and South
Africa respectively. There is also the threat of regional conflict. For example,
Middle East Fiber Cable Company, 7% of which is owned by us, is headquartered in
Saudi Arabia and could be affected by local instability. (See comments under
"INTERNATIONAL OPERATIONS" on page 14.)

      23)   WE HAVE NOT PAID DIVIDENDS AND DO NOT PLAN TO PAY DIVIDENDS IN THE
            FORESEEABLE FUTURE.

We have never paid cash dividends on our common stock and we do not anticipate
paying any cash dividends in the foreseeable future. We intend to use any future
earnings to finance the growth and development of our business. Furthermore, our
current financing agreements prohibit our paying dividends.

      24)   WE HAVE GUARANTEED THE DEBTS OF OTHER COMPANIES AND WE COULD BE
            LIABLE FOR DEBTS OVER WHICH WE HAVE NO CONTROL.

We could be liable for debts owed by third parties over whom we have no control.
Automated Light Technologies, Inc. is the primary guarantor of approximately
$188,000 in loan obligations of Allied Controls, Inc., a former subsidiary of
Automated Light Technologies, Inc., to the Department of Economic Development
for the State of Connecticut. The loan, which is due in 2006, provides for
monthly principal payments of $3,500 and interest at 1% per annum. As of the
date of this prospectus, Allied Controls, Inc. is current in its payments to the
Department of Economic Development.

In addition, FCI is a co-guarantor with other joint venture partners for credit
facilities provided by banks to Middle East Fiber Cables Co., a Saudi Arabian
joint venture. The assets of the joint ventures collateralize the credit
facilities. As of April 1, 2003, we were contingently liable with respect to
these loans in the amount of approximately $144,000.

      25)   OUR COMMON STOCK PRICE IS VOLATILE AND IT IS POSSIBLE THAT THE PRICE
            OF OUR COMMON STOCK WILL DECLINE IN THE FUTURE.

The market for our common stock has been subject to wide fluctuations and it is
possible that the price of our common stock will decline in the future. We
believe these fluctuations are in response to variations in our anticipated or
actual results of operations, speculation and market conditions which may be
unrelated to our operating performance.

                                      -31-
<PAGE>

The following table reflects the high and low prices for our common stock for
the last three years:

         PERIOD                       HIGH                  LOW
         2002
         ----
           4th    quarter             $0.48                $0.17
           3rd    quarter             $0.29                $0.10
           2nd    quarter             $1.64                $0.20
           1st    quarter             $2.98                $1.41

         2001
         ----
           4th    quarter             $3.14                $2.06
           3rd    quarter             $6.35                $2.25
           2nd    quarter             $7.09                $3.75
           1st    quarter             $8.63                $3.56

         2000
         ----
           4th    quarter             $7.16                $2.19
           3rd    quarter             $9.31                $4.41
           2nd    quarter             $7.00                $2.81
           1st    quarter            $11.00                $1.72

      26)   WE ARE SUBJECT TO ENVIRONMENTAL REGULATIONS WORLDWIDE AND FAILURE TO
            COMPLY WITH THESE REGULATIONS MAY RESULT IN FINES AND THE SUSPENSION
            OF OUR OPERATIONS.

Our company is subject to environmental protection laws in Jena, Germany and
Campinas, Brazil concerning the use, storage, and disposal of any toxic and
hazardous materials. Any failure to comply with these regulations may result in
the issuance of fines and the suspension of operations. Neither FiberCore Jena
GmbH nor Xtal FiberCore Brasil, S.A. has been cited in the past for any
environmental violations. Algar, S. A. has agreed to remedy any existing
violations associated with Xtal Fibras Opticas, S.A. at the time of our
acquisition of Xtal FiberCore Brasil, S.A. and to indemnify us for any losses
caused by any existing violation until it is remedied. This indemnification is
subject to the risk that Algar may fail to perform due to illiquidity or other
reasons. Algar's indemnification is secured by their 10% shareholder interest in
Xtal Fibras Opticas, S.A. If we fail to meet environmental standards and comply
with applicable law, we could experience a material adverse effect on our
business, results of operations, or financial condition.

      27)   WE ARE RESTRICTED FROM RELOCATING, SELLING OR LEASING TO OTHER
            ENTITIES OUR JENA MANUFACTURING OPERATIONS AND WE MUST MAINTAIN A
            MINIMUM LEVEL OF EMPLOYMENT OR WE MIGHT BE SUBJECT TO REPAYING
            GRANTS RECEIVED FROM THE GERMAN GOVERNMENT.

We are subject to certain operating restrictions and requirements at our
facilities in Jena, Germany as a result of the financial grants provided to us
by German governmental entities. If we relocate, sell or lease the Jena facility
or equipment to others, or fail to maintain a minimum level of jobs of 157
employees after the current expansion is completed, we could be required to
repay approximately12,300,000 Euro, the full

                                      -32-
<PAGE>

amount of the grants received. We presently have 197 employees in Jena. A
required prepayment of the grants could have a material adverse effect on our
business, results of operations, or financial condition.

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

None.



             (The remainder of this page intentionally left blank.)



                                      -33-
<PAGE>

                                    PART II
                                    -------

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
           ---------------------------------------------------------------------

In November of 2000, the Company's stock began trading on the NASDAQ small-cap
market. The Company's stock previously traded on the Over the Counter (OTC)
Bulletin Board. There were 293 holders of record and approximately 14,500
beneficial owners of Common Stock as of March 31, 2003. Set forth below for the
periods indicated are the high and low prices for the Common Stock as reported
on the Bulletin Board and Nasdaq small-cap. The Company's stock trades under the
symbol FBCEE.

STOCK PRICE AND DIVIDEND POLICY

PERIOD                        HIGH         LOW
------                        ----         ---
2002
      4th quarter            $0.48        $0.17
      3rd quarter            $0.29        $0.10
      2nd quarter            $1.64        $0.20
      1st quarter            $2.98        $1.41
2001

      4th quarter            $3.14        $2.06
      3rd quarter            $6.35        $2.25
      2nd quarter            $7.09        $3.75
      1st quarter            $8.63        $3.56

The payment of dividends, if any, in the future is within the discretion of the
Board of Directors and will depend on the Company's earnings, its capital
requirements, financial condition, contractual and legal restrictions and other
relevant factors. Under the Fleet Loan Agreement, and related documents, the
Company is prohibited from paying dividends as long as the loan remains
outstanding. The Company does not expect to declare or pay any dividends in the
foreseeable future. In addition, the ability of the Company to pay cash
dividends in the future will be subject to its ability to meet certain other of
its obligations. As discussed herein (See Risk Factor 2 - "Delisting"), the
Company is at risk of being delisted from The Nasdaq SmallCap market. If such
delisting occurs, no assurance can be given that a liquid trading market will be
available to our shareholders. If delisted, the Company will endeavor to
facilitate trading of its common stock on the OTC-Bulletin Board.

See Footnote 11 - Stockholders' Equity for a description of recent equity
transactions.

                                      -34-
<PAGE>

ITEM 6.     SELECTED FINANCIAL DATA
            -----------------------

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected financial data of the Company for each of the years 2002,
2001, 2000, 1999, and 1998 has been derived from the audited financial
statements and notes thereto of the Company and its predecessors. The
information set forth below is qualified by reference to, and should be read in
conjunction with, the consolidated financial statements and related notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations".

                            YEARS ENDED DECEMBER 31,
                            ------------------------
                    (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                               2002            2001         2000(1)           1999            1998
                                                               ----            ----         -------           ----            ----
Operating Data:
<S>                                                      <C>            <C>            <C>             <C>             <C>
   Net Sales .........................................   $     25,557   $     52,362   $     36,919    $     12,126    $      8,201
   Costs and expenses:
   Cost of sales .....................................         25,791         36,084         25,118           9,820           6,534
   Selling, general, and administrative ..............         10,060          8,692          5,071           3,237           2,981
   Restructuring costs ...............................            103             --             --              --              --
   Write-off of goodwill .............................          7,313             --             --              --              --
   Write-off of patents ..............................          2,972             --             --              --              --
   Research and development ..........................          1,877          2,189          1,459             722             475
   Interest expense, net (2) .........................          4,844          2,028          5,832             952             746
   Other income (expense), net .......................         (4,534)           484            226            (336)            208
                                                         ------------   ------------   ------------    ------------    ------------
   Income (loss) before provision for income taxes
      and minority interest ..........................        (31,937)         3,853           (335)         (2,941)         (2,327)
   (Provision) benefit for income taxes ..............           (471)        (3,006)        (2,054)            937             (15)
                                                         ------------   ------------   ------------    ------------    ------------
   Income (loss) before minority interest ............        (32,408)           847         (2,389)         (2,004)         (2,342)
   Minority interest in (income)loss of consolidated
      subsidiary .....................................          1,331           (367)          (308)             --              --
                                                         ------------   ------------   ------------    ------------    ------------
   Net income (loss) .................................   $    (31,077)  $        480   $     (2,697)   $     (2,004)   $     (2,342)
                                                         ============   ============   ============    ============    ============
Income (loss) per share of common stock
Basic ................................................   $       (.48)          0.01   $      (0.05)   $      (0.05)   $      (0.07)
                                                         ============   ============   ============    ============    ============
Diluted ..............................................   $       (.48)  $       0.01   $      (0.05)   $      (0.05)   $      (0.07)
                                                         ============   ============   ============    ============    ============
Weighted average shares outstanding:
Basic ................................................     64,884,661     58,074,724     49,043,882      36,610,544      35,833,501
Diluted ..............................................     64,884,661     63,885,536     49,043,882      36,610,544      35,833,501
Balance Sheet Data:
   Working capital (deficiency) .....................    $    (27,352)  $     (1,319)  $      2,047    $      1,041    $      1,425
   Total assets .....................................          75,603         92,983         67,453          24,062          25,768
   Long-term obligations .............................         21,700         22,475          9,849           9,563          10,204
   Total liabilities .................................         71,126         49,491         28,551          14,085          14,864
   Minority interest .................................             15          5,117          4,750           3,263           3,263
   Accumulated deficit ...............................        (50,490)       (19,413)       (19,893)        (17,196)        (15,192)
   Stockholders' equity ..............................          4,462         38,375         34,152           6,714           7,641
</TABLE>

(1) Includes results from the acquisition of Xtal as of June 1, 2000.

(2) Interest expense, net, includes $1,735 and $5,405 of non-cash, non-recurring
    interest expense on convertible debt for the years 2002 and 2000,
    respectively.

                                      -35-
<PAGE>

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            ---------------------------------------------------------------
            RESULTS OF OPERATIONS
            ---------------------

BACKGROUND

Certain statements in this Form 10-K constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors, which may cause the actual results,
performance, or achievements of the Company, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. The important factors
that could cause actual results to differ materially from those indicated by
such forward-looking statements include, but are not limited to (i) the
information being of a preliminary nature and therefore subject to further
adjustment; (ii) the ability of the Company to contain costs, to grow internally
or by acquisition and to integrate acquired businesses into the Company's group
of companies; (iii) the uncertainties of litigation; (iv) the Company's
dependence on significant customers and suppliers; (v) changing conditions in
the optical fiber industry which could adversely affect the Company's business;
(vi) unsettled economic conditions in several of the countries in which the
Company operates; (vii) competitive actions by other companies, including the
development by competitors of new or superior services or products, price
reductions or the entry into the market of new competitors; (viii) the delivery
of and ability to commission new equipment as scheduled; and (ix) all the risks
inherent in the development, introduction, and implementation of new products
and services; and other factors both referenced and not referenced in this Form
10-K. When used in this Form 10-K, the words "estimate", "project",
"anticipate", "expect", "intend", "believe", "plan" and similar expressions are
intended to identify forward-looking statements, and the above described risks
inherent therein.

The Company's principal operating companies are FCJ and Xtal. FCJ manufactures
both multimode and single-mode fiber and preforms with an emphasis on the
multimode market; Xtal manufactures both multimode and single-mode fiber and
single-mode preforms with an emphasis on the single-mode market.

The Company maintains its corporate headquarters in Charlton, Massachusetts,
which is staffed primarily by executive, accounting and administrative
personnel. The following discussion and analysis of the results of operations is
based on the Company's audited financial statements for the years ended December
31, 2002 and 2001.

CRITICAL ACCOUNTING POLICIES

For a detailed discussion of the Company's accounting policies, refer to the
Summary of Significant Accounting Policies on page 59 for a summary of
significant accounting policies.

The Consolidated Financial Statements and Notes to Consolidated Financial
Statements contain information that is pertinent to management's discussion and
analysis. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities.

The Company believes the following critical accounting policies involve
additional management judgment due to the sensitivity of the methods,
assumptions and estimates necessary in determining the related asset and
liability amounts.

                                      -36-
<PAGE>

REVENUE RECOGNITION:

The Company recognizes revenues in accordance with invoice terms, typically when
products are shipped and accruals for sales returns and other allowances are
provided at the time of shipment based upon past experience. If actual future
returns and allowances differ from past experience, additional allowances may be
required.

INVENTORY VALUATION:

Inventory is valued at the lower of actual cost to purchase and/or manufacture
the inventory or the estimated market value of the inventory. The Company
provides estimated inventory allowances for slow-moving and obsolete inventory
based on current assessments about future demands, market conditions and related
management initiatives. If market conditions are less favorable than those
projected by management, additional inventory allowances may be required.

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 our 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 our historical experience and any specific
customer collection issues that we have 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 we have in the past. Since our accounts receivable are concentrated
in a relatively few number of customers, a significant change in the liquidity
or financial position of any one of these customers could have a material
adverse impact on the collectability of our accounts receivable and our future
operating results.

VALUATION OF LONG-LIVED ASSETS:

We periodically review the carrying value of our long-lived assets for continued
appropriateness. This review is based upon our projections of anticipated future
cash flows. While we believe that our estimates of future cash flows are
reasonable, different assumptions regarding such cash flows could materially
affect our evaluations

RESULTS OF OPERATIONS

Year ended December 31, 2002

The results for the twelve-month period ended December 31, 2002 include the
operations of DCI FiberCore, Inc., which was merged into Automated Light
Technologies ("ALT"), a wholly owned subsidiary of the Company on June 1, 2001
and FiberCore Africa (FC Africa), a 60% owned joint venture. Effective July 16,
2002, the name of DCI FiberCore, Inc. has been changed to FiberCore Systems,
Inc. ("FCS"). FC Africa is in start-up mode and has primarily incurred
administrative expenses during 2002.

Sales for the twelve-month period ended December 31, 2002 decreased by
$26,805,000 or 51% compared to the same period in 2001. Sales continued to be
negatively impacted by a 93% decline in shipments to customers in South America,
which is primarily a single-mode market. Overall, single-mode sales were down by
87% in all regions, while multimode sales increased by approximately 32% for the
year. The

                                      -37-
<PAGE>

decline in 2002 was partially attributable to the loss of sales from Cabelte and
the significant reduction in sales from several other South American customers.
Sales to Cabelte for 2001 were $10,178,000. Their business in the products that
use our fiber was negligible in 2002 and they have subsequently filed for
"Concordata" (Brazilian insolvency/reorganization) in February 2003. We
currently have no expectation that their purchases will resume. The Company has
taken steps to try to offset this weakness by shifting sales to other markets,
managing production levels to better match near-term demand levels, and
shifting, to the extent possible, production to multimode from single-mode
fiber, but we cannot assure the success of our efforts. Company-wide for 2002,
the decrease in volume of shipments accounted for $20,144,000 of the decrease in
sales of fiber, while the negative effects of pricing decreases accounted for
$6,272,000 of the decrease in sales of fiber. The balance of the net decrease in
sales is related to a $389,000 net decrease in the sale of other fiber products
and sales of FCS, which was acquired June 1, 2001.

Gross profit was ($234,000) for 2002 or (.9%) of sales compared to $16,278,000
or 31.1% of sales in 2001. Cost of sales for 2002 includes write-downs of raw
materials and finished goods, amounting to $3,388,000 and restructuring charges
of $197,000. Exclusive of these write-downs, gross profit for 2002 would have
been $3,352,000 or 13% of sales. The $16,512,000 decrease in gross profit from
the comparable year is primarily attributable to significantly lower shipment
volume of single-mode fiber, combined with lower pricing on both single-mode and
multimode fiber. The Company expects pricing pressure to continue in the
near-term. The Company has reduced costs at both of its fiber manufacturing
facilities during 2002 in response to the lower demand levels, including a 62%
reduction in staffing at the Xtal facility in Brazil and utilizing a reduced
work week in some areas of both plants. The Company believes that margins will
improve over the longer term as a result of higher production levels as volume
increases and as a result of continued cost reduction efforts, process
improvements and integration of technology between operations. Some variation
can be expected from quarter to quarter as (i) incremental costs are incurred in
connection with the installation and start-up of new equipment and new
technologies, and (ii) pricing variation due to scheduled market-pricing
adjustments made on a quarterly basis in accordance with the terms of new and
existing contracts.

Selling, general and administrative costs ("SG&A") increased $1,368,000 or 16%
for 2002 compared to the comparable period in 2001. SG&A costs from FC Africa,
which was first included in consolidated operations in June 2002, accounted for
$885,000, although $724,000 was contributed by joint venture partners. FCS,
which was acquired June 1, 2001 accounted for an increase of $195,000 in SG&A
expenses for 2002. During 2002, legal costs increased by $654,000 primarily as a
result of the Fitel, Shinetsu and Techman legal matters. Other professional fees
increased by $321,000 primarily as the result of a $200,000 settlement with
Gruntal.

The Company has taken steps to significantly reduce ongoing SG&A costs during
the second half of 2002 and these efforts are expected to continue into 2003.
Excluding the FiberCore Africa costs and the increase in legal and professional
fees described above, the Company reduced its on-going SG&A costs during the
second half of 2002 as compared to the first half of the year by $3.9 million on
an annualized basis, a reduction of 39%. The Company is continuing its efforts
to reduce these costs even further.

Goodwill related to the acquisition of Xtal and FCS, amounting to $7,313,000 was
written off in the fourth quarter. Patents related to ALT amounting to
$2,972,000 were written off in the fourth quarter and restructuring charges
related to Xtal amounting to $103,000 were recorded in the 2nd quarter. In
addition, FCI incurred one-time costs in the fourth quarter of 2002 amounting to
$430,000.

                                      -38-
<PAGE>

Research and development costs decreased $313,000 or 14% for 2002 compared to
the prior year. The decrease was a result of lower expenditures at the Company's
Brazilian subsidiary. The Company intends to continue its research and
development to increase production efficiency, reduce manufacturing costs, and
develop new products. The Company believes that this investment will result in
increased profitability through increased production efficiency and improved
manufacturing technologies.

Net interest expense increased by $2,902,000 or 128% compared to 2001. 2002
included $1,735,000 of non-cash interest expense in connection with the
amortization of deferred financing costs, the deemed beneficial conversion
feature and the fair value of warrants issued to a group of investors consisting
of Riverview Group LLC, Laterman & Co. and Forevergreen Partners, related to
$5,500,000 in 5% convertible subordinated debentures issued during 2002.
$859,000 of the non-cash charge to interest expense, related to the fair value
of the warrants issued and the beneficial conversion feature related to the
debentures was offset by an increase to additional paid-in-capital. This had no
effect on the net equity, cash flow, or operations of the Company. Exclusive of
non-cash interest, net interest expense, increased by $1,081,000 or 53%. The
increase in interest expense, exclusive of non-cash interest is attributable to
expansion activities at FCJ, increased debt related to operations at Xtal and
interest related to the $5,500,000 in 5% convertible debentures. Borrowings
during 2002 of $25,153,000 were primarily related to the expansion of
manufacturing facilities in Germany and general working capital uses at all
locations.

Net foreign exchange losses were $4,322,000 for 2002 compared to gains of
$381,000 for 2001. The net losses in 2002 are due principally to the significant
decline in the value of the Brazilian Real versus the U.S. Dollar, the Japanese
Yen and the European Euro on raw material purchases offset by the strengthening
of the Euro versus the U.S. Dollar on the deposit with Sparkasse Jena.
Approximately $8.7 million of loans at Xtal, which were previously denominated
in foreign currency have been re-financed and denominated in Reais. This change
will have the effect of decreasing foreign exchange losses at Xtal in times of
weakness in the Real to the US Dollar. This effect will be offset in part due to
higher interest rates charged in Brazil for loans denominated in Reais.

Income taxes related to the Company's foreign subsidiaries were $471,000 for
2002 compared to $3,006,000 and $2,697 for 2001 and 2000, respectively. The
provision for 2002 is primarily related to taxes in Germany and Brazil on other
income, such as foreign exchange gains and interest income.

Year Ended December 31, 2001

The results for the twelve-month period include the operations of DCI, which was
acquired on June 1, 2001 and merged into ALT as of the date of the acquisition,
and the results of Xtal, which was acquired June 1, 2000. The results for 2001
include a full year of operations for Xtal as compared to seven month's
operations in 2000. Sales for the twelve-month period ended December, 31, 2001
increased by $15,443,000 or 42% compared to the comparable period in 2000. The
increase includes twelve month's sales for Xtal of $32,392,000 for 2001,
compared to sales for the full year of 2000 of $33,433,000, only $21,916,000 of
which was included in operations of the Company since the acquisition date of
June 1, 2000. The decrease in sales for Xtal as compared to the full year of
2000 was attributable to the dramatic decline in the South American fiber market
as well as the worldwide market for single-mode fiber and deterioration of
pricing during the last half of 2001. This included the loss of sales to a major
customer in the second half of the year who was in breach of contract during
that period, after buying fiber at significantly higher levels than 2000 during
the first half of the year. Sales for Xtal decreased in the final seven-month
period in 2001 as compared to the same period in 2000 by $8,737,000 or 40%.

                                      -39-
<PAGE>

The South American customer referenced above has paid all of the accounts
receivable owed to the Company, approximately $3,200,000, which was part of the
breach of contract. Shipments have not yet resumed to this customer. Xtal and
the customer are operating under an existing contract, and the Company expected
to be the primary supplier of optical fiber to this customer over the next
several years. Notwithstanding that no shipments were made to this customer
after July of 2001, total sales to them increased by over $4,000,000 from 2000
to 2001. Overall, the softening in the South American market, including the
situation with the customer described above, and the associated reduction in
pricing brought about by the overall softening in the worldwide single-mode
fiber market, resulted in a reduction in sales of approximately $13,000,000 from
the first half of 2001 to the second half of the year. As a result of the lower
demand, the Company began operating its Xtal facility at reduced production
levels in September 2001.

Sales from the Company's German subsidiary, FCJ increased by $3,783,000 or 25%
for the year ended December 31, 2001. The revenue increases were primarily due
to higher shipment volume to new and continuing customers. The majority of FCJ's
shipments are multimode fiber and that market was not as adversely affected
either in demand or pricing as the single-mode market. Company-wide, the volume
increase in fiber shipments during 2001 represented an increase in sales of
$15,800,000 while the net effect of pricing changes decreased revenues by
$1,600,000 million as compared to 2000. However, pricing was higher during the
first half of the year and then decreased significantly during the second half
of the year.

Gross profit was $16,278,000 or 31% of sales in 2001 compared to $11,801,000 or
32% of sales in 2000. The $4,477,000 increase in gross profit occurred during
the first-half of the year. Margins declined in the third and fourth quarters as
a result of pricing pressures due to the slowdown in the overall fiber market
and reached a low of (7%) in the fourth quarter. The sudden and unprecedented
change in demand in the market has driven single-mode fiber prices down from
their levels in the first half of 2001.

Selling, general and administrative ("SG&A") costs increased $3,621,000 or 71%
compared to 2000. SG&A costs were 17% of sales in 2001 as compared to 14% during
2000. The increase in percent of sales was attributable to the reduced sales
levels during the second half of 2001, as SG&A was 11% during the first half of
2001. The inclusion of Xtal for the entire year of 2001 as compared to seven
months in 2000 and the acquisition of DCI, accounted for $1,200,000 or 33% of
the increase. FCQ and FCM accounted for approximately $125,000 of the increase
as compared to 2000. Increases in personnel, legal and accounting fees, travel
and trade show expenses at all locations accounted for the balance of the
increase.

Research and development costs increased $730,000 or 50% over 2000. The Company
intends to continue to invest in its research and development to increase
production efficiency, reduce manufacturing costs and develop new products. The
Company believes this investment will result in increased profitability through
increased production efficiency.

Excluding the effect of non-cash interest charges, in the amount of $5,405,000,
recorded in 2000 with respect to the deemed beneficial conversion attributable
to $7,500,000 in notes issued to Crescent International, Ltd., interest expense
would have increased by $1,477,000. The borrowings for 2001 were primarily
related to expansion of facilities in Germany and Brazil and general working
capital used at all locations. The Company had foreign exchange gains of
$381,000 compared to a gain of $98,000 for 2000. The gains were principally due
to the impact of the fluctuations in the value of the Brazilian Real versus the
Japanese Yen and the German Deutsche Mark on foreign currency denominated
invoices and loans for Xtal raw material purchases.

                                      -40-
<PAGE>

The Company recorded a tax provision of $3,006,000 for 2001, compared to a
provision of $2,054,000 in 2000. The provision is primarily a result of taxable
income earned at the Company's operations in Germany and Brazil. The provision
reflects no tax benefits attributable to operating losses incurred in the U.S.

LIQUIDITY AND CAPITAL RESOURCES

General
-------

As of the date of this Annual Report, the Company is currently in default under
loan agreements with the Holders of its Convertible Debentures and with Algar.
These default conditions cause a cross-default on the Fleet credit facility of
$8,500,000 and on a $1,500,000 loan from Tyco International Finance Alpha GmbH
and Fleet and/or Tyco could accelerate the maturity date of their respective
loans and the entire balances could become immediately due. In the event of a
default of the Fleet Credit Facility, Fleet could exercise the provisions of a
guarantee given by Tyco International Group S.A. to be paid in full by Tyco and
Tyco would then assume Fleet's position as a creditor of the Company. In this
case, Tyco would also have the right to assume control of the Company's Board of
Directors. Also, as shown in the financial statements, the Company's current
liabilities exceeded its current assets by $27,352,000 at December 31, 2002,
including $9,250,000 of long-term debt that has been classified as current as a
result of being in default. The Company must raise approximately $5 million in
additional financing soon and/or restructure some of its obligations to address
its liquidity crisis. The Company is also attempting to renegotiate the terms on
approximately $18 million in short-term debt and notes payable, including the
$9.25 million discussed above, and an additional $3 - $5 million is planned to
be shifted to long-term debt based on financing activities associated with the
Phase 2 expansion of our German operation. These factors, among others, indicate
that the Company may be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis and to obtain
additional financing or refinancing as may be required. (See Risk Factors 1 -
"Going Concern", 2 - "Delisting", 3 - Change in Control" and 4 - "Liquidity")

The downturn in the economy and the telecommunications industry in particular as
a result of cutbacks in capital spending, coupled with an overcapacity of
installed fiber, affected global demand for single-mode fiber primarily in North
America, South America and Europe starting in July, 2001. During 2002, volume
and pricing continued to deteriorate through the end of the year. At this point
there have been signs that pricing has stabilized but demand has not as yet
shown any recovery.

Multimode fiber was not affected as dramatically as single-mode fiber as a
result of the economic downturn. For the year 2002, multimode fiber sales volume
was up by approximately 45%, while pricing declined by 9%. Overall multimode
revenues were up by 31%.

While we anticipate improvement in product demand and pricing over the course of
the next year, these trends in both demand and pricing for fiber, while part of
a periodic cycle in the industry, cannot be assured of reversing themselves in
any certain time frame. In fact, prior industry predictions of recovery have not
been accurate and therefore the timing of the recovery cannot be forecast with a
high degree of reliability. If these factors do not improve, the Company will
continue to be adversely affected which could result in continuing pressure on
gross margins, further losses and negative cash flows from operations. This
could impact on the Company's ability to meet its current obligations and to
raise additional capital. The Company continues to focus on reducing product and
SG&A costs to minimize the effect of the above

                                      -41-
<PAGE>

trends while continuing to invest in development efforts to further reduce
production costs and position the Company for the expected rebound in the
industry.

The Company currently has a backlog of approximately $41,000,000. Approximately
$14,000,000 of this backlog is currently scheduled for delivery in 2003. This
number may continue to change as a result of re-pricing mechanisms in the
Company's contracts and potential reschedules due to changing business
conditions. All backlog numbers are calculated based on pricing levels in effect
as of the date indicated. The backlog does not include any orders taken or
anticipated in 2003. The decrease in the order backlog reflects the weaker
market for fiber since the middle of 2001, which has resulted in a shift to an
essentially spot market for fiber, and the reduction of prices and the
rescheduling of existing contracts from many of the Company's customers. It also
reflects the removal from our backlog of Cabelte, which filed for "Concordata"
(Brazilian reorganization/insolvency filing), and other South American customers
where there is great uncertainty on when they will resume production.

In response to customer demand for the Company's fiber, the Company implemented
a capacity expansion program in 2000. The new facility in Maua, Germany (4 km
from the original Jena operation) completed construction and was officially
opened February 14, 2002. This new facility offers improved manufacturing
efficiency, thereby increasing the Company's competitiveness in the marketplace,
and more than doubles the capacity of the original FCJ plant. The Company began
the second phase of the project to complete furnishing the new facility with
additional equipment to further increase capacity, but placed this activity on
hold due to market conditions.

The Company's Brazilian subsidiary, Xtal, has a current capacity of over
1,000,000 kms of single-mode fiber per year. The integration of FiberCore and
Xtal technologies increased Xtal's capacity from the 500,000 km per year level
that existed prior to its acquisition by FiberCore. The Company had initiated
expansion efforts in 2000, but stopped these activities in mid-2001 when the
market downturn began in South America. The plant has available excess building
space as well as land for new construction, which will allow the Company to add
processing equipment that can more than double the existing capacity if and when
demand requires it. In the longer term, the Company anticipates opening new
facilities in South Africa and Asia, if and when market conditions improve.

FiberCore Systems, Inc. is currently a small portion of the Company's revenue
stream with $1,690,000 in revenue in 2002. The Company expects that this entity
will be a rapidly growing portion of its business in the coming years as it will
focus on the FTTH (Fiber to the Home) and FTTD (Fiber to the Desk) markets that
are expected to grow rapidly in that time period, however there is some
uncertainty about the timing of this growth. The combination of FCS'
capabilities in designing, installing and maintaining telecommunications
networks with the equipment capabilities of ALT should improve the sales
potential of both parts of FCS.

In December 2000, the Company closed on a $10,000,000, five (5) year revolving
credit loan agreement with Fleet National Bank, but the maximum principal amount
of the loan decreases by $750,000 on December 26, 2001 and each subsequent year.
Loan payments, in the amount of $750,000, may be made by way of a reduction in
the amount available under the credit facility. As of December 31, 2002 the
Company had outstanding borrowings of $8,500,000. Currently, there is no
availability under this facility. The Company is currently in a state of default
with the holders of the Convertible Subordinated Debentures. This causes a
cross-default on the Fleet credit facility of $8,500,000 and Fleet could
accelerate the maturity date of their respective loans and the entire balance
could become immediately due. In the event of a default of the Credit Facility,
Fleet could exercise the provisions of a guarantee given by

                                      -42-
<PAGE>

Tyco International Group S.A. to be paid in full by Tyco and Tyco would then
assume Fleet's position as a creditor of the Company. In this case, Tyco would
also have the right to assume control of the Company's Board of Directors.

The following changes in balance sheet amounts are net of the effect of the
change in the currency exchange rates from December 31, 2001 to December 31,
2002.

Year Ended December 31, 2002

The Company had available cash of $1,392,000 as of December 31, 2002 and had
$32,672,000 in notes payable and current installments on long-term debt. In
addition, there is a working capital deficit of $27,352,000. During 2002, the
Company took a number of actions to address the cash flow situation. During the
fourth quarter, the Company completed negotiations with a group of banks in
Brazil to re-finance $8.9 million of partially secured short-term notes payable.
Approximately $8.9 million of the loans were converted to long-term debt with
payments beginning one year from the date of the agreements, with scheduled
repayment over the succeeding three years, and the $8.1 million was
re-classified to long-term debt on the Balance Sheet as of September 30, 2002.
As of December 31, 2002, $3.2 million of this amount remains in long-term debt.
The Company has short-term notes of approximately $8.9 million in Germany,
primarily associated with the expansion projects. Approximately $3.5 million was
paid with grant funds from the German government in February 2003. Those grants
are associated with the first phase of the expansion. Under the terms of
financing agreements completed during 2002, FCJ became eligible to receive
approximately $8 million in government grants and approximately $7 million in
long-term bank loans and equipment leases against funds already expended by the
Company. Approximately $4.8 million is expected to remain in short-term debt
under working capital lines with several German banks after grants and long-term
loans and leases are finalized.

The Company has approximately $2.5 million of principal outstanding against the
Convertible Subordinated Debentures issued in January and June of 2002 ("the
Debentures"). During the first nine months of 2002, the Company has paid $1.5
million in cash payments and reduced the outstanding balance since the start of
the third quarter by $1.53 million through the issuance of common stock, and has
the option, under certain circumstances, of continuing to issue shares in
payment of the Debentures if the shares have been previously registered pursuant
to an effective registration statement. The Company is currently unable to pay
in registered shares because it does not have an effective registration
statement registering sufficient shares for such purpose. The Company has not
had sufficient funds to make redemptions of the Debentures since September of
2002 and had received a waiver with respect to such redemptions required through
December 1, 2002. Such waiver, however, was conditioned on the Company reaching
an agreement with the holders of the Debentures on or prior to December 2, 2002
with respect to re-scheduling redemption payments and collateralizing the
Company's obligations. The Company has been engaged in discussions with the
holders of the Debentures to reach a revised agreement. However, the Company and
the holders of the Debentures have not reached a final agreement and therefore
the Company is currently in a state of default with the holders of the
Debentures. This causes a cross-default on the Fleet credit facility of
$8,500,000 and on a $1,500,000 loan from Tyco International Finance Alpha GmbH
and Fleet and/or Tyco could accelerate the maturity date of their respective
loans and the entire balances could become immediately due. If an event of
default on the Debentures continues, the holders have the right to accelerate
the maturity date and the entire balance of $2,467,000 could become immediately
due.

Finally, $1.25 million due to Algar associated with the purchase of Xtal was not
paid on the due date of December 20, 2002. The Company has held discussions with
Algar to defer or otherwise adjust this

                                      -43-
<PAGE>

requirement and these discussions are continuing. However, the Company and Algar
have not reached a final agreement and therefore the Company is currently in a
state of default with Algar under the terms of a Loan Agreement. This causes a
cross-default on the Fleet credit facility of $8,500,000 and on a $1,500,000
loan from Tyco International Finance Alpha GmbH and Fleet and/or Tyco could
accelerate the maturity date of their respective loans and the entire balances
could become immediately due. In the event of a default of the Credit Facility,
Fleet could exercise the provisions of a guarantee given by Tyco International
Group S.A. to be paid in full by Tyco and Tyco would then assume Fleet's
position as a creditor of the Company. In this case, Tyco would also have the
right to assume control of the Company's Board of Directors The result of these
current events of default with the Debenture holders and with Algar has caused
the Company to reclassify $7,750,000 of the Fleet Credit Facility and a
$1,500,000 loan from Tyco International Finance Alpha GmbH from long-term to
short-term debt.

As part of the shareholder's agreement associated with the acquisition of Xtal
in 2000, the Company has a call option to acquire from Algar the remaining 10%
of the stock of Xtal upon payment of $2.5 million, plus 6% interest calculated
from June 20, 2000. Algar has a put option, exercisable on June 20, 2003 or at
any time that the Company decides to sell, dispose or otherwise transfer any
portion of its interest in Xtal to a third party, that would require the Company
to acquire all of Algar's remaining shares for a payment of $2.5 million, plus
6% interest calculated from June 20, 2000. Algar's 10% shareholder position in
Xtal, is being held by the Company to collateralize Algar's indemnification
provisions that are part of the Xtal purchase agreements.

The Company took aggressive steps during 2002 to move toward a breakeven to
positive cash flow from operations during the second half of 2002. These steps
included implementing reductions in production costs from operational
improvements, a significant reduction in SG&A expenses and reductions in both
inventories and receivables. This was due in part, during the fourth quarter to
the receipt of $3 million in refunded deposits from suppliers at FCJ related to
phase II expansion and the receipt of recoverable taxes.

The Company had negative cash flow from operations of $350,000 and $3,976,000
for 2002 and 2001, respectively. However, the Company did achieve a positive
cash flow from operations of $2,730,000 and $2,227,000 during the third and
fourth quarters, respectively primarily as a result of implementing the cost
reduction activities discussed elsewhere in this report and due to a reduction
in accounts receivable and other receivables of $4.6 million during the fourth
quarter. The negative cash flow resulted from a loss for the period of
$31,077,000 plus depreciation and amortization of $2,914,000, write-off of
goodwill of $7,313,000, write-off of patents of $2,972,000, non-cash interest of
$1,735,000, write-down of inventory amounting to $3,388,000, decrease in
minority interest of $1,834,000 and foreign exchange losses and other non-cash
charges of $6,330,000. The changes in current assets and current liabilities
produced a net source of cash of $7,909,000. Accounts receivable decreased by
$5,885,000 as compared to an increase of $905,000 for 2001. Other receivables
decreased by $2,225,000 resulting from collection of short-term deposits at FCJ,
which were paid to vendors in the amount of $2,152,000, in connection with the
expansion. Xtal has negotiated with the Brazilian Government a plan to allow
Xtal to negotiate with vendors to offset VAT taxes receivable from the Brazilian
Government and offset them against vendor accounts payable. It is expected that
approximately $643,000 will be offset in the second quarter of 2003. The number
of days sales outstanding in accounts receivable decreased from 64 days at
December 31, 2001 to 50 at December 31, 2002. We do not anticipate that the
number of days sales in accounts receivable will climb back to the level
experienced at December 31, 2001. Inventory increased by $1,533,000 as compared
to an increase of $2,494,000 for 2001. The increase of $1,533,000 is before the
effect of the inventory write-downs for the year of $3,388,000. Net of
write-downs, inventory decreased by $1,855,000.

                                      -44-
<PAGE>

Inventory turnover has decreased from approximately 5 times at December 31, 2001
to approximately 4 times as of December 31, 2002 as a result of the lower sales
volume.

The telecommunications industry, and specifically the fiber optic segment, has
been experiencing a historic downturn in business for the past 18 to 24 months.
While industry reports suggest that the industry may be at or near bottom, we
are currently unable to predict the timing and/or the magnitude of a recovery.
If conditions do not improve and/or we are unable to reduce product costs, the
Company will continue to be adversely affected, which could result in continuing
pressure on gross margins, further losses, and continued negative cash flows
from operations. This could have an impact on the Company's ability to meet its
current obligations and to raise additional financing.

Approximately $14,000,000 of the backlog is currently scheduled for delivery in
the next 12 months. We anticipate further schedule changes are possible, but
expect that additional orders could offset those changes. We have taken steps to
reduce product and SG&A costs, including the restructuring at the Xtal facility,
to minimize the effect of the market conditions. Moreover, the Company estimates
that due to continuing improvements during the year in operating cash flow, the
slowing and/or postponing of expansion activities, the rescheduling of notes
payable as discussed above and the finalization of grants and loans associated
with the expansion in Germany, the Company will improve its liquidity position
to meet ongoing cash flow needs. However, as a result of delays and some
cancellations in the financing of our German expansion activities, and continued
price erosion for the Company's products, the Company will face a cash shortfall
in the near term unless additional financing can be arranged.

In the current environment in the telecommunications industry, the financial
markets, and at the current prices of the Company's common stock, raising
additional equity financing is difficult and would be significantly dilutive to
existing shareholders. Negotiations are ongoing at this time with several
parties with regard to debt and / or equity capital. We cannot predict with
certainty at this time that we will be successful in raising additional capital.

The Company invested $24,195,000 in new equipment and facilities at FCJ and Xtal
during 2002, with almost all of the investment located at FCJ. Grants received
by FCJ related to the expansion in Germany amounted to $3,640,000 for 2002.
Grant funds reduce the cost basis of the assets acquired. Most of the
expenditures in Germany for 2002 were under purchase orders placed in 2001. The
second phase financing discussed above, including grants funds, is being
utilized to fund a significant portion of this investment.

The Company received proceeds from short-term notes payable of $20,885,000
during 2002 as follows:

      i)    $12,728,000 was received from German banks related to the expansion
            and general working capital purposes at FCJ in 2002. Approximately
            $3.5 million of these notes were repaid from the receipt of
            government grants associated with phase one of the FCJ expansion
            during the first quarter of 2003, and the balance will be (1)
            converted to long-term debt (under the agreements signed during the
            third quarter), (2) converted into equipment leases, (3) repaid from
            new grant funds associated with the phase two expansion and (4) up
            to $4.8 million may remain as a part of working capital lines of
            credit established with several German banks.

      ii)   $2,490,000 was received by Xtal from Brazilian banks for working
            capital purposes.

                                      -45-
<PAGE>

      iii)  $135,000 was received from an officer and a director of the Company
            for general working capital purposes. It is currently expected these
            funds will be re-paid in 2003.

      iv)   The Company received proceeds of $5,500,000 from an investor group
            in consideration of 5% convertible subordinated debentures. The
            proceeds have been used to support the Company's capital expenditure
            program, including the capacity expansion and productivity
            initiatives in Germany, initial funding for FiberCore Africa and
            other corporate purposes. Repayment of the $5,500,000 was scheduled
            at a rate of $500,000 per month, commencing April 1, 2002.
            $1,500,000 was repaid in cash through the second quarter of 2002.
            For the months of July, August and September of 2002, a total of
            $1,533,330 in principal was paid to the debenture holders utilizing
            common stock of the Company. In addition, $112,426 in accrued
            interest was paid in stock. The total number of shares issued for
            the principal and interest payments during the third quarter
            amounted to 7,293,682 shares, including 1,648,913 shares of
            restricted stock, at an average price per share of $.22564 per
            share. Warrants were issued in connection with the 5% convertible
            subordinated debentures. The fair market value of the warrants was
            recorded as a debt discount on the accompanying consolidated balance
            sheet. The Company has the option, under certain circumstances, of
            continuing to issue shares in payment of the Debentures if the
            shares have been previously registered pursuant to an effective
            registration statement. The Company is currently unable to pay in
            registered shares because it does not have an effective registration
            statement registering sufficient shares for such purpose. The
            Company has not had sufficient excess funds available to make any
            payments subsequent to the September 2002 payment, and had received
            a waiver with respect to such redemptions required through December
            1, 2002. Such waiver, however, was conditioned on the Company
            reaching an agreement with the holders of the Debentures on or prior
            to December 2, 2002 with respect to re-scheduling redemption
            payments and collateralizing the Company's obligations. The Company
            has been engaged in discussions with the holders of the Debentures
            to reach a revised agreement. However, the Company and the holders
            of the Debentures have not reached a final agreement and therefore
            the Company is currently in a state of default with the holders of
            the Debentures. This causes a cross-default on the Fleet credit
            facility of $8,500,000 and on a $1,500,000 loan from Tyco
            International Finance Alpha GmbH and Fleet and/or Tyco could
            accelerate the maturity date and the entire balances could become
            immediately due. If an event of default on the Debentures continues,
            the holders have the right to accelerate the maturity date and the
            entire balance of $2,467,000 could become immediately due.

      v)    The Company received proceeds of $23,000 from A&R Process Projects
            (Pty) Ltd. in South Africa. The note is payable with interest at 16%
            and will be repaid in four installments during the first six months
            of 2003.

The Company received proceeds of $4,268,000 of long-term debt during 2002 as
follows:

      i)    $1,500,000 was received from Tyco International Finance Alpha GmbH
            for general working capital purposes. (This has since been
            reclassified to current portion of long-term debt).

      ii)   $2,496,000 was received by FCJ as funding for the Phase II expansion
            project.

      iii)  $155,000 was received by Xtal for general working capital purposes.

                                      -46-
<PAGE>

      iv)   FC Africa assumed $117,000 in convertible debentures related to the
            joint venture in South Africa. 50% of the loan was repaid during the
            first quarter of 2003 and the balance will be repaid in April 2003.

Lien Attachment
---------------

Pursuant to the Loan Agreement between Fleet National Bank ("Fleet") and the
Company, dated as of December 20, 2000 (the "Loan Agreement"), Fleet has the
right to attach a lien on 65% of the equity in the Company's subsidiaries and
substantially all of the Company's other assets, and to increase the interest
rate on the Company's obligations to Fleet by 1%, if the credit rating of Tyco
International Group S.A. ("Tyco"), the guarantor of such obligations, falls
below certain levels. The Company is in compliance with its obligations under
the Loan Agreement, which does not contain any financial covenants, excluding
the cross-default provisions described above. Downgrades of Tyco's credit in
June 2002 triggered Fleet's ability to attach the lien and increase the interest
rate. On June 28, 2002, Fleet Bank exercised its right to attach the liens and
also increased the interest rate on the loan, effective on the date of the
downgrade of Tyco's credit rating.

Year Ended December 31, 2001

The Company generated negative cash flow from operations of $3,976,000 for 2001,
compared to positive cash flow from operations of $9,171,000 for 2000. The
decrease in operating cash flow resulted primarily from: the reduction of net
income (excluding the non-cash interest expense in 2000) compared to 2000 of
$2,228,000 that was primarily due to net losses in the second half of the year
of $5,548,000; the build-up in finished goods inventory by $2,494,000, most of
which occurred during the second half of the year due to the dramatic reduction
in sales, as compared to a reduction of inventory in 2000 of $363,000; a change
in accrued expenses and advance payments from customers of $3,438,000 as
compared to 2000 due to the utilization of a $2,936,000 advance payment by a
customer; an increase of only $1,064,000 in accounts payable in 2001 as compared
to an increase of $3,164,000 in 2000; and an increase in other receivables of
$4,691,000 compared to a $756,000 increase in 2000, primarily related to a
$1,743,000 deposit due from a vendor in the first half of 2002 (this will be
paid during the second quarter 2002), an increase in refundable taxes in both
Germany amounting to $1,158,000 and in Brazil amounting to $1,763,000. These
taxes are essentially VAT taxes, which are based upon raw materials and
equipment purchases and refunded on the basis of future sales. The positive cash
flow for the prior year included a $5,405,000 charge for non-cash interest
expense.

The foreign exchange gains were attributable to the weakness of the Japanese Yen
versus the Brazilian Real and the US Dollar in the fourth quarter of the year.

During the third quarter, one of the Company's larger South American customers
breached its contract with Xtal. This breach consisted of missed payments of
$3,200,000 for accounts receivable and the subsequent suspension of shipments
starting in July. The cumulative effect of this breach, together with a lower
demand from other customers, had a negative impact on cash flow during the
quarter for Xtal. As a result of this situation, the Company had an increase in
inventory levels at the end of the third quarter and therefore reduced
production levels at the Brazilian facility during the third and fourth
quarters. The Company also increased its short-term borrowings during the second
half of the year to compensate for the reduced cash flow from operations during
the period. The Company reached a resolution with this customer in October 2001.
As of the end of January 2002, all of the outstanding receivables owed by the

                                      -47-
<PAGE>

customer had been collected. The Company is currently negotiating with the
customer with respect to shipments for 2002.

The Company invested $24,813,000 in new equipment and facilities for both major
locations during 2001, with most of the investment occurring in Germany. A new
manufacturing facility was constructed for FCJ as part of the expansion process
there and the grand opening was held in February 2002. A building was acquired
in Jena, Germany to house the 6 new machines that will be the initial operations
of FiberCore Glas, using the Company's recently patented POVD process. Grant
funds received related to the expansion in Germany amounted to $2,092,000. These
funds reduce the cost basis of the assets acquired. Cash paid in connection with
the DCI acquisition was $292,000, while cash acquired with the DCI acquisition
was $27,000.

The Company received proceeds of long-term debt of $15,067,000 during 2001.
These funds were used for the purchase of equipment and facilities at the
Company's German and Brazilian locations to fund the expansion of these
locations and for general working capital. In January of 2001, long-term debt
was reduced by $4,000,000 as a result of the conversion by Crescent
International, Ltd. of such debt into 1,570,680 shares of Common Stock of the
Company. Upon conversion, the interest associated with the debt was waived.
Additionally, there were principal payments on long-term debt for the year of
$609,000. Proceeds of short-term notes payable amounted to $8,224,000 for 2001.
These notes were used primarily for short-term working capital purposes in
Brazil. Short-term notes for Xtal amounting to $1,190,000 were paid during 2001.

      o     On August 20, 2001, the Company replaced its existing equity line of
            credit with Crescent International Ltd. ("Crescent"), which had an
            availability of $19,000,000 with a new equity line with Crescent
            providing for the same availability. The new agreement extends the
            period during which Crescent can be obligated to purchase the
            Company's common stock and contains several positive features,
            including a pricing mechanism more advantageous to the Company. The
            Company received net proceeds of $2,698,000 upon the sale of common
            stock to Crescent on August 22, 2001 pursuant to the new agreement,
            and net proceeds of $902,000 upon an additional sale on October 26,
            2001. The proceeds from the foregoing sales to Crescent were used to
            fund capacity expansion and for other corporate purposes. During the
            fourth quarter of 2002, Crescent informed the Company that it had
            decided not to extend the existing equity agreement, which was
            scheduled to expire December 31, 2002, between Crescent and the
            Company, providing for the sale of common stock to Crescent. At that
            time, Crescent indicated that they had no current plans to sell any
            common stock in the Company held by Crescent.

                                      -48-
<PAGE>

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

As of December 31, 2002, contractual cash obligations, commitments and
contingencies of the Company were as follows:

<TABLE>
<CAPTION>
                                                               Less than 1
(Dollars in thousands)                             Total          year         1-3 years      4-5 years     After 5 years
                                              -----------------------------------------------------------------------------
<S>                                               <C>            <C>            <C>            <C>            <C>
Notes payable and current portion of
long-term debt                                    $31,502        $31,502        $    --        $    --        $    --
Long-term debt                                     20,442             --         14,244          3,628          2,570
Capital lease obligations                           2,428          1,170          1,258             --             --
Operating leases                                   10,274          2,243          6,056          1,975             --
Unconditional purchase obligations*                 6,378          6,378             --             --             --
                                                  -------        -------        -------        -------        -------
Total contractual cash obligations                $71,024        $41,293        $21,558        $ 5,603        $ 2,570
                                                  =======        =======        =======        =======        =======
</TABLE>

*  Refers to raw material purchase requirements under take-or-pay agreements as
   part of our ordinary course of business.

GOODWILL

In July 2001, the FASB issued SFAS No. 141, Business Combinations, which
established financial accounting and reporting for business combinations and
supersedes Accounting Principles Board ("APB") Opinion No. 16, Business
Combinations. It requires that all business combinations in the scope of this
Statement are to be accounted for using one method, the purchase method. The
provisions of this Statement apply to all business combinations initiated after
June 30, 2001, and also apply to all business combinations accounted for using
the purchase method for which the date of acquisition is July 1, 2001 or later.
The Company has adopted SFAS No. 141, and the adoption of SFAS No. 141 had no
material impact on the financial reporting and related disclosures.

In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets, which establishes financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon their
acquisition, and after they have been initially recognized in the financial
statements. The Company has adopted SFAS No.142 beginning with the first quarter
of fiscal 2002.

SFAS No.142 requires that goodwill and intangible assets that have indefinite
useful lives will not be amortized, but rather they will be tested at least
annually for impairment. Intangible assets that have finite useful lives will
continue to be amortized over their useful lives. The goodwill test for
impairment consists of a two-step process that begins with an estimation of the
fair value of a reporting unit. The first step is a screen for potential
impairment and the second step measures the amount of impairment, if any. SFAS
No. 142 requires an entity to complete the first step of the transitional
goodwill impairment test within six months of adopting the Statement. The
Company completed its initial test of impairment, measured as of January 1, 2002
and concluded there was no impairment to goodwill as of the adoption date of
SFAS No. 142. Management completed the annual impairment test in the fourth
quarter of 2002 and recorded

                                      -49-
<PAGE>

goodwill impairment charges of approximately $7.3 million. This represented a
complete write-down of the goodwill associated with FiberCore's acquisition of
Xtal in 2000 and DCI in 2001.

RECENT ACCOUNTING PRONOUNCEMENTS

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4,44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections
(SFAS No. 145). SFAS No. 145 rescinds SFAS No. 4, Reporting Gains and Losses
from Extinguishment of Debt, and an amendment of that statement, SFAS No. 64,
Extinguishment of Debt Made to Satisfy Sinking-Fund Requirements. SFAS No. 145
also rescinds SFAS No. 44, Accounting for Intangible Assets of Motor Carriers.
SFAS No. 145 amends SFAS No. 13, Accounting for Leases, to eliminate an
inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. SFAS No. 145 also
amends other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. The adoption of SFAS No. 145 is not expected to have a material
result on the Company's financial position or results of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. SFAS No. 146, nullifies Emerging Issues Task Force
("EITF") 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). The Company is in the process of determining the effect of
the adoption of SFAS No. 146 on the Company's consolidated financial statements.

In December 2002, the FASB issue SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure and amendment to SFAS No. 123", which
provides three optional transition methods for entities that decide to
voluntarily adopt the fair value recognition principles of SFAS No. 123,
"Accounting for Stock Issued to Employees", and modifies the disclosure
requirements of that statement. The Company has not adopted the fair value
recognition principles for SFAS No. 123; therefore this statement has had no
effect upon the Company's consolidated financial condition or results of
operations. The Company had adopted the disclosure requirements under SFAS No.
148 as of December 31, 2002 and will provide additional quarterly disclosures
required in 2003.

In November 2002, the FASB issued Interpretation ("FIN") No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). The Interpretation requires
certain guarantees to be recorded at fair values and also requires a guarantor
to make new disclosures, even when the likelihood of making payment under the
guarantee is remote. The recognition provisions of FIN 45 are effective on a
prospective basis for guarantees issued or modified after December 31, 2002. The
disclosure requirements are effective for financial statements of interim and
annual periods ending after December 15, 2002. Adoption of this statement is not
expected to have a material impact on the Company's consolidated financial
condition or results of operations.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities", which requires an enterprise to assess if
consolidation is appropriate based upon its variable economic interest in
variable interest entities ("VIE"). Interpretation 46 is effective for new VIE's
established subsequent to February 1, 2003 and must be adopted for existing
VIE's by July 1, 2003. The Company does not invest in investment structures that
require analysis under the Interpretation and the adoption of Interpretation 46
is not expected to have material impact on the Company's consolidated financial
condition or results of operations.

                                      -50-
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risks from changes in foreign currency exchange
rates and interest rates. The Company has two principal operating subsidiaries,
which are located in foreign counties. FCJ is located in Germany and its
functional currency is the Euro. Xtal is located in Brazil and its functional
currency is the Brazilian Real.

FOREIGN CURRENCY RISK. FCJ may, from time to time, purchase short-term forward
exchange contracts to hedge payments and/or receipts due in currencies other
than the Euro. At December 31, 2002, FCJ did not have any outstanding forward
exchange contracts. At December 31, 2002, the Company had a long-term loan
denominated in DM totaling DM 7,700,000. The principal of the loan is due at
maturity, September 2006. Interest on the loan is payable quarterly at the fixed
rate of 6.25% per annum. A 10% change in the DM exchange rate to the U.S. dollar
could increase or decrease the interest cash flow requirements of the Company by
approximately $24,000 for each of the years 2002 through 2005, and by
approximately $19,000 in 2006.

Substantially all of the Company's sales are through FCJ, and Xtal, with a
relatively small contribution from FCS. Additionally, at December 31, 2002, 65%
and 19% of the Company's assets are at its German and Brazilian subsidiaries,
respectively. The Company, therefore, is subject to foreign currency translation
gains or losses in reporting its consolidated financial position and results of
operations.

INTEREST RATE RISK. At December 31, 2002, the Company had a long-term loan with
an interest rate based on the prime rate or LIBOR. The Company selects either
one, two or three-month LIBOR-based on prevailing market rates. A 10% change in
the interest rates on this loan would have increased or decreased interest
expense by approximately $42,000 for 2002.

             (The remainder of this page intentionally left blank.)



                                      -51-
<PAGE>

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
            -------------------------------------------

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                           PAGE
Independent Auditors' Report................................................ 53
Consolidated Balance Sheets at December 31, 2002 and 2001................... 54
Consolidated Statements of Operations for the Years Ended December 31, 2002,
   2001, and 2000........................................................... 55
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended
   December 31, 2002, 2001 and 2000......................................... 56
Consolidated Statements of Changes in Stockholders' Equity for the Years
   Ended December 31, 2002, 2001 and 2000................................... 57
Consolidated Statements of Cash Flows for the Years Ended December 31, 2002,
   2001 and 2000............................................................ 58
Notes To Consolidated Financial Statements for the Years Ended December 31,
   2002, 2001 and 2000...................................................... 59


                                      -52-
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
FiberCore, Inc.
Charlton, Massachusetts

We have audited the accompanying consolidated balance sheets of FiberCore, Inc.
and subsidiaries (the "Company") as of December 31, 2002 and 2001, and the
related consolidated statements of operations, comprehensive income (loss),
changes in stockholders' equity and cash flows for each of the three years in
the period ended December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these 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, such consolidated financial statements present fairly, in all
material respects, the financial position of FiberCore, Inc. and subsidiaries as
of December 31, 2002 and 2001, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2002 in
conformity with accounting principles generally accepted in the United States of
America.

As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for goodwill and other intangible assets to
conform to Statement of Financial Accounting Standards No. 142.

The accompanying financial statements for the year ended December 31, 2002 have
been prepared assuming that the Company will continue as a going concern. As
discussed in Note 1, the Company is experiencing difficulty in generating
sufficient cash flows to meet its obligations and is in default under certain
loan agreements. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans concerning these
matters are described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



/s/ DELOITTE & TOUCHE LLP
Hartford, Connecticut
April 29, 2003


                                      -53-
<PAGE>

                        FIBERCORE, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
(Dollars in thousands except share data)                                                  2002        2001
                                                                                          ----        ----
<S>                                                                                     <C>         <C>
                                      ASSETS
Current assets:
   Cash .............................................................................   $  1,392    $  1,721
   Accounts receivable, less allowance for doubtful accounts of $516 in 2002
     and $703 in 2001 ...............................................................      2,958       8,436
   Receivables from government grants ...............................................      7,571          --
   Other receivables ................................................................      2,289       5,398
   Inventories ......................................................................      5,421       8,099
   Prepaid and other current assets .................................................        730       1,022
                                                                                        --------     -------
     Total current assets ...........................................................     20,361      24,676
                                                                                        --------     -------
Property and equipment ..............................................................     56,486      47,116
Less - accumulated depreciation .....................................................     (9,049)     (6,568)
                                                                                        --------     -------
     Property and equipment - net ...................................................     47,437      40,548
                                                                                        --------     -------
Other assets:
   Notes receivable from joint venture partners .....................................         --       4,948
   Restricted cash ..................................................................      1,990       1,753
   Patents, less accumulated amortization of $96 in 2002 and $4,117 in 2001 .........        354       3,855
   Deposit on equipment .............................................................      3,020       3,008
   Investment in joint venture ......................................................        925         925
   Deferred tax asset ...............................................................         --         383
   Goodwill .........................................................................         --      10,897
   Other ............................................................................      1,516       1,990
                                                                                        --------     -------
     Total other assets .............................................................      7,805      27,759
                                                                                        --------     -------
     Total assets ...................................................................   $ 75,603    $ 92,983
                                                                                        ========    ========
                         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable ....................................................................   $ 17,558    $  8,888
   Current portion of long-term debt ................................................     15,114       1,971
   Accounts payable .................................................................      8,462       8,746
   Accrued expenses .................................................................      6,116       5,966
   Other liabilities                                                                         463         424
                                                                                        --------     -------
       Total current liabilities ....................................................     47,713      25,995
   Deferred income ..................................................................      1,713       1,021
   Long-term debt, less current portion .............................................     21,700      22,475
                                                                                        --------     -------
     Total liabilities ..............................................................     71,126      49,491
                                                                                        --------     -------
Minority interest                                                                             15       5,117
Commitments and contingencies (Note 10)
  Stockholders' equity:
   Preferred stock, $ .001 par value, authorized 10,000,000 shares; no shares issued
     and outstanding ................................................................         --          --
   Series A preferred stock, $ .001 par value, authorized 1 share; 1 share issued and
     outstanding ....................................................................         --          --
   Common stock, $ .001 par value, authorized 100,000,000 shares; shares issued and
     outstanding: 68,876,094 in 2002 and 61,481,139 in 2001 .........................         68          61
   Additional paid-in-capital .......................................................     65,350      64,847
   Accumulated deficit ..............................................................    (50,490)    (19,413)
   Accumulated other comprehensive loss:
   Accumulated translation adjustment ...............................................    (10,466)     (7,120)
                                                                                        --------     -------
     Total stockholders' equity .....................................................      4,462      38,375
                                                                                        --------     -------
     Total liabilities and stockholders' equity .....................................   $ 75,603    $ 92,983
                                                                                        ========    ========
</TABLE>
                See accompanying notes to consolidated financial statements.

                                      -54-
<PAGE>

                        FIBERCORE, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000

<TABLE>
<CAPTION>
(Dollars in thousands except share data)
                                                                 2002            2001            2000
                                                                 ----            ----            ----
<S>                                                       <C>             <C>             <C>
Net sales .............................................   $     25,557    $     52,362    $     36,919
                                                          ------------    ------------    ------------
Cost of sales:
   Cost of sales ......................................         22,206          36,084          25,118
   Restructuring costs ................................            197              --              --
   Write-down of inventory ............................          3,388              --              --
                                                          ------------    ------------    ------------
Total cost of sales ...................................         25,791          36,084          25,118
                                                          ------------    ------------    ------------
Gross profit (loss) ...................................           (234)         16,278          11,801


Selling, general and administrative expenses ..........         10,060           8,692           5,071
Research & development ................................          1,877           2,189           1,459
Restructuring costs ...................................            103              --              --
Write-off of goodwill .................................          7,313              --              --
Write-off of patents ..................................          2,972              --              --
                                                          ------------    ------------    ------------
Income (loss) from operations .........................        (22,559)          5,397           5,271
Non-cash interest expense on convertible debt .........         (1,735)             --          (5,405)
Foreign exchange gains(losses) ........................         (4,322)            381              98
Interest income (expense) - net .......................         (3,109)         (2,028)           (427)
Other income (expense) - net ..........................           (212)            103             128
                                                          ------------    ------------    ------------
Income (loss) before income taxes and minority
  interest ............................................        (31,937)          3,853            (335)
Provision for income taxes ............................            471           3,006           2,054
                                                          ------------    ------------    ------------
Income (loss) before minority interest ................        (32,408)            847          (2,389)
Minority interest in (income) loss of subsidiary ......          1,331            (367)           (308)
                                                          ------------    ------------    ------------
Net Income (loss) .....................................   $    (31,077)   $        480    $     (2,697)
Income (loss) per share of common stock:
Basic .................................................   $      (0.48)   $       0.01    $      (0.05)
                                                          ============    ============    ============
Diluted ...............................................   $      (0.48)   $       0.01    $      (0.05)
                                                          ============    ============    ============
Weighted average shares outstanding:
Basic .................................................     64,881,661      58,074,724      49,043,882
                                                          ============    ============    ============
Diluted ...............................................     64,881,661      63,885,536      49,043,882
                                                          ============    ============    ============
</TABLE>
                See accompanying notes to consolidated financial statements.

                                      -55-
<PAGE>

                        FIBERCORE, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(Dollars in thousands)
                                        2002        2001        2000
                                        ----        ----        ----

Net income (loss) ................   $(31,077)   $    480    $ (2,697)
Other comprehensive (loss) income:
Foreign currency translation
  adjustments ....................     (3,346)     (4,888)     (1,226)
                                     --------    --------    --------

Comprehensive loss ...............   $(34,423)   $ (4,408)   $ (3,923)
                                     ========    ========    ========

          See accompanying notes to consolidated financial statements.

                                      -56-
<PAGE>

                        FIBERCORE, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(Dollars in thousands except share data)
<TABLE>
<CAPTION>
                                                                               ACCUMULATED
                                             COMMON STOCK                         OTHER       RETAINED         TOTAL
                                                        PAR        PAID-IN    COMPREHENSIVE   EARNINGS     STOCKHOLDERS'
                                          SHARES       VALUE       CAPITAL    INCOME (LOSS)   (DEFICIT)       EQUITY
------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>          <C>           <C>           <C>           <C>
Balance, January 1, 2000 ...........   41,404,602       $42       $24,874        $ (1,006)     $(17,196)     $ 6,714
Sale of stock for cash .............    3,193,369         3        12,893              --            --       12,896
Issuance of stock related to
   conversion of debt ..............    8,704,275         9        10,164              --            --       10,173
Issuance of stock on exercise of
   options and warrants ............    4,132,800         4         2,405              --            --        2,409
Issuance of stock options for
   services ........................      232,924        --           478              --            --          478
Deemed interest on convertible
  debt .............................           --        --         5,405              --            --        5,405
Foreign currency translation
   adjustment ......................           --        --            --          (1,226)           --       (1,226)
Loss for the year ..................           --        --            --              --        (2,697)      (2,697)
------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000 .........   57,667,970       $58       $56,219        $ (2,232)     $(19,893)     $34,152
Sale of stock for cash .............    1,826,487         2         3,787              --            --        3,789
Issuance of stock related to
   conversion of debt ..............    1,570,680         1         3,999              --            --        4,000
Issuance of stock options for
   services ........................      163,333        --           236              --            --          236
Issuance of stock  for acquisition
   of DCI ..........................      252,669        --           606              --            --          606
Foreign currency translation
   adjustment ......................           --        --            --          (4,888)           --       (4,888)
Income for the year ................           --        --            --              --           480          480
------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001 .........   61,481,139       $61       $64,847        $ (7,120)     $(19,413)     $38,375
Issuance of stock related to
   conversion of debt ..............    7,293,682         7         1,638              --            --        1,645
Issuance of warrants and exercise
   of options ......................      101,273        --           835              --            --          835
Contribution of capital in
   FiberCore Africa joint venture ..           --        --            96              --            --           96
Reversal of Malaysian joint
  venture ..........................           --        --        (2,066)             --            --       (2,066)
Foreign currency translation
   adjustment ......................           --        --            --          (3,346)           --       (3,346)
Loss for the year ..................           --        --            --              --        31,077       31,077
------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2002 .........   68,876,094       $68       $65,350        $(10,466)     $(50,490)     $ 4,462
========================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements

                                      -57-
<PAGE>

                        FIBERCORE, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

<TABLE>
<CAPTION>
(Dollars in thousands except share data)                                                    2002       2001        2000
                                                                                            ----       ----        ----
<S>                                                                                      <C>         <C>         <C>
Cash flows from operating activities:
   Net income (loss) .................................................................   $(31,077)   $    480    $ (2,697)
Adjustments to reconcile net income (loss) to net cash provided by (used in) o
   perating activities:
   Issuance of stock options for services performed ..................................         --         236         119
   Depreciation and amortization .....................................................      2,914       3,518       2,815
   Loss on disposal of fixed assets ..................................................        402          --          --
   Write-off of goodwill .............................................................      7,313          --          --
   Write-off of patents ..............................................................      2,972          --          --
   Write-down of inventory ...........................................................      3,388          --          --
   Deferred income tax benefit .......................................................        287         297         100
   Increase in deferred revenue ......................................................        681       1,273          --
   Change in minority interest .......................................................     (1,834)        367       1,487
   Non-cash interest expense .........................................................      1,735          --       5,405
   Foreign currency translation (gain) loss and other ................................      4,960      (1,735)     (1,252)
Changes in operating assets and liabilities:
   Accounts receivable ...............................................................      5,885        (905)     (2,629)
   Other receivables .................................................................      2,225      (4,691)       (756)
   Inventories .......................................................................     (1,533)     (2,494)        363
   Prepaid and other current assets ..................................................        (68)       (557)        443
   Accounts payable ..................................................................        981       1,064       3,164
   Accrued expenses ..................................................................        419        (829)      2,609
                                                                                         --------    --------    --------
       Net cash provided by (used in) operating activities ...........................       (350)     (3,976)      9,171
                                                                                         --------    --------    --------
Cash flows from investing activities:
   Purchases of property and equipment ...............................................    (24,195)    (24,813)     (9,950)
   Reimbursement from government grant ...............................................      3,640       2,092         165
   Cash used for acquisition .........................................................         --        (292)    (19,586)
   Cash acquired from acquisition ....................................................         --          27         196
   Other .............................................................................       (178)       (700)        (17)
                                                                                         --------    --------    --------
       Net cash used in investing activities .........................................    (20,733)    (23,686)    (29,192)
                                                                                         --------    --------    --------
Cash flows from financing activities:
   Proceeds from issuance of common stock ............................................        157       3,789      15,211
    Cash contribution from minority shareholders of FC Africa ........................         96          --          --
   Proceeds from long-term debt ......................................................      4,268      15,067      10,650
   Proceeds from notes payable .......................................................     20,885       8,224         300
   Repayment of notes payable ........................................................     (3,200)     (1,190)     (1,209)
   Repayment of long term debt .......................................................       (765)       (609)         --
   Financing costs ...................................................................       (343)       (590)       (328)
                                                                                         --------    --------    --------
      Net cash provided by financing activities ......................................     21,098      24,691      24,624
                                                                                         --------    --------    --------
Effect of foreign exchange rate change on cash .......................................       (344)       (359)        (39)
                                                                                         --------    --------    --------
Increase (decrease) in cash ..........................................................       (329)     (3,330)      4,564
Cash, beginning of year ..............................................................      1,721       5,051         487
                                                                                         --------    --------    --------
Cash, end of year ....................................................................   $  1,392    $  1,721    $  5,051
                                                                                         ========    ========    ========
Supplemental disclosure:
   Common stock issued for conversion of debt ........................................   $  1,645    $  4,000    $ 10,173
   Property acquired under capital leases ............................................         --       4,119          --
   Cash paid for interest ............................................................      1,887       1,711         600
   Cash paid for taxes ...............................................................        158       1,005         778
   Receivables from government grants ................................................      7,571          --          --
</TABLE>
          See accompanying notes to consolidated financial statements.

                                      -58-
<PAGE>

                        FIBERCORE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern
-------------

As of the date of this Annual Report on form 10-K, the Company was in violation
of certain covenants and Holders of its Convertible Debentures and with Algar.
These default conditions cause a cross-default on the Fleet credit facility of
$8,500,000 and on a $1,500,000 loan from Tyco International Finance Alpha GmbH
and Fleet and/or Tyco could accelerate the maturity date of their respective
loans and the entire balances could become immediately due. In the event of a
default of the Fleet Credit Facility, Fleet could exercise the provisions of a
guarantee given by Tyco International Group S.A. to be paid in full by Tyco and
Tyco would then assume Fleet's position as a creditor of the Company. In this
case, Tyco would also have the right to assume control of the Company's Board of
Directors. Also, as shown in the financial statements, the Company's current
liabilities exceeded its current assets by $27,352,000 at December 31, 2002,
including $9,250,000 of long-term debt that has been classified as current as a
result of being in default. The Company must raise approximately $5 million in
additional financing soon and/or restructure some of its obligations to address
its liquidity crisis. The Company is also attempting to renegotiate the terms on
approximately $18 million in short-term debt and notes payable, including the
$9.25 million discussed above, and an additional $3 - $5 million is planned to
be shifted to long-term debt based on financing activities associated with the
Phase 2 expansion of our German operation. These factors, among others, indicate
that the Company may be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis and to obtain
additional financing or refinancing as may be required.

The Company is actively pursuing a number of actions to address it ability to
continue as a going concern. It has taken and continues to take steps to reduce
its cost structure. It has accelerated the development and implementation of new
technology, specifically its POVD and other plasma-based technologies, which
will have a substantial impact on the production costs and capacity of its
optical fiber and preform products. The Company is actively pursuing new
business opportunities, including some major projects for Fiber to the Home
(FTTH). The Company is also engaged in ongoing discussions with several
potential investment groups to raise at least the $5 million in additional
capital requirements described above. However, there can be no assurance that
the Company will be successful in these efforts and be able to continue as a
going concern.

Incorporation and nature of operations
--------------------------------------

FiberCore, Inc. (the "Company") is primarily engaged in the business of
developing, manufacturing, and marketing single-mode and multimode optical fiber
and optical fiber preforms for the telecommunications and data communications
industry. The Company operates as a single segment enterprise.

The Company's principal operating companies are FCJ, a wholly owned subsidiary
in Germany and Xtal, a 90% owned Brazilian company acquired June 1, 2000. FCJ
manufactures both multimode and single-mode fiber and preforms with an emphasis
on the multimode market; Xtal manufactures both single-mode and multimode fiber
and single-mode preforms with an emphasis on the single-mode market.

                                      -59-
<PAGE>

In March 2000, FCJ formed FCM, a wholly owned subsidiary in Germany, which
designs and manufactures the specialized fiber equipment used by the Company's
operating units.

In May 2000, FCQ was formed in Germany as a wholly owned subsidiary of
FiberCore, Inc. FCQ currently owns the land and building utilized by FCG and
leases that property to FCG.

In April of 2001, FiberCore Glas (FCG) was formed in Germany as a wholly owned
subsidiary of FCJ. FCG will be utilizing the Company's newly patented POVD
technology to complement the supply of synthetic silica tube.

FiberCore Asia Sdn. Bhd. ("FC Asia") was formed in 1997 to construct an
optical-fiber manufacturing facility in Malaysia. Construction of the Malaysian
facility required loan financing which, due to the economic downturn in Asia,
has been delayed. In the fourth quarter of 2002, a decision was made not to
currently pursue this joint venture due to the uncertainty that a plant will
ultimately be built and accordingly, the related balance sheet accounts of FC
Asia were reversed. The contractual arrangements are still in place to allow
future activity under the joint venture if and when conditions improve.

FC Africa was formed in February 2002 as a joint venture between FCI and local
investors in South Africa to construct an optical fiber manufacturing facility
in the Cape Town, South Africa area. This facility is expected to serve the
African market, as well as the Middle East and other export markets when it is
operational. This project has been delayed due to industry conditions.

The Company's common stock is quoted on the Nasdaq SmallCap Market, and has been
subject to frequent significant price fluctuations. Furthermore, the Company
must meet certain maintenance requirements, including a $1.00 minimum bid
requirement, in order for such securities to continue to be listed on the Nasdaq
SmallCap Market. On April 15, 2003, the last reported sale price of the
Company's common stock was $0.19 per share. If our securities are de-listed from
the Nasdaq SmallCap market, investors' interest in the Company's securities
could be reduced.

On June 3, 2002, the Company received a notice from the Nasdaq Stock Market
stating that for 30 consecutive trading days, the bid price for our common stock
closed below the minimum $1.00 per share requirement for continued listing on
the Nasdaq SmallCap Market. The notice indicated that pursuant to applicable
rules, we were provided with 180 days (i.e. until December 2, 2002), to regain
compliance. If at any time before December 2, 2002 the bid price of our common
stock closed at $1.00 per share or more for a minimum of 10 consecutive trading
days, we would have been in compliance with the minimum bid requirement.

As we were unable to demonstrate compliance by December 2, 2002, the Nasdaq
Stock Market reviewed our latest financial statements (as of September 30, 2002)
and determined that we continued to meet initial listing criteria. We would meet
these criteria if we would have any of the following: (i) stockholder's equity
of $5 million; (ii) market capitalization of $50 million; or (iii) net income of
$750,000 (excluding extraordinary or non-recurring items) in the most recently
completed fiscal year or in two of the last three most recently completed fiscal
years. As of September 30, 2002, we had stockholder's equity of $21,329,000. As
a result of meeting the initial listing criteria on December 2, 2002, the Nasdaq
Stock Market granted us an additional 180 calendar-day grace period (i.e. until
May 29, 2003) to demonstrate compliance with the minimum bid requirement. If the
Company is not in compliance by May 29, 2003, our stock would be de-listed,
absent successful appeal. The Nasdaq Stock Market has recently proposed new
rules that would allow for further extensions of time to demonstrate compliance
of the $1 minimum bid

                                      -60-
<PAGE>

requirement if the Company continues to meet the initial listing criteria. As of
December 31, 2002 the Company had stockholder's equity of $4,462,000. Therefore,
the Company may not be able to meet this criterion on May 29, 2003 without an
equity infusion or an increase in its stock price.

Additionally, on April 17, 2003, the Company received a notification of
delisting from Nasdaq. The Company had not yet filed this Annual Report on Form
10-K with the SEC as of this date due to delays in finalizing the results from
its foreign subsidiaries. The Company had previously filed for an extension to
file this Annual Report on Form 12b-25, which expired on April 15, 2003. As a
result of not timely filing its 10-K, the Company received a Nasdaq staff
determination on April 17, 2003 indicating that the Company fails to comply with
the filing requirements for continued listing set forth in Marketplace Rule
4310(c)(14), and further that the Company is late in paying fees to Nasdaq which
is a failure to comply with Marketplace Rule 4310 (c) (13), and that its
securities would, therefore, be delisted from the Nasdaq SmallCap Market at the
opening of business on April 28, 2003. Accordingly, the trading symbol for the
Company's securities was changed from FBCE to FBCEE at the opening of business
on April 22, 2003. The Company has filed for a hearing to contest this
determination. This hearing is scheduled for May 22, 2003. The delisting action
has been stayed until the hearing date.

Delisting could materially and adversely affect the trading market and prices
for our securities. A de-listing could also trigger an event of default under
the terms of the convertible debt issued to Riverview Group, LLC, Laterman & Co.
and Forevergreen Partners, which, if un-remedied, could trigger a cross default
on our credit agreement with Fleet National Bank. Events of default could result
in acceleration of the maturity of our debt to Riverview Group, LLC, Laterman &
Co. and Forevergreen Partners or Fleet, as the case may be. If delisted, the
Company will endeavor to facilitate trading of its common stock on the
OTC-Bulletin Board.

Use of estimates in the preparation of financial statements
-----------------------------------------------------------

The preparation of financial statements in conformity 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 and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Principles of consolidation
---------------------------

The consolidated financial statements include the accounts of the Company and
its majority-owned subsidiaries. All intercompany balances and transactions have
been eliminated in consolidation. Minority interest on the balance sheet
includes 10% ownership of Xtal, by its former owner, Algar, S.A. Continuing
losses have eliminated the minority interest in Xtal and, as such, as of
December 31, 2002, the balance of the minority interest was related solely to FC
Africa.

The Company holds a 7% interest, carried at $925,000, in Middle East Fiber Cable
Co. ("MEFC"), a cable manufacturing company that operates in Saudi Arabia. In
2002, the Company made approximately $116,000 in preform sales to MEFC and
$975,000 in 2001. MEFC began operations in 1998. The Company is a co-guarantor
with the other joint venture partners for certain credit facilities provided by
banks to MEFC. The assets of MEFC also collateralize these credit facilities. At
December 31, 2002, the Company was contingently liable for these loans in the
amount of approximately $144,000.

                                      -61-
<PAGE>

Inventories
-----------

Inventories are valued at the lower of cost or market using the first-in,
first-out method.

Property and equipment
----------------------

Property and equipment is stated at cost, net of grants received applicable to
acquisitions. The cost of maintenance and repairs is charged to expense as
incurred. Expenditures for significant renewals or improvements to properties
and equipment are added to the basis of the asset. Property and equipment is
depreciated using the straight-line method over the estimated useful lives of
the assets.

Restricted Cash
---------------

In connection with the 1997 expansion of the FCJ facility, the Company obtained
a loan from the Berliner Bank in Germany. Sparkasse Jena in Germany assumed the
loan under the same terms and conditions in 2001. Cash in the amount of German
marks 3,850,000 (approximately U.S. $1,990,000 at December 31, 2002), was
deposited with this institution as collateral for this loan when it was
originated

Patents
-------

Patents are amortized on a straight-line basis over seventeen years, which is
the estimated useful life of the patents. The Company evaluates the
recoverability of patents from expected future cash flows. In fourth quarter of
2002, the Company decided to currently discontinue investing in the ALT product
line and accordingly the related patents, which had a net book value of
approximately $2,972,000, were written off.

Fair value of financial instruments
-----------------------------------

The Company has financial instruments, which consist of cash, short-term
receivables, accounts payable and notes payable, for which their carrying
amounts approximate fair value due to the short maturity of those instruments.
The principal amount of the long-term debt approximates fair value since the
interest rates on these instruments approximate current market rates.

Translation of foreign currencies
---------------------------------

The translation of foreign subsidiaries financial statements into U.S. dollars
is performed for balance sheet accounts using current exchange rates in effect
at the balance sheet date and for revenue and expense accounts using an average
exchange rate for the period. Unrealized gains or losses resulting from
translation are included in stockholders' equity as other comprehensive income
(loss).

Revenue Recognition
-------------------

Revenue is recognized when products are shipped for all businesses.

Research and Development
------------------------

Research and development costs are expensed as incurred. The Company received
$59,000, $127,000 and $161,000 in grants for research and development activities
in 2002, 2001 and 2000, respectively. The grant funds received are accounted for
in other income. The principal terms of the grants are that the grant funds

                                      -62-
<PAGE>

received are used only for the specific project for which the grants were
awarded and that the research project is completed in accordance with the terms
of the grant award. The projects progress is evaluated on a periodic basis
(usually quarterly) and in the event that the Company determined that the
conditions of the grant were not met or the grantor has advised the Company that
the funds were not used as intended, then the Company would record the liability
at the date of such determination with an offsetting charge to income. The
Company has completed or is completing all research projects in accordance with
the terms of the grants and therefore has not recorded any obligation to repay
any grant funds received.

Income taxes
------------

The Company accounts for income taxes in accordance with the asset and liability
method. Deferred taxes are recognized for the future tax consequences
attributable to the differences between the book and tax basis of assets and
liabilities. 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 income in the
period that includes the enacted date.

Earnings (loss) per share of common stock
-----------------------------------------

Basic earnings (loss) per share of common stock is computed by dividing net
income (loss) by the weighted average number of common shares outstanding during
the year. Diluted earnings per share assumes that outstanding common shares were
increased by shares issuable upon the exercise of options and warrants for which
market price exceeds the exercise price, less shares, which could have been
purchased by the Company with the related proceeds. For 2002 and 2000, the stock
purchase warrants and stock options have not been included in the computation of
basic loss per share, since the effect would have been anti-dilutive.

Stock options
-------------

The Financial Accounting Standards Board's ("FASB") Statement of Financial
Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation,
defines a fair value based method of accounting for an employee stock option or
similar equity instrument. However, the Company will continue to measure
compensation cost for employee stock compensation transactions using the
intrinsic value based method of accounting prescribed by APB Opinion No. 25,
Accounting for Stock Issued to Employees, as permitted under SFAS No. 123.

The Company has computed the pro forma disclosures required under SFAS No. 123
for options granted in fiscal 2002, 2001 and 2000 using the Black-Scholes option
pricing model prescribed by SFAS No. 123. The weighted average assumptions used
are as follows:

                             2002               2001                2000
-------------------  ------------------  ------------------  ------------------
Risk-free interest
rate                          3%                 5%                  5%
Expected dividend
yield                       None               None                None
Expected lives             3 years            3 years             3 years
Expected volatility          145%                89%                140%

                                      -63-
<PAGE>

The Company applies APB Opinion 25 in accounting for its stock compensation
plans. Had compensation cost been determined on the basis of fair value pursuant
to FASB Statement No. 123, net loss and loss per share would have been as
follows:

<TABLE>
<CAPTION>
(Dollars in thousands)                                           2002          2001         2000
Income (loss):                                                   ----          ----         ----
<S>                                                        <C>              <C>         <C>
As reported                                                $   (31,077)     $    480    $  (2,697)
    Effect of stock-based employee
    compensation expense determined under fair valuation
    method for all awards                                       (1,092)         (662)        (134)
                                                           -----------      --------    ---------
Pro forma                                                  $   (32,169)     $   (182)   $  (2,831)
                                                           ===========      ========    =========
Net income (loss) per common share:
Basic earnings (loss) per share:
   As reported                                             $     (0.48)     $   0.01    $   (0.05)
   Pro forma                                               $     (0.50)     $  (0.00)   $   (0.06)
Diluted earnings (loss) per share:
   As reported                                             $     (0.48)     $   0.01    $   (0.05)
   Pro forma                                               $     (0.50)     $  (0.00)   $   (0.06)
</TABLE>

Goodwill
--------

In July 2001, the FASB issued SFAS No. 141, Business Combinations, which
established financial accounting and reporting for business combinations and
supersedes Accounting Principles Board ("APB") Opinion No. 16, Business
Combinations. It requires that all business combinations in the scope of this
Statement are to be accounted for using one method, the purchase method. The
provisions of this Statement apply to all business combinations initiated after
June 30, 2001, and also apply to all business combinations accounted for using
the purchase method for which the date of acquisition is July 1, 2001 or later.
The Company has adopted SFAS No. 141, and the adoption of SFAS No. 141 had no
material impact on the financial reporting and related disclosures.

In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets, which establishes financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon their
acquisition, and after they have been initially recognized in the financial
statements. The Company has adopted SFAS No.142 beginning with the first quarter
of fiscal 2002.

SFAS No.142 requires that goodwill and intangible assets that have indefinite
useful lives will not be amortized, but rather they will be tested at least
annually for impairment. Intangible assets that have finite useful lives will
continue to be amortized over their useful lives. The goodwill test for
impairment consists of a two-step process that begins with an estimation of the
fair value of a reporting unit. The first step is a screen for potential
impairment and the second step measures the amount of impairment, if any. SFAS
No. 142 requires an entity to complete the first step of the transitional
goodwill impairment test within six months of adopting the Statement. The
Company completed its initial test of impairment, measured as of January 1, 2002
and concluded there was no impairment to goodwill as of the adoption date of
SFAS No. 142. Management completed the annual impairment test in the fourth
quarter of 2002 and recorded

                                      -64-
<PAGE>

goodwill impairment charges of approximately $7.3 million. This represented a
complete write-down of the goodwill associated with FiberCore's acquisition of
Xtal in 2000 and DCI in 2001.

Pro forma results for the years ended December 31, 2001 and 2000, assuming the
discontinuation of amortization of goodwill is as follows (in thousands of
dollars, except per share amounts):

<TABLE>
<CAPTION>
                                                                                  2001                  2000
                                                                                  ----                  ----

<S>                                                                             <C>                   <C>
            Previously reported net income (loss)                               $   480               $(2,697)
             Amortization of goodwill                                               530                   363
                                                                                -------               -------
            Pro forma net income (loss)                                         $ 1,010               $(2,334)
                                                                                =======               =======
            Pro forma income per share of common stock:

            Basic:
               Previously reported net income (loss) per share                  $  0.01               $ (0.05)
               Amortization of goodwill                                            0.01                  0.01
                                                                                -------               -------
               Pro forma net income per share                                   $  0.02               $ (0.04)
                                                                                =======               =======
            Diluted:
               Previously reported net income (loss) per share                  $  0.01               $ (0.05)
               Amortization of goodwill                                            0.01                  0.01
                                                                                -------               -------
               Pro forma net income per share                                   $  0.02               $ (0.04)
                                                                                =======               =======
</TABLE>

Following are patent costs classified as intangible assets that will continue to
be subject to amortization over the patent's expected useful lives, which are
generally seventeen years (in thousands of dollars):


                                           As of                     As of
                                     December 31, 2002         December 31, 2001
                                     -----------------         -----------------


Gross carrying amount                     $450                      $7,972
Accumulated amortization                   (96)                     (4,117)
                                          ----                      ------

Net carrying amount                       $354                      $3,855
                                          ====                      ======


                                                     Twelve Months Ended
                                                         December 31,

                                                    2002              2001
                                                    ----              ----
Aggregate patent amortization expense              $ 430             $ 508

                                      -65-
<PAGE>

Estimated annual patent amortization expense for fiscal years ending (in
thousands of dollars):

    December 31, 2003                                     $26
    December 31, 2004                                     $22
    December 31, 2005                                     $22
    December 31, 2006                                     $22
    December 31, 2007                                     $22

Recent Accounting Pronouncements
--------------------------------

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4,44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections
(SFAS No. 145). SFAS No. 145 rescinds SFAS No. 4, Reporting Gains and Losses
from Extinguishment of Debt, and an amendment of that statement, SFAS No. 64,
Extinguishment of Debt Made to Satisfy Sinking-Fund Requirements. SFAS No. 145
also rescinds SFAS No. 44, Accounting for Intangible Assets of Motor Carriers.
SFAS No. 145 amends SFAS No. 13, Accounting for Leases, to eliminate an
inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. SFAS No. 145 also
amends other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. The adoption of SFAS No. 145 is not expected to have a material
result on the Company's financial position or results of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. SFAS No. 146, nullifies Emerging Issues Task Force
("EITF") 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 will be applicable for restructuring
activities in the future.

In December 2002, the FASB issue SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure and amendment to SFAS No. 123", which
provides three optional transition methods for entities that decide to
voluntarily adopt the fair value recognition principles of SFAS No. 123,
"Accounting for Stock Issued to Employees", and modifies the disclosure
requirements of that statement. The Company has not adopted the fair value
recognition principles for SFAS No. 123; therefore this statement has had no
effect upon the Company's consolidated financial condition or results of
operations. The Company had adopted the disclosure requirements under SFAS No.
148 as of December 31, 2002 and will provide additional quarterly disclosures
required in 2003.

In November 2002, the FASB issued Interpretation ("FIN") No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). The Interpretation requires
certain guarantees to be recorded at fair values and also requires a guarantor
to make new disclosures, even when the likelihood of making payment under the
guarantee is remote. The recognition provisions of FIN 45 are effective on a
prospective basis for guarantees issued or modified after December 31, 2002. The
disclosure requirements are effective for financial statements of interim and
annual periods ending after December 15, 2002. Adoption of this statement is not
expected to have a material impact on the Company's consolidated financial
condition or results of operations.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities", which requires an enterprise to assess if
consolidation is appropriate based upon its variable economic interest in
variable interest entities ("VIE"). Interpretation 46 is effective for new VIE's
established subsequent to February 1, 2003 and must be adopted for existing
VIE's by July 1, 2003. The Company

                                      -66-
<PAGE>

does not invest in investment structures that require analysis under the
Interpretation and the adoption of Interpretation 46 is not expected to have
material impact on the Company's consolidated financial condition or results of
operations.

Impairment of Long-Lived Assets
-------------------------------

The Company reviews the recoverability of its long-lived assets, including
finite-lived intangible assets, when events or changes in circumstances occur
that indicate that the carrying value of the asset may not be recoverable. The
assessment of possible impairment is based on the Company's ability to recover
the carrying value of the asset from expected future undiscounted operating cash
flows of the related operations. If these cash flows are less than the carrying
value of such asset, an impairment loss is recognized for the difference between
estimated fair value and carrying value. The measurement of impairment requires
management to estimate the fair value of long-lived assets.

Reclassifications
-----------------

Certain amounts in the prior year financial statements have been reclassified to
conform to the 2002 presentation.

(2)   EARNINGS PER SHARE

Basic earnings per share ("EPS") is based on the weighted average number of
common shares outstanding, excluding common stock equivalents. Diluted EPS
reflects the potential dilution of EPS that could occur if securities or other
contracts to issue common shares were exercised or converted.

For the year ended December 31, 2001, basic and diluted earnings per share were
calculated. For the years 2002 and 2000, there was no difference between basic
and diluted earnings per share due to the losses of the Company in those years.

The following table shows securities outstanding as of December 31, that dilute
basic EPS. Since there were losses in 2002 and 2000, the securities listed below
were not included in the computation of diluted EPS because to do so would have
been anti-dilutive.

                                                 2002        2001       2000
                                                 ----        ----       ----
Employee stock options......................  4,944,452   4,557,452  4,516,783
Warrants to acquire common stock............  2,972,997   3,279,941  3,368,276
Common stock to be issued for
  convertible debt..........................  1,556,744          --  1,570,680
                                              ---------   ---------  ---------
  Total.....................................  9,474,193   7,837,393  9,455,739
                                              =========   ========   =========

At December 31, 2002 there were outstanding warrants to purchase 2,972,997
common shares at exercise prices ranging from $0.25 to $7.179 per share. Of the
warrants outstanding, certain officers of the Company and their spouses held
889,767.

                                      -67-
<PAGE>

(3)  ACQUISITIONS AND STRATEGIC INVESTMENTS

On June 1, 2001, the Company acquired the capital stock of Data Communications,
Inc. ("DCI"), a privately held company located in Hyannis, Massachusetts. DCI
was merged into FiberCore's Automated Light Technologies (ALT) subsidiary and
the merged entity was subsequently renamed DCI FiberCore, Inc. In July 2002, the
subsidiary was renamed FiberCore Systems, Inc. ("FCS"). The Company expects FCS
to boost the breadth of the Company's technical capabilities used in support of
bringing optical fiber closer to the end-user.

FCS designs, installs and maintains low cost fiber optic networks, primarily in
the northeast U.S., for local area network applications, such as those used in
hospitals, universities, government and commercial buildings.

The purchase price of DCI was approximately $1,100,000 and consisted, almost
exclusively, of the issuance of 252,669 shares of FiberCore common stock. 50,534
of these shares of common stock are held in escrow and are contingently issuable
based on certain conditions. The cost of the acquisition of $1,100,000 exceeded
the fair value of the net assets acquired by $520,000. This excess, which has
been accounted for under purchase accounting as goodwill, has been written off
in the fourth quarter of 2002.

The results of DCI for 2002 were not significant to the results of operations
set forth in the Company's consolidated financial statements.

On June 20, 2000, the Company closed on an agreement to acquire, as of June 1,
2000, full ownership of Xtal FiberCore, Brasil (formerly "Xtal Fibras Opticas,
S.A."), a wholly owned subsidiary of Algar S.A. The $25,000,000 purchase price
is payable over a three year period; however, $2,500,000 is subject to achieving
certain profitability targets. At the closing, the Company paid $10,000,000 in
cash and issued to Algar a $10,000,000 note payable with interest at 6% payable
on December 31, 2000 for 90% of Xtal. According to the terms of the agreement,
the Company was entitled to receive a $1,000,000 discount if the $10,000,000
note was prepaid by August 31, 2000. On August 29, 2000, Algar's Chief Operating
Officer, on behalf of Algar, agreed to allow the discount if the remaining
$9,000,000 of the note was paid by September 8, 2000. On September 8, 2000, the
Company paid $9,000,000 together with interest, to Algar. Subsequently, Algar
disputed the understanding. On December 29, 2000, the Company, in full
settlement of the dispute, paid Algar $200,000 receiving, in effect, an $800,000
rather than a $1,000,000 discount. At the closing, the Company also issued a
$2,500,000, 6% note, payable in two installments of $1,250,000 each, on
September 20, 2001, and on December 20, 2002, respectively. The obligation to
repay the $2,500,000 note is contingent on Xtal's attaining specified
profitability targets in 2000 and 2001; the targets in 2000 and 2001 were
achieved. The payment due to Algar on December 20, 2002 has not been made. The
Company may acquire the remaining 10% of the stock upon payment of an additional
$2,500,000 plus 6% interest on or before June 20, 2003. Algar has a put option,
exercisable on June 20, 2003 or at any time that the Company decides to sell,
dispose or otherwise transfer any portion of its interest in Xtal to a third
party, that would require the Company to acquire all of Algar's remaining shares
for a payment of $2.5 million, plus 6% interest calculated from June 20, 2000.
Algar's 10% shareholder position in Xtal, is being held by the Company to
collateralize Algar's indemnification provisions that are part of the Xtal
purchase agreements.

 The cost of the acquisition of $22,486,000 exceeded the fair value of the net
assets acquired by $11,699,000. This excess, which has been accounted for under
purchase accounting as goodwill, was

                                      -68-
<PAGE>

being amortized over twenty years through December 31, 2001. Management
completed the annual impairment test in the fourth quarter of 2002 and recorded
a goodwill impairment charge of approximately $6.8 million. This represented a
complete write-down of the goodwill associated with FiberCore's acquisition of
Xtal in 2000.

Assuming the acquisition of Xtal had occurred at the beginning of each period
presented, the pro forma net sales, gross profit, net loss and basic and diluted
loss per share of common stock are provided below.


(Dollars in thousands except share data)                2000
                                                        ----
Net sales.......................................   $    48,408

Gross Profit ...................................   $    13,461

Net Loss .......................................   $    (2,390)

Basic and diluted loss per share of common         $     (0.05)
  stock.........................................

Weighted average shares outstanding ............    51,866,828

In November 1997, the Company entered into a joint-venture agreement with
Federal Power Sdn. Bhd. ("FDP") and PNB Equity Resource Corporation ("PERC") to
form FiberCore Asia Sdn. Bhd. ("FC Asia") in Malaysia. FC Asia was established
to construct and operate an optical fiber preform manufacturing facility in
Malaysia. The Company owns 51% of FC Asia, and FDP and PERC own 37% and 12%,
respectively. The Company granted FC Asia a license to use the Company's
technology in exchange for the Company's ownership interest, and FDP and PERC
contributed cash of $1,683,000 and notes of $4,949,000 for their ownership
interests. In the fourth quarter of 2002, a decision was made not to currently
pursue this joint venture due to the uncertainty that a plant will ultimately be
built and accordingly, the related balance sheet accounts of FC Asia were
reversed. The contractual arrangements are still in place to allow future
activity under the joint venture if and when conditions improve.

                                      -69-
<PAGE>

(4) RECEIVABLES

Activity in the allowance for doubtful accounts consisted of the following for
the years ended December 31:
(Dollars in thousands)                  2002     2001     2000
                                       -----    -----    -----
Balance at beginning of period .....   $ 703    $ 836    $ 220
Additions charged to expense .......      63       --       17
Xtal allowance acquired ............      --       --      803
Deductions .........................    (250)    (133)    (204)
                                       -----    -----    -----
       Balance at end of period ....   $ 516    $ 703    $ 836
                                       =====    =====    =====

Other receivables consist of the following at December 31:

(Dollars in thousands)   2002      2001
                        ------   ------
Due from suppliers ..   $  421   $2,369
Value added tax .....    1,834    2,921
Other ...............       34      108
                        ------   ------
       Total ........   $2,289   $5,398
                        ======   ======

(5) INVENTORIES

Inventories consist of the following at December 31:

(Dollars in thousands)   2002       2001
                       -------    -------
Raw materials .......  $ 2,072    $ 3,913
Work-in-process .....      526      1,379
Finished goods ......    2,823      2,807
                       -------    -------
           Total ....  $ 5,421    $ 8,099
                       =======    =======

(6) PROPERTY AND EQUIPMENT

Property and equipment, including capital leases, consist of the following at
December 31:

(Dollars in thousands)               ESTIMATED
                                    USEFUL LIVES      2002        2001
                                    ------------      ----        ----
Land ..............................   N/A          $  1,793    $  1,562
Buildings .........................   25 years       14,630       4,447
Machinery and equipment ...........   2-12 years     39,463      25,317
Furniture,  fixtures and vehicles..   2-7 years       1,159         866
Leasehold improvements ............   3-10 years        898         800
Construction in progress ..........   N/A            16,316      19,698
                                                   --------    --------
                                                     74,259      52,690
Less grants .......................                 (17,773)     (5,574)
                                                   --------    --------
           Total ..................                $ 56,486    $ 47,116
                                                   ========    ========

Depreciation on property and equipment charged to expense was $2,176,000 in
2002, $2,231,000 in 2001 and $1,793,000 in 2000. Capital leases included above
are $369,000 for buildings and $3,750,000 for equipment with accumulated
depreciation of $243,000 as of December 31, 2002.

                                      -70-
<PAGE>

(7) ACCRUED EXPENSES

Accrued expenses consist of the following at December 31:

(Dollars in thousands)             2002      2001
                                  ------   -------
Accrued wages, benefits & taxes   $1,484   $1,525
Accrued interest ..............      700      235
Accrued legal and audit .......      290      276
Accrued income taxes ..........    2,966    2,198
Other .........................      676    1,732
                                  ------   ------
           Total ..............   $6,116   $5,966
                                  ======   ======
(8)   NOTES PAYABLE

Notes payable consist of the following at December 31:

<TABLE>
<CAPTION>
(Dollars in thousands)                                                           2002       2001
                                                                                -----      ------
<S>                                                                            <C>         <C>
Notes payable to Banco ABC Brasil SA with interest at CDI plus 6.8%,
refinanced on a long-term basis in 2002 (see Note 9)                               --       1,234

Note payable to Banco BNL do Brasil SA with interest at 29.4 %, due
December 31, 2002 (1) (see note a below)                                           89         408

Note payable to Banco Bilbao Vizcaya Argentaria Brasil SA and Banespa with
interest at TR plus 20.4% due October 25, 2003, refinanced on a
long-term basis in 2002 (See Note 9)                                               --       2,346

Note payable to Banco Sudameris Brasil SA with interest at CDI plus
6.2 %, due November 26, 2003  (1) (see note a below)                            2,703       2,565

Note payable to Banco Sudameris Brasil SA with interest at 4.1%, due
February 3, 2003 (1) (see note a below)                                           481         584

Note payable to Banco Bilbao Vizcaya Argentaria Brasil SA with
interest at CDI plus 6.2%, due June 18, 2003  (1) (see note a below)               32         501

Amounts outstanding under working capital loans and interim financing
for grants from German banks with interest ranging from 6.75% to 8%,
due at various dates in 2003 (see note b below)                                12,728          --

Notes payable to an officer and a director with interest at 12%
payable upon demand  (see note c below)                                           135          --

Note payable to Algar S.A with interest at 18%, which was due
December 20, 2002 (see note d below)                                            1,375       1,250

Notes payable to A&R Process Projects (Pty), Ltd., with interest at
16%, due at various dates in 2003 (see note e below)                               23          --

Debt discount attributable to the 5% convertible subordinated
debentures                                                                         (8)         --
                                                                             --------    --------
Total                                                                        $ 17,558    $  8,888
                                                                             ========    ========
</TABLE>

(1) These loans are denominated in Brazilian Reais. The interest rates float
above a reference rate called CDI (average daily overnight inter-bank rate). As
of December 31, 2002, CDI was 24.8%.

(2) These loans are denominated in Brazilian Reais. The interest rates float
above a reference rate called TR (a Brazilian bank reference rate). As of
December 31, 2002, TR was 3.8%.

(3) The Company selects one, two or three-month LIBOR (London Inter-bank
Offering Rate) contracts to determine interest rates on the Fleet loan. As of
December 31, 2002, the rate for a three-month LIBOR contract was approximately
1.426%.

                                      -71-
<PAGE>

      a)    Xtal received $2,490,000 in 2002 from various Brazilian banks for
            general working capital purposes. The notes bear interest at annual
            rates ranging from 4.1% to 31.6%. These notes are denominated in
            Brazilian Reais. They are due at various dates throughout 2003. The
            loans are collateralized by land, buildings, equipment and
            inventory.

      b)    FCJ received an additional $12,728,000 during 2002 from various
            German banks as pre-funding of government grants and working capital
            loans to partially fund the Phase II expansion and for general
            working capital purposes. Approximately $3,504,000 of these notes
            were repaid from the receipt of government grants associated with
            phase one of the FCJ expansion, which were received in February
            2003. Under the terms of financing agreements completed during 2002,
            FCJ became eligible to receive approximately $8 million in
            government grants and approximately $7 million in long-term bank
            loans and equipment leases against funds already expended by the
            Company. Approximately $4.8 million is currently in short-term debt
            under working capital lines with several German banks and the
            Company anticipates that a similar amount will remain there after
            grants and long-term loans and leases are finalized. The loans are
            collateralized by land, buildings, equipment, accounts receivable
            and inventory.

      c)    $135,000 was received from an officer and a director of the Company
            for general working capital purposes. These funds are payable upon
            demand and are unsecured.

      d)    Pursuant to the acquisition of Xtal, the Company issued $2,500,000
            of 6% notes, payable in two installments of $1,250,000 each, on
            September 20, 2001, and on December 20, 2002, respectively. The
            obligation to repay the $2,500,000 note was contingent on Xtal
            attaining specified profitability targets in 2000 and 2001; the
            profitability targets for 2000 and 2001 were met. At December 31,
            2000, the first loan was recorded. That loan, with accrued interest,
            was paid as of December 31, 2001. The second contingent loan was
            recorded as of December 31, 2001 and was due with interest at 6% on
            December 20, 2002. The second loan has not been paid. Accordingly,
            under the terms of the agreement, the annual interest rate has
            increased from 6% to 18% and the Company has accrued a penalty
            amounting to 10% of the principal, or $125,000, payable to Algar in
            addition to the $1,250,000 principal on the loan. The loan is
            unsecured.

                                      -72-
<PAGE>


      e)    The Company received proceeds of $23,000 from A&R Process Projects
            (Pty) Ltd. in South Africa. The note is payable with interest at 16%
            and will be repaid in four installments during the first six months
            of 2003. The loan is unsecured.



                                      -73-
<PAGE>

(9)   LONG-TERM DEBT

Long-term debt consists of the following at December 31:

<TABLE>
<CAPTION>
(Dollars in thousands)                                                2002        2001
                                                                    ------     -------
<S>                                                               <C>         <C>
Note payable to Sparkasse Jena, with interest at 6.25%, due
September 30, 2006 (see note a below)                             $  4,128    $  3,507

Capital lease with AVV Thuringen GmbH. with interest at 15.75%,
due November 1, 2006 (see note k below)                                328         328

Mortgage payable to Sparkasse Jena with interest at 7%, due
June 30, 2011 (see note j below)                                     1,075         956

Notes payable to a consortium of banks in Germany with interest
rates ranging from 5.6% to 6.24%, due March 31, 2011 (see note
c below)                                                             9,447       7,102

Notes payable to Banco ABC Brasil SA with interest rates at
CDI plus 6.8%, due November 15, 2004 (1) (see note d below)           961          --

Notes payable to BCN Bank with interest at CDI plus 6.17, due
December 5, 2006 (1) (see note d below)                                507          --

5% Convertible subordinated debentures, payable to an investor
group, due January 15, 2004 (see note g below)                       2,467          --

Notes payable to Banco Bilbao Vizcaya Argentaria Brasil SA and
Banespa with interest at 20.4% plus TR, due October 25, 2006
(2) (see note d below)                                               3,904          --

Notes payable to Santander Bank with interest at CDI plus 6.0%,
due October 12, 2004 (1) (see note d below)                            370          --

Note payable to Tyco International Finance Alpha GmbH, with
interest based on LIBOR plus 3%, due January 30, 2004 (3) (see
note e below)                                                        1,500          --

Note payable to Sparkasse Jena, with interest at 6.4% due July
29, 2008 (see note b below)                                          1,411          --

Capital lease with Banco Votorantin SA with interest at 26.9%,
due January 17, 2005 (see note i below)                              2,099       3,394

Convertible debentures S. Tredoux and B. Schabort with interest
at 14.3%, due at various dates between June and October of 2004
(see note f below)                                                     117          --

Fleet Bank line of credit - with interest at LIBOR plus 2-1/2,
due December 26, 2005 (3) (see note h below)                         8,500       9,159
                                                                  --------       -----
                                                                  $ 36,814    $ 24,446

Less - current portion of long-term debt                           (15,114)     (1,971)
                                                                  --------    --------
Total                                                             $ 21,700    $ 22,475
                                                                  ========    ========
</TABLE>

(1) These Loans are denominated in Brazilian Reais. The interest rates float
above a reference rate called CDI (average daily overnight inter-bank rate). As
of December 31, 2002, CDI was 24.8%.

(2) These loans are denominated in Brazilian Reais. The interest rates float
above a reference rate called TR (a Brazilian bank reference rate). As of
December 31, 2002, TR was 3.8%.

(3) The rate for the Tyco loan is based upon three-month LIBOR rate. As of
December 31, 2002, the rate LIBOR rate under the loan agreement was 1.45%

                                      -74-
<PAGE>

      a)    During the year ended December 31, 1997, the Company drew down
            7,700,000 German Deutsche Marks (approximately U.S. $4,128,000 at
            December 31, 2002) under a loan agreement with the Sparkasse Jena.
            The proceeds were used to fund the expansion of the Company's plant
            in Germany. The loan bears interest at 6.25% annually and is due on
            September 30, 2006. A cash deposit of approximately $1,990,000 as of
            December 31, 2002 collateralizes the loan.

      b)    $1,411,000 was received by FCG from Sparkasse Jena as a portion of
            the funding for the POVD equipment. The loan is collateralized by
            the underlying equipment

      c)    $1,085,000 was received by FCJ from DKB Bank as a portion of the
            funding for the phase II expansion. Approximately $746,000 of the
            debt payable to a consortium of German banks is included in current
            portion of long-term debt. $9,447,000 is collateralized by land,
            buildings and equipment.

      d)    $155,000 was received by Xtal for general working capital purposes.
            Approximately $8.1 million of short-term debt was converted to
            long-term debt during the fourth quarter. These loans were converted
            to Reais from US Dollars, Euros and Japanese Yen. Total loans of
            $5,742,000 are collateralized by land, buildings, equipment and
            inventory at Xtal.

      e)    $1,500,000 was received from Tyco International Finance Alpha GmbH
            for general working capital purposes. This amount is included in
            current portion of long-term debt. The loan is collateralized by
            equipment.

      f)    FC Africa assumed $117,000 in convertible debentures related to the
            joint venture in South Africa. 50% of the loan was repaid during the
            first quarter of 2003 and the balance will be repaid in April 2003.
            The debentures are unsecured.

      g)    In January 2002, the Company borrowed $5,500,000 in 5% convertible
            subordinated debentures for capacity expansion and productivity
            initiatives in Germany, initial funding for FiberCore Africa
            (Proprietary) Limited ("FiberCore Africa") and other corporate
            purposes. Repayment of the $5,500,000 is scheduled at a rate of
            $500,000 per month, commencing April 1, 2002. $1,500,000 was repaid
            in cash in the second quarter. Pursuant to the Company's option
            under the agreement the Company elected to make the scheduled
            payments due July 1, August 1 and September 1 via the issuance of
            stock. Under the

                                      -75-
<PAGE>

            agreement, upon 30 days prior notice to the holders of the
            debentures, the Company can elect to pay a scheduled payment in
            stock. If the Company elects to make a payment in stock, the holders
            of the debentures can elect to either increase the payment by up to
            100% or decrease the payment by up to 50%. For the months of July,
            August and September 2002, a total of $1,533,330 in principal was
            paid in common stock to the debenture holders. In addition, $112,426
            in accrued interest was paid in stock. The total number of shares
            issued for the principal and interest payments during the third
            quarter amounted to 7,293,682 shares, including 1,648,913 shares of
            restricted stock at an average price per share of $.22564 per share.
            Warrants were issued in connection with the 5% convertible
            subordinated debentures. The fair value of the warrants was recorded
            as debt discount on the accompanying consolidated balance sheet. The
            debt discount is being amortized over the period of the loan using
            an effective interest rate method. The Company has the option, under
            certain circumstances, of continuing to issue shares in payment of
            the Debentures if the shares have been previously registered
            pursuant to an effective registration statement. The Company has not
            had sufficient excess funds available to make any payments
            subsequent to the September 2002 payment, and had received a waiver
            with respect to such redemptions required through December 1, 2002.
            Such waiver, however, was conditioned on the Company reaching an
            agreement with the holders of the Debentures on or prior to December
            2, 2002 with respect to re-scheduling redemption payments and
            collateralizing the Company's obligations. The Company has been
            engaged in discussions with the holders of the Debentures to reach a
            revised agreement. However, the Company and the holders of the
            Debentures have not reached a final agreement and therefore the
            Company is currently in a state of default with the holders of the
            Debentures This causes a cross-default on the Fleet credit facility
            of $8,500,000 and on a $1,500,000 loan from Tyco International
            Finance Alpha GmbH and Fleet and/or Tyco could accelerate the
            maturity date and the entire balances could become immediately due.
            If an event of default on the Debentures continues, the holders have
            the right to accelerate the maturity date and the entire balance of
            $2,467,000 could become immediately due. This amount is included in
            current portion of long-term debt. The debentures are unsecured.

      h)    On December 26, 2000, the Company closed on a $10,000,000, five (5)
            year revolving credit loan agreement with Fleet National Bank, but
            the maximum principal amount of the loan decreases by $750,000 on
            December 26, 2001 and each subsequent year. Contemporaneously with
            each reduction, the Company shall repay to the Bank the amount, if
            any, by which the outstanding principal balance exceeds the loan
            commitment as so reduced, together with accrued interest and unpaid
            interest, thereon. The Company is required to pay commitment fees of
            1% per annum on the unused balance of the Fleet revolving credit
            loan. The loan is guaranteed by Tyco Sigma Limited, a wholly owned
            subsidiary of Tyco International Ltd., pursuant to a Guarantor
            Indemnification Agreement entered into with the Company and three
            managing shareholders of the Company. Under the guarantee, the
            Company is obligated to make quarterly payments to Tyco Sigma
            Limited in an amount equal to .4% (1.6% annually) on the unpaid
            principal as of the end of each year. At the Company's election, the
            interest rate is equal to either the bank's prime rate or 1.5% above
            the bank's LIBOR rate, which is set at one, two and three month
            intervals. In addition, so long as obligations remain owing to
            Fleet, the Company will not pay any dividends or make similar
            distributions. While the Company entered into a Pledge and Security
            Agreement with respect to substantially all of the Company's assets,
            as part of the closing, the Pledge and Security Agreement is not
            effective and no security interest shall

                                      -76-
<PAGE>

            attach unless the bank elects upon the occurrence of an event
            of default. Pursuant to the Loan Agreement between Fleet National
            Bank ("Fleet") and the Company, dated as of December 20, 2000 (the
            "Loan Agreement"), Fleet has the right to attach a lien on 65% of
            the equity in the Company's subsidiaries and substantially all of
            the Company's other assets, and to increase the interest rate on the
            Company's obligations to Fleet by 1%, if the credit rating of Tyco
            International Group S.A. ("Tyco"), the guarantor of such
            obligations, falls below certain levels. The Company is in
            compliance with its obligations under the Loan Agreement, which does
            not contain any financial covenants, excluding the cross-default
            provisions described above. Recent downgrades of Tyco's credit
            triggered Fleet's ability to attach the lien and increase the
            interest rate. On June 28, 2002, Fleet exercised its right to attach
            the liens and also increased the interest rate on the loan,
            effective on the date of the downgrade of Tyco's credit rating. If
            an event of default occurs, Tyco Sigma can exercise its rights as
            holder of its share of the Series A Preferred Stock to cause the
            Company's Board of Directors to be expanded to include a sufficient
            number of additional (Tyco/designated) Series A directors such that
            the Series A directors constitute a majority of the Board of
            Directors. If the Guarantor Indemnification Agreement is terminated,
            all Series A directors will be deemed to resign, and the Series A
            Preferred Stock will automatically be cancelled. The Series A
            Preferred Stock contains no other voting rights or dividend,
            liquidation, conversion, or other monetary rights or preferences.
            This amount is included in current portion of long-term debt.

      i)    During April of 2001, Xtal purchased $3,750,000 of equipment under a
            capital lease with Banco Votorantin SA, with an annual interest rate
            of 26.9% and denominated in Brazilian Reais. The lease will be paid
            in February 2006. Approximately $1,105,000 is included in current
            portion of long-term debt. The lease is collateralized by the
            underlying equipment.

      j)    During August of 2001, FCQ borrowed $956,000 from Sparkasse Jena for
            the purchase of a building with an interest rate of 7%. The loan
            matures in June of 2011. Approximately $83,000 is included in
            current portion of long-term debt. The loan is collateralized by the
            land and the building.

      k)    As of June 2001, FCJ financed $369,000 towards the cost of a new
            building for FiberCore Machinery, with an interest rate of 16% due
            in November of 2006. Approximately $65,000 is included in current
            portion of long-term debt. The lease is collateralized by the
            building.

Scheduled maturities of long-term debt and capital leases are as follows at
December 31, 2002:

                  (Dollars in thousands)
                  2003                  $   15,114
                  2004                       3,815
                  2005                       2,157
                  2006                       9,529
                  2007                       2,256
                  2008 and thereafter        3,943
                                        ----------
                  Total                 $   36,814
                                        ==========

                                      -77-
<PAGE>

(10)  401-K PLAN

On January 1, 2002, formed the FiberCore, Inc. 401(k) Retirement Plan ("Plan").
All employees who have completed at least three consecutive months of service
and are age 21 or older are eligible to participate. Employer contributions
through December 31, 2002 are vested over three years. The Company match
consisted of 3% of compensation up to a maximum compensation level of $200,000.
Employer contributions and expenses related to the Plan were $44,000 for 2002.

(11) COMMITMENTS AND CONTINGENCIES

The Company and its subsidiaries have entered into various leases for its office
and production space. The Company's office lease is on a monthly basis at a
monthly rental of $2,750. FCJ conducts part of its operations from premises
under an operating lease. The lease provides for fixed monthly rental payments
of $23,000 for 2002 and $19,000 for 2003. The lease expires December 31, 2003,
however, the Company has the option to renew the lease annually with six months
notice. The Company intends to remain at these premises and use them in
conjunction with the new building, which has been completed and was put into use
in February of 2002. Xtal owns the land and buildings in which its operations
are conducted.

Future minimum lease payments under non-cancelable operating leases (with
minimum or remaining lease terms in excess of one year) are as follows, as of
December 31, 2002:

      (Dollars in thousands)

         FISCAL YEAR ENDING
            DECEMBER 31,             AMOUNT
      ------------------------     ---------
      2003....................         2,243
      2004....................         2,079
      2005....................         2,076
      2006 ...................         1,901
      2007 ...................         1,975
      2008 and thereafter ....           ---
                                   ---------
           Total..............     $  10,274
                                   =========
Included in the statements of operations for the years ended December 31, 2002,
2001 and 2000 is operating lease expense of $2,006,000, $1,377,000, and
$396,000, respectively.

The Company has two vendor supply contracts which contain "take or pay"
provisions to the extent that the Company purchases less than the agreed upon
annual percentage covered by the annual purchase order. One contract also
contains "take or pay" provisions if the vendor delivers less than the agreed
upon amount covered by the annual purchase order. If the vendor delivers less
than the contracted amount, they are required to pay a fee to FiberCore based on
the amount of the shortage. The Company and Xtal are currently engaged in
arbitration with one of these suppliers regarding volumes not taken during the
fourth quarter of 2001, which is described more completely below. The Company
currently has $6,378,000 for 2003 under these take or pay contracts.

Xtal is party to a three (3) year take-or-pay contract expiring in June 2003,
with Shin Etsu for the delivery of single-mode preforms to Xtal. In 2001, Xtal
purchased approximately $10,900,000 of product under the contact. The contract
calls for monthly purchases of preform with 50% of the volume at a fixed price
and 50% to be set quarterly based on market prices. There are provisions in the
contract that provide for exceptions for both parties regarding the requirements
to ship or purchase preforms. In the fourth quarter

                                      -78-
<PAGE>

of 2001, Xtal elected not to take most of the contracted volume under one of
these provisions. Shin Etsu is contesting Xtal's interpretation of the contract
and has submitted a claim to arbitration relative to this volume and additional
volumes under a non-related, agreement, which is not a take-or-pay agreement.
The total amount in dispute is approximately $4,400,000, with approximately
$3,700,000 related to the take-or-pay contract. Xtal and the Company have
submitted their position to the arbitration panel. However, if Xtal were to
ultimately lose, Xtal could be required to purchase the preforms in question as
well as pay the costs of arbitration. In that case, the legal costs of
arbitration would negatively impact the Company's operating results, but the
costs of the material would become part of inventory/cost of sales. This could
potentially have a negative operating impact as well, depending on the price of
the preforms determined in the arbitration ruling versus the market price of the
preforms at the time of the ruling. The parties have had settlement discussions
during this period but have not reached an agreement at this time. Xtal
continued to purchase preforms from Shin Etsu under the contract through the
first quarter of 2002.

The Company is currently in litigation with Techman International Corp.
("Techman") and M. Mahmud Awan ("Awan") who controls Techman, relating to
certain investments, contracts and other claims. Both parties are seeking
approximately $500,000 in cash. In addition, the Company is suing Techman and
Awan for the return of shares that have been canceled by the Company because of
the failure of Techman and Awan to satisfy certain conditions related to their
issuance. The litigation is in the discovery and motion phase. The Company
believes that its claims against Techman and Awan are good and that it will
ultimately prevail on its claims, but given the uncertainties inherent in
litigation, the outcome cannot be predicted with any reasonable certainty at
this time.

ALT is contingently liable for certain debt of a former subsidiary, Allied
Controls, Inc. ("Allied"), in the amount of approximately $188,000. Allied is
current in its payments with respect to this debt.

The Company is a co-guarantor with the other joint venture partners for certain
credit facilities provided by banks to MEFC. The assets of MEFC collateralize
the obligations under the credit facility. At December 31, 2002, the Company was
contingently liable for these loans in the amount of approximately $144,000.

In addition to the above, the Company is subject to various claims, which arise
in the ordinary course of business. The Company believes such claims,
individually or in the aggregate, will not have a material adverse effect on the
consolidated financial position or results of operations of the Company.

(12) STOCKHOLDERS' EQUITY

The Company has completed the following sales of securities during the past
three years:

      1)    a private placement in reliance on Section 4(2), dated May 16, 2000,
            pursuant to which the Company issued 485,002 shares to ten offshore
            accredited investors for $1,550,000;

      2)    a private placement in reliance on Section 4(2), dated May 19, 2000,
            pursuant to which the Company issued 4,451,529 shares of Common
            Stock to Tyco Electronics Corporation, a wholly owned subsidiary of
            Tyco International Ltd, upon its conversion of $6,432,000
            outstanding debt, including interest, and issued 2,765,487 shares of
            Common Stock upon the exercise of warrants for $2,000,000;

                                      -79-
<PAGE>

      3)    a private placement in reliance on Section 4(2) with Crescent
            International Ltd, ("Crescent") dated June 9, 2000, with respect to
            a $30,000,000 commitment pursuant to which the Company:

            o     issued 1,200,274 shares of Common Stock for $3,500,000 on June
                  9, 2000;

            o     issued $7,500,000 in debt convertible into shares of Common
                  Stock, of which $2,000,000 on June 29, 2000 and $1,500,000 on
                  December 29, 2000 were converted into 685,871 and 590,760
                  shares of Common Stock, respectively. The remaining $4,000,000
                  held as of December 31, 2000 was converted into 1,570,680
                  shares of Common Stock on January 12, 2001;

            o     a private placement in connection with transactions with
                  Crescent, pursuant to which the Company issued to Gruntal, its
                  then investment banker and agent in the Crescent transactions,
                  warrants to purchase up to 504,146 shares includes 47,260
                  warrants issued December 29, 2000, of Common Stock at a
                  weighted average exercise price of $3.56; and

            o     During the fourth quarter of 2002, Crescent informed the
                  Company that it had decided not to extend the existing equity
                  agreement, which was scheduled to expire December 31, 2002,
                  between Crescent and the Company, providing for the sale of
                  common stock to Crescent. At that time, Crescent indicated
                  that they had no current plans to sell any common stock in the
                  Company held by Crescent.

      4)    a private placement in reliance on Section 4(2), dated September 5,
            2000, pursuant to which the Company issued 1,352,275 shares of
            Common Stock to Tyco Sigma Limited, a wholly owned subsidiary of
            Tyco International Ltd., for $9,000,000;

      5)    an offering in reliance on Regulation S, dated September 15, 2000
            pursuant to which the Company issued 155,718 shares of Common Stock
            to two venture capital companies located outside the U.S. for
            $1,110,000;

      6)    On August 20, 2001, the Company replaced existing $19,000,000 equity
            line with Crescent with a new line totaling the same amount.
            Pursuant to the new agreement the Company has completed the
            following transactions:

            o     a private placement in reliance on Section 4(2), dated August
                  20, 2001 pursuant to which the Company issued 661,625 shares
                  of Common Stock to Crescent for $3,000,000; and

            o     a private placement in reliance on Section 4(2), dated October
                  31, 2001, pursuant to which the Company issued 446,667 shares
                  of Common Stock to Crescent for $1,000,000.

      7)    As of January 15, 2002, the Company sold $5,000,000 of 5%
            convertible subordinated debentures to a group of investors
            consisting of Riverview Group, LLC, Laterman & Co. and Forevergreen
            Partners. The Company's agreements with the investors require the
            Company to register the shares of the Company's common stock
            issuable upon conversion

                                      -80-
<PAGE>

            of the debentures or exercise of warrants sold to the investors in
            connection with the sale of the debentures. The Company is in the
            process of registering the resale of the shares into which the
            debentures may be converted and the shares issuable upon exercise of
            the described warrants. The debentures mature in January 2004, but
            the Company must redeem $500,000 of the outstanding debentures each
            month, commencing April 1, 2002, and may do so in shares of the
            Company's common stock if certain conditions are met.


The Company used the proceeds from the foregoing sales of securities primarily
to finance the acquisition of Xtal and improvements at Xtal's facilities and for
research and development activities, support the Company's expansion program
including capacity expansion and productivity initiatives in Germany, initial
funding for FiberCore Africa, working capital and other Corporate purposes.

In connection with the Company's transaction with Crescent, the Company filed a
registration statement on Form S-3, which became effective on September 29, 2000
and was updated with the registration statement which became effective June 3,
2002. The registration statement provided for Crescent's resale of the shares of
Common Stock previously issued to Crescent, the shares of Common Stock issuable
to Crescent upon exercise of warrants, and 456,886 shares of Common Stock
issuable upon exercise of warrants issued to Gruntal. The registration statement
also included a shelf registration of 4,200,000 shares of Common Stock, which
the Company may sell through one or more underwritten offerings. As of December
31, 2002, the Company had not sold any shares under the registration statement.
During the fourth quarter of 2002, Crescent informed the Company that it had
decided not to extend the existing equity agreement, which was scheduled to
expire December 31, 2002, between Crescent and the Company, providing for the
sale of common stock to Crescent. At that time, Crescent indicated that they had
no current plans to sell any common stock in the Company held by Crescent.

The Company has issued stock options under the 1997 Incentive Stock Option Plan,
a 1998 Non-qualified Stock Option Agreement and the 2000 Long-term Incentive
Stock Plan. Options vest at various dates, generally over the three-year period
from the date of the grant. The options granted in 2002, 2001 and 2000 expire
ten (10) years from the grant date. The option price is not less than the fair
market value of the shares on the date of the grant.

                                      -81-
<PAGE>

The following represents the stock option activity, price range and weighted
average price during the three years ended December 31, 2002.
                                                                     WEIGHTED
                                      NUMBER OF    EXERCISE PRICE     AVERAGE
                                        SHARES         RANGE         EXERCISE
                                     ----------   ---------------    ----------
Outstanding at December 31, 1999     6,073,151      $0.01-$2.12        $0.64
Granted in 2000                        110,416      $3.81-$4.91        $3.92
Exercised in 2000                   (1,172,986)     $0.01-$1.58        $0.47
Expired in 2000                       (493,798)     $1.16-$2.13        $1.42
                                     ------------------------------------------
Outstanding at December 31, 2000     4,516,783      $0.19-$4.91        $0.60
Granted in 2001                        781,500      $4.12-$6.11        $4.46
Exercised in 2001                     (548,831)     $0.19-$1.58        $0.28
Expired in 2001                       (192,000)     $0.27-$4.12        $0.53
                                     ------------------------------------------
Outstanding at December 31, 2001:    4,557,452      $0.19-$6.11        $1.30
Granted in 2002                        547,500      $0.21-$2.39        $2.20
Exercised in 2002                       (7,000)     $0.27              $0.27
Expired in 2002                       (153,500)     $0.56-$4.12        $2.84
                                     ------------------------------------------
Outstanding at December 31, 2002:    4,944,452      $0.19-$6.11        $1.35
                                     ==========================================
At December 31, 2002:
Exercisable                          4,031,622      $0.19-$6.11        $0.97
Not Exercisable                        912,830      $0.21-$6.11        $3.07

The weighted average fair value of options granted during 2002, 2001 and 2000
was $1.77, $2.64 and $3.09, respectively

Options vest at various dates, generally over the three-year period from the
date of the grant. The options granted in 2002, 2001 and 2000 expire ten (10)
years from the grant date.

A summary of the status of the Company's stock options and weighted average
prices at December 31, 2002 are as follows:

                                    WEIGHTED                           WEIGHTED
                                     AVERAGE                           AVERAGE
     RANGE OF          OPTIONS      EXERCISE  REMAINING    OPTIONS     EXERCISE
  EXERCISE PRICE     OUTSTANDING      PRICE     YEARS    EXERCISABLE    PRICE
  --------------     -----------    --------  ---------  ------------   -------

  $0.19 - $0.56      3,000,827        $0.24        6     2,960,827      $0.24
  $0.57 - $1.50        223,709        $1.47        9       148,709      $1.45
  $1.51 - $4.91      1,567,916        $3.03        7       868,085      $3.05
  $4.92 - $6.11        152,000        $5.78        8        54,001      $5.79
                     ---------        -----              ---------      -----
  $0.19 - $6.11      4,944,452        $1.36              4,031,622      $0.97
                     =========        =====              =========      =====

                                      -82-
<PAGE>

(13) INCOME TAXES

The provision (benefit) for income taxes consists of the following components:

(Dollars in thousands)     2002       2001      2000
                         -------    -------   -------
Current:
   Federal               $    --    $    --   $    --
   State                      (3)        --         8
   Foreign                  (151)     2,709     1,946
                         -------    -------   -------
                         $  (154)   $ 2,709   $ 1,954
                         -------    -------   -------
Deferred:
   Federal               $    --    $    --   $    --
   State                      --         --        --
   Foreign                   625        297       100
                         -------    -------   -------
                             625        297       100
                         -------    -------   -------
                         $   471    $ 3,006   $ 2,054
                         -------    -------   -------


                                      -83-
<PAGE>

The provision for income taxes differs from the amount computed by applying the
statutory U.S. Federal income tax rate to income before income taxes as a result
of the following:

(Dollars in thousands)      2002         2001       2000
                          --------    --------   --------
U.S. Federal income tax
  (benefit) at
  statutory rate          $(10,406)   $  1,220   $   (113)
State income taxes, net
  of Federal benefit            (3)          1          5

Non-deductible expenses       (719)        214      2,181
Foreign tax rate
  differential                (134)        314       (269)

Recognition of NOL              --          --         --
Losses with no tax
  benefit                   11,733       1,210        303

Other, net                      --          47        (53)
                          --------    --------   --------
                          $    471    $  3,006   $  2,054
                          ========    ========   ========

The significant components of the deferred tax assets as of December 31, 2002
and December 31, 2001 are as follows:

(Dollars in thousands)                  2002        2001
                                      --------    --------
Deferred Liabilities:
   Reserves                           $   (173)   $     (1)
                                      --------    --------
Total Deferred Tax Liability          $   (173)   $     (1)
                                      --------    --------
Deferred Assets:
   Reserves                           $  5,452    $  1,004
                                      --------    --------
   Net Operating loss carry-forward     16,290       9,941

   Foreign tax credit                       --         273
                                      --------    --------
Total Deferred Tax Asset              $ 21,742    $ 11,218
Total Deferred Tax
   Asset/(Liability)                    21,569      11,217
                                      --------    --------
Valuation allowance                    (21,569)    (10,834)
                                      --------    --------
   Net Deferred Tax
     Asset/(Liability)                $     --    $    383
                                      ========    ========

The liability method of accounting for deferred income taxes requires a
valuation allowance against deferred tax assets if, based on the weight of
available evidence, it is more likely than not that some or all of the deferred
tax assets will not be realized. In 2002, FiberCore has recorded a full
valuation allowance for all current year losses. In 2001, FiberCore retained a
full valuation allowance against the net operating losses of Xtal that were
acquired in June 2000. The net deferred tax assets applicable to FiberCore and
its major operating subsidiaries (including FiberCore Jena A.G. and FiberCore
Brasil, S.A.) are now fully reserved. The total valuation allowance increased by
$10,735,000, $3,097,000 and $2,038,000 in 2002, 2001, and 2000 respectively.

FiberCore, Inc. has net operating loss carry-forwards available of approximately
$24,030,000 at December 31, 2002 for federal tax purposes. There has been no
federal income tax expense for the years 2002, 2001, and 2000. The majority of
the net operating loss carry-forwards expire in the years 2009 through 2022.

                                      -84-
<PAGE>

FiberCore Jena A.G. has net operating loss carry-forwards available of
approximately $396,000 and $615,000 for corporate income tax purposes and
municipal trade tax purposes respectively at December 31, 2002.

FiberCore Brasil, S.A. has net operating loss carry-forwards available of
approximately $17,848,000. In Brazil, the use of the net operating losses is
limited to 30% of taxable income per year. The net operating loss carry-forwards
may be carried forward indefinitely.

FiberCore Systems, Inc., previously known as ALT, has pre-acquisition net
operating loss carry-forwards available of approximately $519,000 at December
31, 2002 for federal and state tax purposes. The loss carry forwards expire
between the years 2004 and 2008.

(14)  MAJOR CUSTOMERS

For 2002, one customer exceeded the 10% level of consolidated sales. Optical
Cable Corporation represented 17% of the Company's sales in 2002 and 7% in 2001.
In 2001, Cabelte Cabos Electricos SA was the only company that exceeded the 10%
level with sales to them totaling 19% of sales. In 2000, Furukawa Industrial S/A
Produtos Eletricos was the only company that exceeded the 10% level with sales
to them totaling 11% of sales.

As of December 31, 2002, Furukawa Industrial S/A Produtos Eletricos and Optical
Cable Corporation accounted for 12% and 21%, respectively, of accounts
receivable.

(15)  RELATED PARTY TRANSACTIONS

In 2002, the Company had sales to MEFC of $116,000 in which the Company holds a
7% interest; sales in 2001 to MEFC were $975,000. On August 1, 2000, Mr. Steven
Phillips assumed the role of interim Chief Financial Officer. He continued in
that role through July 26, 2001, at which time he resumed his role as a
consultant to the Company. Prior to July 31, 2000 and subsequent to July 26,
2001, the Company had a consulting agreement with One Financial Group
Incorporated ("OFG"), a company controlled by Mr. Phillips who is also a
director of the Company. OFG provides services as a financial advisor. In 2002,
the Company incurred costs of $223,000. For the period July 27, 2001 to December
31, 2001, the Company incurred costs of $119,000 in connection with services
rendered by OFG. During the period from January 1, to July 31, 2000, the Company
incurred costs of $116,000.

                                      -85-
<PAGE>

(16)  FOREIGN OPERATIONS

The Company has operations in three principal geographic areas: the United
States (Company and DCI), Germany (FCJ), and Brazil (Xtal). Following is a
summary of information by area for the years ended December 31, 2002, 2001 and
2000:

<TABLE>
<CAPTION>
(Dollars in thousands)                                                  2002        2001       2000
                                                                        ----        ----       ----
<S>                                                                   <C>         <C>         <C>
Net sales to customers in:
   United States ................................................     $11,903     $ 9,981     $ 4,241
   Germany ......................................................       2,274       5,198       5,432
   United Kingdom ...............................................       1,589       3,955       2,895
   Brazil .......................................................       1,657      24,360          --
   Other ........................................................       8,134       8,868       2,102
                                                                      -------     -------     -------
Net sales as reported in the accompanying consolidated statements
   of operations ................................................     $25,557     $52,362     $12,126
                                                                      =======     =======     =======
Long-lived assets:
   United States(1) .............................................     $ 7,556     $ 8,520     $ 7,938
   Germany ......................................................      37,018      22,524       7,432
   Brazil(2) ....................................................      10,348      31,929      25,278
   Malaysia .....................................................          --       5,334       5,334
   South Africa .................................................         320          --          --
                                                                      -------     -------     -------
   Total long-lived assets ......................................     $55,242     $68,307     $45,982
                                                                      =======     =======     =======
</TABLE>

(1)   Includes $506 of Goodwill in 2001.
(2)   Includes $10,391 of Goodwill in 2001

Inter-company sales are eliminated in consolidation and are excluded from net
sales reported in the accompanying consolidated statements of operations.
Long-lived assets are those that are identifiable with operations in each
geographic area. FC Asia had no significant operations since its formation in
1997.

                                      -86-
<PAGE>

(17)  QUARTERLY FINANCIAL INFORMATION (unaudited)

<TABLE>
<CAPTION>
(Dollars in thousands)
                         QUARTERS                               FIRST         SECOND         THIRD         FOURTH
--------------------------------------------------------    -----------    ----------     ----------    ----------

<S>                                                         <C>            <C>            <C>           <C>
2002(1)
-------
Net sales                                                   $     7,885    $    6,374     $    6,107    $    5,191
Gross Profit (loss)                                                (185)          659            671        (1,379)
Net loss                                                          4,078         5,143          5,118        16,738
Basic loss per share                                        $      0.07    $     0.08     $     0.08    $     0.24
Diluted income (loss) per share                             $     (0.07)   $    (0.08)    $     0.08    $     0.24

2001(2)
-------
Net sales                                                   $    16,226    $   18,066     $    8,823    $    9,247
Gross profit (loss)                                               6,591         7,230          3,089          (632)
Net  income (loss)                                                2,979         3,049         (2,241)       (3,307)
Basic  income (loss) per share(6)                           $      0.05    $     0.05     $    (0.04)   $    (0.05)
Diluted  income (loss) per share                            $      0.05    $     0.05     $    (0.04)   $    (0.05)

2000(4)
-------
Net sales                                                   $     3,453    $    6,413     $   13,188    $   13,865
Gross profit                                                        732         1,690          3,859         5,520
Net income (loss) (4)                                              (496)       (5,333)           836         2,296
Basic income (loss) per share (6)                           $     (0.01)   $    (0.11)    $     0.02    $     0.04
Diluted income (loss) per share (5)                         $     (0.01)   $    (0.11)    $     0.01    $     0.04
</TABLE>

(1)  The results for the fourth quarter included approximately $10,748 of
     write-offs for goodwill, patents and deferred expenses.

(2)  The Company purchased DCI as of June 1, 2001

(3)  The Company purchased Xtal as of June 1, 2000

(4)  During the second quarter the Company recorded a non-cash interest charge
     of $5,317 related to beneficial conversion features on convertible debt.

(5)  As the Company reported a consolidated net loss for the year ended December
     31, 2000, basic and diluted earnings per share for that period were the
     same. As the Company reported a consolidated net income for the third and
     fourth quarter of 2000, the Company had both basic and diluted earnings per
     share for those periods.

(6)  The sum of the quarterly loss per share does not equal the annual loss per
     share due to rounding.

                                      -87-
<PAGE>

ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            ---------------------------------------------------------------
            FINANCIAL DISCLOSURE
            --------------------

            Not Applicable



             (The remainder of this page intentionally left blank.)



                                      -88-
<PAGE>

                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
            --------------------------------------------------

EXECUTIVE OFFICERS AND DIRECTORS

The following tables set forth certain information with respect to each person
who was an executive officer or director of the Company as of December 31, 2002.

           NAME              AGE                  POSITION
--------------------------   ---   -----------------------------------------
Dr. Mohd A. Aslami            56   Chairman of the Board of Directors, Chief
                                     Executive Officer, and President
Charles De Luca               65   Member of the Management Board of FCJ and
                                     Director
Robert P. Lobban              48   Chief Financial Officer and Treasurer
Steven Phillips               57   Director and Consultant
Zaid Siddig                   64   Director
Javad K. Hassan               62   Director
Michael A. Robinson (1)       37   Director

Dr. Aslami is a co-founder, Chairman of the Board of Directors and Chief
Executive Officer of the Company. Dr. Aslami has served as Chairman and Chief
Executive Officer of FiberCore Jena, the Company's wholly owned subsidiary in
Germany, since 1994. Dr. Aslami also co-founded ALT in 1986, and served as its
President, Chief Executive Officer and director from 1986 to 1994. Dr. Aslami
received a Ph.D. in chemical engineering from the University of Cincinnati in
1974.

Mr. De Luca is a member of the Management Board of FCJ and is a co-founder and
director of the Company. Mr. De Luca also co-founded and became an Executive
Vice President and director of ALT in 1986. Mr. De Luca received his MBA in
marketing and business management from St. Johns University in 1974.

Mr. Lobban joined FiberCore in April of 2001 as the Vice President of Finance
and was named Chief Financial Officer and Treasurer July 27, 2001. Prior to
joining the Company, Mr. Lobban was the Chief Financial Officer of a publicly
held manufacturing company in Phoenix, Arizona. He has 25 years experience as a
senior financial executive including nine years as a management consultant to
several Fortune 500 companies. Mr. Lobban holds a Bachelor of Science Degree in
Industrial Engineering from Northeastern University and a Masters in Business
Administration from the Harvard Graduate School of Business.

Mr. Phillips became interim Chief Financial Officer and Treasurer of the Company
in August 2000 and continued in that role until July 26, 2001. Mr. Phillips
served as a financial consultant to the Company for many years prior to assuming
the role of interim Chief Financial Officer and has resumed the role of
financial consultant as of July 27, 2001. He became a director of the Company in
May 1995 and became a director of ALT in May 1989. He also served as interim
Chief Financial Officer for a start-up internet company and as Chief Financial
Officer of the Winstar Government Securities Company L.P., a registered

                                      -89-
<PAGE>

U.S. Government securities dealer which he co-founded. Since August 1987, Mr.
Phillips has served as a director of James Money Management, Inc. a private
investment company.

Mr. Siddig was one of the founding partners and a Director of SpecTran
Corporation (subsequently acquired by Lucent Technologies), an optical perform
and fiber manufacturing company, from its inception in 1981 until 1991. He
previously served as a Director of FiberCore from 1994 through 1997. Mr. Siddig
is currently a private investor. Mr. Siddig's appointment was voted on at the
Company's Annual Meeting on August 16, 2002.

Mr. Hassan joined AMP Incorporated (now Tyco) in 1988 as Vice President of
Technology and in 1993 was appointed Corporate Vice President, Strategic
Businesses, later renamed Global Interconnect Systems Business ("GISB") where he
pioneered and deployed a new strategy to take Tyco from a connector company to a
global interconnection systems and solutions organization. He was named
President of GISB in 1993. After retiring from Tyco in 1998, Mr. Hassan founded
and is Chairman and CEO of NeST (Network Systems and Technologies), a provider
of software systems and electronics design and manufacturing with over 2000
employees. He is Chairman of AM Communications, a public company providing
broadband network monitoring and management systems to cable TV operators, and
General Partner to MESA (Middle East and Southeast Asia) Venture Capital Fund
for targeted investments in US-based technology companies. He is a member of the
board of several companies and currently serves as Chairman of the Electronic
Development Commission for the Government of Kerala in India. Mr. Hassan's
membership on the Board of Directors of FiberCore, Inc. is not pursuant to any
agreement with Tyco. Mr. Hassan received a B.S.M.E. degree from Kerala
University in 1962, a Masters of Materials Science degree from the University of
Bridgeport, Connecticut in 1968 and was elected IEEE Fellow, Institute of
Electrical and Electronics Engineers in 1986.

Mr. Robinson became a director of the Company in October 2000. Mr. Robinson was
the Senior Vice President and Corporate Treasurer of Tyco International Ltd., a
global, diversified manufacturing and service company. Mr. Robinson was
appointed Treasurer of Tyco in March 1998. Prior to this appointment, he was a
Vice President in the Investment Banking Department at Merrill Lynch, focusing
on conglomerate and healthcare companies. Previously, he held positions at
Colgate-Palmolive and Bankers Trust Company. Mr. Robinson holds a Bachelors
Degree in Accounting, summa cum laude, from Florida A&M University and a Masters
of Business Administration Degree from the Graduate School of Business at
Harvard University.

      (1) Concurrently with a resignation from his position as Treasurer of
          Tyco, Mr. Robinson submitted his resignation from the FiberCore Board
          of Directors in January 2003.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Pursuant to Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") and the rules thereunder, the Company's executive officers and directors
are required to file with the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. reports of ownership and
changes in ownership of Common Stock. Copies of such reports are required to be
furnished to the Company. Based solely on review of the copies of such reports
furnished to the Company, or written representations that no other reports were
required, the Company believes that during the year ended December 31, 2002 all
of its executive officers and directors complied with the requirements of
Section 16(a), except that Mr. Javad K. Hassan, a director of the Company, did
not timely file the report on Form 4 with respect to his acquisition of options
to purchase up to 5,000 shares of the Company's common stock.

                                      -90-
<PAGE>

ITEM 11.    EXECUTIVE COMPENSATION
            ----------------------

Following is a summary of the compensation earned and/or paid to the Company's
Chief Executive Officer and its most highly compensated executive officers for
the last three years.

<TABLE>
<CAPTION>
                                                                                       Restricted       Securities
                                     Fiscal                            Other Annual       Stock         Underlying
   Name and Principal Position        Year      Salary $     Bonus $   Compensation     Award(s)     Options/SARs(#)
---------------------------------  ---------  ------------  ---------  ------------  --------------  ---------------
<S>                                <C>        <C>           <C>        <C>           <C>             <C>
Dr. Mohd Aslami                       2002      380,000        --            --             --           100,000
   Chairman, Chief Executive          2001      360,000      72,000          --             --           250,000
   Officer & President                2000      200,000      70,000          --             --

Charles De Luca                       2002      140,000        --            --             --            25,000
   Director, Member of Board          2001      135,000      20,000          --             --            60,000
   Management of FiberCore            2000      115,000      25,000          --             --
   Jena AG

Steven Phillips (*)interim Chief      2002         --          --                                         39,000
   Financial Officer, Treasurer       2001      116,666      23,350          --             --            66,000
   and Director                       2000       83,333      21,000          --             --              --

Robert P. Lobban(***), Chief          2002      173,250        --            --             --            15,000
   Financial Officer and              2001      111,903      16,500          --             --            85,000
   Treasurer

Michael J. Beecher(**)
   Chief Financial Officer &
   Treasurer                          2000       67,083        --            --            --               --
</TABLE>

*    For the five months commencing August 1, 2000 and for seven months ended
     July 26, 2001. Options to purchase up to 5,000 shares of the Company's
     common stock were granted to Mr. Phillips as a Director of the Company in
     2001 and in 2002.

**   For the seven months ended July 31, 2000

***  For the eight months commencing April 26, 2001. Mr. Lobban became Chief
     Financial Officer and Treasurer on July 27, 2001.

The Company has issued stock options that are exercisable as of December 31,
2002 from the 1997 Incentive Stock Option Plan, a 1998 Non-qualified Stock
Option Agreement and the 2000 Long-term Incentive Stock Plan. Options vest at
various dates, generally over the three-year period from the date of the grant.
The options granted in 2002, 2001 and 2000 expire ten (10) years from the grant
date. The option price is not less than the fair market value of the shares on
the date of the grant. The 1997 Plan provided for the issuance of up to
5,000,000 shares. 952,000 shares were issued under such plan. The non-qualified
plan provided for options in lieu of salary. 3,679,729 options were issued under
this plan. The 2000 Plan provides for the issuance of up to 7,500,000 shares of
common stock, upon the exercise of options granted under such plan. 1,464,416
shares have been issued under the Plan.

                                      -91-
<PAGE>

OPTION/SAR GRANTS IN LAST FISCAL YEAR
-------------------------------------

The following table lists the options granted to the executive officers during
the year ended December 31, 2002.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                  INDIVIDUAL GRANTS
                                                  -----------------
------------------------------------------------------------------------------------------------------------------------
     Name        Number of      % of Total    Exercise       Expiration        Potential realized        Potential
     ----        Securities      Options/      or base          Date           values at assumed      realized values
                 Underlying    SARs Granted     price           ----          annual rates of stock   at assumed annual
                  Options/     to Employees   ($/Share)                        price appreciation      rates of stock
                    SARs        in Fiscal     ---------                         for option term            price
                  Granted          Year                                         ---------------        appreciation.
                    (#)            ----                                              5%($)             for option term
                    ---                                                                                ---------------
                                                                                                           10% ($)
--------------- ------------- --------------- ----------- ------------------ ---------------------- -------------------
<S>             <C>           <C>             <C>         <C>                <C>                     <C>
Dr. Mohd             100,000       18%          $2.38     Jan. 27, 2012             $149,677              $379,311
Aslami

--------------- ------------- --------------- ----------- ------------------ ---------------------- -------------------
Charles De            25,000        5%          $2.38     Jan. 27, 2012              $37,419               $94,828
Luca

--------------- ------------- --------------- ----------- ------------------ ---------------------- -------------------
Steven                34,000        7%          $2.38     Jan. 27, 2012              $50,890              $128,966
Phillips               5,000                    $0.21     Aug. 15, 2012                 $660                $1,673

--------------- ------------- --------------- ----------- ------------------ ---------------------- -------------------
Robert P.             15,000        3%          $2.38     Jan. 27, 2012              $22,452               $56,897
Lobban
--------------- ------------- --------------- ----------- ------------------ ---------------------- -------------------
</TABLE>

                                      -92-
<PAGE>

AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTIONS/SAR VALUES

The following table lists the options/SARs exercised during the year and the
options/SARs held by the executive officers that were unexercised at December
31, 2002.

<TABLE>
<CAPTION>
                                                                      NUMBER OF SECURITIES
                                                                     UNDERLYING UNEXERCISED        VALUE OF UNEXERCISED
                                                                          OPTIONS/SARS           IN-THE-MONEY OPTIONS/SARS
                                                                     AT FISCAL YEAR-END (#)       AT FISCAL YEAR-END ($)
                                 SHARES ACQUIRED       VALUE              EXERCISABLE/                 EXERCISABLE/
             NAME                ON EXERCISE (#)   REALIZED ($)          UNEXERCISABLE                 UNEXERCISABLE
-------------------------------  ---------------  --------------  ----------------------------  ---------------------------
<S>                              <C>              <C>             <C>                           <C>
Dr. Mohd Aslami                            0                 $0        1,342,224/183,333                $138,683/$0
Charles De Luca                            0                 $0          495,022/45,000                  $59,807/$0
Robert P. Lobban                           0                 $0          28,334/71,666                     $0/$0
</TABLE>


Compensation Committee
----------------------

         In April 2000 the Board of Directors established a Compensation
         Committee. The board members participating on the committee are Michael
         A. Robinson, Zaid Siddig and Javad K. Hassan. Mr. Robinson was the
         Chairman of the committee. Concurrently with a resignation from his
         position as Treasurer of Tyco, Mr. Robinson submitted his resignation
         from the FiberCore Board of Directors in January 2003.

Executive Compensation Program

The Company has not, as yet, adopted a formal executive compensation program,
although it intends to adopt such program. It is expected that such plan will
reflect the following executive compensation philosophy and contain the
compensation components as described below. Such program may contain all or some
of the components and will be subject to change by the Board of Directors.

Compensation Philosophy
-----------------------

The Company's mission is to be a significant provider of optical fiber and
optical fiber preforms in the markets it serves. To support this and other
strategic objectives as approved by the Board of Directors and to provide
adequate returns to shareholders, the Company must compete for, attract,
develop, motivate and retain top quality executive talent at the corporate
office and operating business units of the Company during periods of both
favorable and unfavorable world-wide business conditions.

The Company's executive compensation program is a critical management tool in
achieving this goal. "Pay for performance" is the underlying philosophy for the
Company's executive compensation program. The program is designed to link
executive pay to corporate performance, including share price, recognizing that
there is not always a direct and short-term correlation between executive
performance and share price. To align shareholder interests and executive
rewards, significant portions of each executive's compensation will represent
"at risk" pay opportunities related to accomplishment of specific business
goals.

                                      -93-
<PAGE>

The program will be designed and administered to:

      o     provide annual and longer term incentives that help focus each
            executive's attention on approved corporate business goals the
            attainment of which, in the judgment of the Board of Directors,
            should increase long-term shareholder value;

      o     link "at risk" pay with appropriate measurable quantitative and
            qualitative achievements against approved performance parameters;

      o     reward individual and team achievements that contribute to the
            attainment of the Company's business goals; and

      o     provide a balance of total compensation opportunities, including
            salary, bonus, and longer term cash and non-cash and equity
            incentives, that are competitive with similarly situated companies
            and reflective of the Company's performance.

In seeking to link executive pay to corporate performance, the Board believes
that the most appropriate measure of corporate performance is the increase in
long-term shareholder value, which involves improving such fundamental
quantitative performance measures as revenue, net income, cash flow, operating
margins, earnings per share and return on shareholders' equity. The Board may
also consider qualitative corporate and individual factors which it believes
bear on increasing the long-term value of the Company to its shareholders. These
include (i) the development of competitive advantages, (ii) the ability to deal
effectively with the complexity and globalization of the Company's businesses,
(iii) success in developing business strategies, managing costs and improving
the quality of the Company's products and services as well as customer
satisfaction, (iv) the general performance of individual job responsibilities,
and (v) the introduction of new products, new patents and other innovations.

Components of Executive Compensation Program
--------------------------------------------

The Company's executive compensation program will consist of (i) an annual
salary, (ii) an annual bonus, (iii) issuance of restricted stock, and (iv) a
long-term incentive represented by stock options. As explained below, restricted
stock and stock options serve to link executive pay to corporate performance,
since the attainment of these awards depends upon meeting the quantitative and,
if applicable, qualitative performance goals which serve to increase long-term
shareholder value.

Salary and Bonus. In December of each year, the Board will set the annual salary
for the following year of each executive officer not subject to an employment
contract, and establish a potential bonus opportunity that executives (even
those subject to employment contracts) may earn for each of the quantitative
and, if applicable, qualitative performance goals established by the Committee.
The Board intends to set these targets in the first half of each year after a
detailed review by the Board of the Company's annual operating budget.

Stock Options and Restricted Stock. The longer-term component of the Company's
executive compensation program will consist of qualified and/or non-qualified
stock option and restricted stock grants. The options generally permit the
option holder to buy the number of shares of Common Stock covered by the option
(an "option exercise") at a price equal to or greater than eighty-five percent
(85%) of the market price of the stock at the time of grant. Thus, the options
generally gain value only to the extent the stock price exceeds the option
exercise price during the life of the option. Generally a portion of the

                                      -94-
<PAGE>

options vest over a period of time and expire no later than ten years, and in
many cases five years after grant. In addition, in appropriate circumstances,
the Company will award restricted stock to executives. Executives will generally
be subject to limitations in selling the restricted stock immediately, and
therefore will have the incentive to increase shareholder value.

Basis of 2002 Compensation
--------------------------

As indicated in the Company's executive compensation philosophy, a major factor
in the Board's compensation decisions is the competitive marketplace for senior
executives. In setting competitive compensation levels, the Company will compare
itself to a self-selected group of companies of comparable size (a peer group),
market capitalization, technological and marketing capabilities, performance and
global presence with which the Company competes for executives.

COMPENSATION OF DIRECTORS
-------------------------

The Company maintains a compensation plan for outside directors (directors who
are not employees of the Company), wherein each outside director receives an
initial award of 10,000 non-qualified stock options and a fee of $10,000 per
year, payable quarterly, and $250 for each Board of Directors meeting or
Committee of the Board meeting attended. After the first year, outside directors
are awarded 5,000 stock options, which are exercisable one year from the grant
date.

On August 1, 2000, Mr. Steven Phillips assumed the role of interim Chief
Financial Officer. He continued in that role through July 26, 2001, at which
time he resumed his role as a consultant to the Company. Prior to July 31, 2000
and subsequent to July 26, 2001, the Company had a consulting agreement with One
Financial Group Incorporated ("OFG"), a company controlled by Mr. Phillips who
is also a director of the Company. OFG provides services as a financial advisor.
In 2002, the Company incurred costs of $223,000. For the period July 27, 2001 to
December 31, 2001, the Company incurred costs of $119,000 in connection with
services rendered by OFG. During the period from January 1, to July 31, 2000,
the Company incurred costs of $116,000.

                                      -95-
<PAGE>

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            --------------------------------------------------------------

The following table sets forth certain information regarding our equity
compensation plans as of December 31, 2002.

                      EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                                                                               Number of securities
                                                                                               remaining available for
                                                                                               future issuance under
                              Number of securities to                 Weighted-average         equity compensation
                              be issued upon exercise                 exercise price of        plans (excluding
                              of outstanding options,                 outstanding options,     securities reflected in
                              warrants and rights                     warrants and rights      column (a))
Plan category                          (a)                                     (b)                       (c)
<S>                           <C>                                     <C>                      <C>
Equity compensation plans
approved by security
holders                              --                                       --                         --

Equity compensation plans
not approved by
security holders                   4,944,452                                  1.35                    6,165,084
                                   ---------                                  ----                    ---------

          Total                    4,944,452                                  1.35                    6,165,084
                                   =========                                  ====                    =========
</TABLE>

The following table sets forth certain information regarding the ownership of
the Common Stock as of December 31, 2002 with respect to (i) each person known
by the Company to own beneficially more than 5% of the outstanding shares of
Common Stock, (ii) each executive officer named in the Executive Compensation
Table, (iii) each director of the Company and (iv) all the directors and
executive officers of the Company as a group. Unless otherwise indicated, each
of the shareholders has sole voting and investment power with respect to the
shares beneficially owned.

<TABLE>
<CAPTION>
             NAME AND ADDRESS (1)                  SHARES OWNED                            % OWNED
-------------------------------------------------  ------------                          ------------
<S>                                                <C>                  <C>              <C>
Mohd Aslami......................................    7,362,171          (2), (9)              9.4
Charles De Luca..................................    5,580,412          (3), (9)              7.12
Robert Lobban....................................      110,200            (7)                 0.14
Steven Phillips..................................    3,009,580          (4), (9)              3.84
Zaid Siddig......................................      544,198                                0.69
Javad K. Hassan..................................       78,333            (5)                 0.10
Michael Robinson.................................           --            (6)                   --
Tyco International Ltd...........................   11,628,224            (8)                14.84
All directors and executive officers as
   a group (7 persons)...........................   21,559,501                               29.67
</TABLE>

(1)  The addresses of the persons and entities named in this table are as
     follows: Messrs. Aslami, De Luca, Phillips, Lobban, Siddig and Hassan, c/o
     FiberCore, Inc., P.O. Box 180, 253 Worcester Road, Charlton, Ma 01507; Mr.
     Robinson and Tyco International Ltd., 9 West 57th Street, New York, New
     York 10022.

                                      -96-
<PAGE>

(2)  Includes 1,389,158 shares and warrants to purchase 323,082 shares held by
     Dr. Aslami's wife, and 1,587,569 shares held by the Ariana trust of which
     Dr. Aslami's wife is the trustee and his children are beneficiaries. Also
     includes 1,885,309 options and warrants to purchase shares of the Company
     held directly by Dr. Aslami.

(3)  Includes 2,396,772 shares and warrants to purchase 323,082 shares held by
     Elizabeth De Luca, Mr. De Luca's wife. Also includes 566,740 options and
     warrants to purchase shares of the Company held directly by Mr. De Luca.

(4)  Includes 348,173 options and warrants to purchase shares of the Company and
     1,243,712 in options held by One Financial Group, Incorporated, a Company
     controlled by Mr. Phillips. Also includes 1,386,027 shares held by Mr.
     Phillips' wife.

(5)  Includes options to acquire 25,000 shares held by Mr. Hassan, as outside
     director compensation.

(6)  Mr. Robinson, Senior Vice President and Corporate Treasurer of Tyco
     International Ltd, was elected to the Company's Board of Directors on
     October 12, 2000. Mr. Robinson submitted his resignation to the Board of
     Directors as of January 2003.

(7)  Includes options to acquire 100,000 shares.

(8)  Of the total, 10,275,849 shares are held by Tyco Electronics Corporation
     and 1,352,375 shares are held by Tyco Sigma Limited. Both entities are
     wholly owned subsidiaries of Tyco International Ltd., a company traded on
     the New York Stock Exchange.

(9)  Under the Guarantor Indemnification Agreement, Mohd Aslami, Steven Phillips
     and Charles De Luca are subject to various restrictions with regard to the
     sale of their common stock.

Arrangements Which Could Result in Change of Control
----------------------------------------------------

Tyco International Group S.A. ("TIGSA"), an affiliate of Tyco International
Ltd., could gain control of the Company's board of directors. TIGSA guaranteed
the Company's obligations to Fleet National Bank under a $10,000,000 credit
facility between Fleet and the Company, dated as of December 20, 2000. Pursuant
to the Guarantor Indemnification Agreement between TIGSA, Dr. Mohd Aslami,
Charles De Luca, Steven Phillips (each a member of the Company's board of
directors), and the Company, dated as of December 26, 2000, the Company issued
one share of Series A Preferred Stock to TIGSA. The certificate of designations
governing the Series A Preferred Stock enables TIGSA to effectively take control
of the Company's board of directors if there is an event of default under the
Guarantor Indemnification Agreement. Events of default include the Company's
failure to timely pay TIGSA guarantee fees; the Company's failure to timely
repay TIGSA if TIGSA is required to perform under its guaranty of the Company's
obligations to Fleet; the Company's failure to comply with specific covenants;
the sale by any of Dr. Mohd Aslami, Charles De Luca or Steven Phillips during
any 12 month period after December 26, 2001 (until termination of the Guarantor
Indemnification Agreement) of more than 10% of the total number of shares each
owned or had the option to obtain during the 12 month period; the Company's
admission that we or any of the Company's subsidiaries cannot pay the Company's
debts as they become due; the Company's making an assignment for the benefit of
any of the Company's creditors; the commencement of bankruptcy proceedings
against the Company or the Company's subsidiaries or the appointment of a
receiver or trustee over a substantial part of the Company's or any of the
Company's subsidiaries' assets, which have not been discharged within 60 days;
or the acceleration of the Company's indebtedness or the indebtedness of any of
the Company's subsidiaries for borrowed money in an outstanding principal amount
of $2,500,000.

The Company is currently in a state of default with the holders of the
Subordinated Convertible Debentures. The Company is also currently in a state of
default with Algar under the terms of a Loan Agreement. This causes a
cross-default on the Fleet credit facility of $8,500,000 and on a $1,500,000
loan from Tyco International Finance Alpha GmbH and Fleet and/or Tyco could
accelerate the maturity date of their respective loans and the entire balances
could become immediately due. Also, in the event the Company is delisted from
the Nasdaq SmallCap Market, this would give rise to an additional default under
the terms of the Subordinated Convertible Debentures, that would cause an
additional cross default on the

                                      -97-
<PAGE>

Fleet credit facility. In the event of a default of the Credit Facility, Fleet
could exercise the provisions of a guarantee given by Tyco International Group
S.A. to be paid in full by Tyco and Tyco would then assume Fleet's position as a
creditor of the Company. In this case, Tyco would also have the right to assume
control of the Company's Board of Directors.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
            ----------------------------------------------

LOANS

During February and March 2000, the Company borrowed a total of $300,000 from
the spouses of two officers and from a company affiliated with an outside
director. In exchange, the Company issued each party a $100,000 unsecured note,
bearing interest at 14%. The notes were repaid in September 2000.

On December 29, 2000, convertible notes issued to two officers and an outside
director in July 1999, totaling $548,000 including related party interest
expense, were converted into 2,190,850 common shares of the Company. Related
party interest expense on these notes in 2000 and 1999 was $72,000 and $90,000,
respectively.

CONSULTING

On August 1, 2000, Mr. Steven Phillips assumed the role of interim Chief
Financial Officer. He continued in that role through July 26, 2001, at which
time he resumed his role as a consultant to the Company. Prior to July 31, 2000
and subsequent to July 26, 2001, the Company had a consulting agreement with One
Financial Group Incorporated ("OFG"), a company controlled by Mr. Phillips who
is also a director of the Company. OFG provides services as a financial advisor.
In 2002, the Company incurred consulting costs of $223,000. For the period July
27, 2001 to December 31, 2001, the Company incurred costs of $119,000 in
connection with services rendered by OFG. During the period from January 1, to
July 31, 2000, the Company incurred costs of $116,000.

ITEM 14.    CONTROLS AND PROCEDURES
            -----------------------

(a)   Evaluation of disclosure and procedures

The Chief Executive Officer and Chief Financial Officer of the Company evaluated
the Company's disclosure controls and procedures (as defined in Rules 13a-14(c)
under the Securities Exchange Act of 1934 (the "Exchange Act") as of a date
within 90 days of the filing date of this Annual Report on Form 10-K and
concluded that the Company's disclosure controls and procedures are functioning
in an effective manner to ensure that the information required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms.

(b)   Change in internal controls

There were no significant changes in internal controls or in other factors that
could significantly affect the internal controls subsequent to the date of their
evaluation.

                                      -98-
<PAGE>

                                     PART IV
                                     -------

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
            ---------------------------------------------------------------

(a)         1.    FINANCIAL STATEMENTS

                  See ITEM 8 of this Report.

            2.    FINANCIAL STATEMENT SCHEDULES

                  The required disclosures are included in the footnotes to the
                  Financial Statements.

            3.    EXHIBITS

                  a.    99.1 Certification by the Chief Executive Officer of the
                        Registrant pursuant to U.S.C. Section 1350, as adopted
                        pursuant to Section 906 of the Sarbanes-Oxley Act of
                        2002.

                  b.    99.2 Certification by the Chief Financial Officer of the
                        Registrant pursuant to U.S.C. Section 1350, as adopted
                        pursuant to Section 906 of the Sarbanes-Oxley Act of
                        2002.

(b)   REPORTS ON FORM 8-K

      o   Current Report on Form 8-K Report filed on November 26, 2002.

                                      -99-
<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.

                              FIBERCORE, INC.
                              -----------------------------------------------
                              (Registrant)

May 19, 2003                  By: /s/ Dr. Mohd A. Aslami
                                  -------------------------------------------
                                  Dr. Mohd A. Aslami
                                  Chairman, Chief Executive Officer
                                  and President (Principal Executive Officer)

May 19, 2003                  By: /s/ Robert P. Lobban
                                  -------------------------------------------
                                  Robert P. Lobban
                                  Chief Financial Officer and Treasurer


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 and on the dates indicated.


/s/ Dr. Mohd A. Aslami                                            May 19, 2003
-------------------------   Chairman of the Board,
Dr. Mohd A. Aslami          President
                            Chief Executive Officer
                            Director


/s/ Charles De Luca                                               May 19, 2003
-------------------------
Charles De Luca             Secretary and Director


/s/ Steven Phillips                                               May 19, 2003
-------------------------
Steven Phillips             Director


/s/ Zaid Siddig                                                   May 19, 2003
-------------------------
Zaid Siddig                 Director


/s/ Javad K. Hassan                                               May 19, 2003
-------------------------
Javad K. Hassan             Director

                                     -100-
<PAGE>

                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I, Mohd A. Aslami, certify that:

1.    I have reviewed this yearly report on Form 10-K of FiberCore, Inc.;

2.    Based on my knowledge, this yearly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this yearly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this yearly report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this yearly
      report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

      a)  designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this yearly report
          is being prepared;

      b)  evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this yearly report (the "Evaluation Date"); and

      c)  presented in this yearly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent functions):

      a)  all significant deficiencies in the design or operation of internal
          controls which could aversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant'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 the registrant's internal
          controls; and

6.    The registrant's other certifying officers and I have indicated in this
      yearly report whether there were significant changes in internal controls
      or in other factors that could significantly affect internal controls
      subsequent to the date of our most recent evaluation, including any
      corrective actions with regard to significant deficiencies and material
      weaknesses.


      Date: May 19, 2003            /s/ Mohd A. Aslami
                                    -------------------------------------------
                                    Mohd A. Aslami
                                    Chairman, President and Chief Executive
                                      Officer

                                     -101-
<PAGE>

                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

      I, Robert P. Lobban, certify that:

      1.    I have reviewed this yearly report on Form 10-K of FiberCore, Inc.;

      2.    Based on my knowledge, this yearly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this yearly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this yearly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this yearly report;

      4.    The registrant's other certifying officers and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
            and have:

            a)  designed such disclosure controls and procedures to ensure that
                material information relating to the registrant, including its
                consolidated subsidiaries, is made known to us by others within
                those entities, particularly during the period in which this
                yearly report is being prepared;

            b)  evaluated the effectiveness of the registrant's disclosure
                controls and procedures as of a date within 90 days prior to the
                filing date of this yearly report (the "Evaluation Date"); and

            c)  presented in this yearly report our conclusions about the
                effectiveness of the disclosure controls and procedures based on
                our evaluation as the Evaluation Date;

      5.    The registrant's other certifying officers and I have disclosed,
            based on our most recent evaluation, to the registrant's auditors
            and the audit committee of registrant's board of directors (or
            persons performing the equivalent functions):

            a)  all significant deficiencies in the design or operation of
                internal controls which could aversely affect the registrant's
                ability to record, process, summarize and report financial data
                and have identified for the registrant'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 the registrant's
                internal controls; and

      6.    The registrant's other certifying officers and I have indicated in
            this yearly report whether there were significant changes in
            internal controls or in other factors that could significantly
            affect internal controls subsequent to the date of our most recent
            evaluation, including any corrective actions with regard to
            significant deficiencies and material weaknesses.


            Date: May 19, 2003            /s/ Robert P. Lobban
                                          ------------------------------------
                                          Robert P. Lobban
                                          Chief Financial Officer

                                     -102-
<PAGE>

                                  EXHIBIT INDEX
The following lists the exhibits which are filed as part of this report. Those
which have been previously filed are incorporated by reference to such previous
filing as indicated below.


EXHIBIT
NUMBER

    2.1     Agreement dated February 13, 1987 between Norscan Instruments Ltd.
            and Automated Light Technologies, Inc. ("ALT"). (1)
    2.2     Agreement and Plan of Reorganization dated as of July 18, 1995
            between Venturecap, Inc. and FiberCore Incorporated. (1)
    2.3     Agreement of Merger dated as of July 18, 1995 between Venturecap,
            Inc. and FiberCore Incorporated. (1)
    2.4     Agreement and Plan of Reorganization dated as of September 18, 1995
            between the FiberCore, Inc. Alt Merger Co., and ALT. (1)
    2.5     Investment Agreement, dated June 1, 2000, by and among FiberCore,
            Inc. and Algar S.A.-Empreendimentos e Participacoes Xtal Fibras
            Opticas S.A. and Mamore Participacoes S.A. (2)
    3.1     Certificate of Incorporation of FiberCore, Inc. (1)
    3.2     Amended and Restated By-Laws of FiberCore, Inc. (12)
    3.3     Amendments to By-Laws of FiberCore, Inc. (3)
    3.4     Designations of Rights Privileges and Preferences of Series A
            Preferred Stock Registrant, dated as of December 19, 2000. (3)
    4.1     Warrant issued to Guido Roennefahrt, dated May 16, 2000, to
            purchase 18,500 Shares of FiberCore Common Stock at an exercise
            price of  $3.20 per share. (9)
    4.2     Warrant issued to Marc Drimer, dated May 16, 2000, to purchase
            15,000 Shares of FiberCore Common Stock at an exercise price of
            $3.20 per share. (9)
    4.3     Warrant issued to Felix Rebholz, dated May 16, 2000, to purchase
            15,000 Shares of FiberCore Common  Stock at an exercise price of
            $3.20 per share. (9)
    4.4     Incentive Warrant, dated June 9, 2000, by and between FiberCore,
            Inc. and Crescent International Ltd. (4)
    4.5     Warrant issued to Gruntal & Co., LLC, dated April 14, 2000, to
            purchase up to 300,000 Shares of FiberCore Common Stock. (6)
    4.6     Warrant issued to Gruntal & Co., LLC, dated June 9, 2000, to
            purchase up to 30,000 Shares of FiberCore Common Stock. (6)
    4.7     Warrant issued to Gruntal & Co., LLC, dated June 9, 2000, to
            purchase up to 72,016 Shares of FiberCore Common Stock. (6)
    4.8     Warrant issued to Gruntal & Co., LLC, dated June 26, 2000, to
            purchase up to 54,870 Shares of FiberCore Common Stock. (6)
    4.9     Registration Rights Agreement, dated June 9, 2000, by and between
            FiberCore, Inc. and Crescent International. (4)
   4.10     Warrant issued to Felix Rebholz, dated September 14, 2000, to
            purchase 1,000 Shares of FiberCore Common Stock at an exercise
            price of  $7.179 per share. (9)
   4.11     Warrant issued to Marc Drimer, dated  September 14, 2000, to
            purchase 1,000 Shares of FiberCore Common Stock at an exercise
            price of  $7.179 per share. (9)
   4.12     Warrant issued to Guido Roennefahrt, dated September 14, 2000, to
            purchase 1,000 Shares of FiberCore Common Stock at an exercise
            price of  $7.179 per share. (9)
   4.13     Warrant issued to Guido Roennefahrt, dated September 18, 2000, to
            purchase 557 Shares of FiberCore Common Stock at an exercise price
            of  $7.179 per share. (9)
   4.14     Warrant issued to Marc Drimer, dated  September 18, 2000, to
            purchase 558 Shares of FiberCore Common Stock at an exercise price
            of  $7.179 per share. (9)
   4.15     Warrant issued to Felix Rebholz, dated September 18, 2000, to
            purchase 557 Shares of FiberCore Common Stock at an exercise price
            of  $7.179 per share. (9)
   4.16     Warrant issued to Gruntal & Co., LLC, dated  December 29, 2000, to
            purchase 47,260 shares of Shares of FiberCore Common Stock at an
            exercise price of $2.538 per share. (9)

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   4.17     Warrant issued to Gruntal & Co., LLC, dated December 29, 2000, to
            purchase 100,000 shares of Shares of FiberCore Common Stock k at an
            exercise price of $5.00 per share. (9)
   4.18     Warrant issued to Gruntal & Co., LLC, dated January 11, 2001, to
            purchase 125,654 Shares of FiberCore Common Stock at an exercise
            price of $2.5443 per share. (9)
   4.19     Warrant issued to Gruntal & Co., LLC, dated August 22, 2001, to
            purchase 39,698 Shares of FiberCore Common Stock at an exercise
            price of  $4.53 per share. (9)
   4.20     Warrant issued to Gruntal & Co., LLC, dated October 25, 2001, to
            purchase 26,800 Shares of FiberCore Common Stock at an exercise
            price of  $2.2388 per share. (9)
   4.21     Registration Rights Agreement among the Registrant, Riverview
            Group, LLC, Laterman & Co. & Forevergreen Partners, dated as of
            January 15, 2002. (10)
   4.22     Convertible Subordinated Debenture issued to Riverview Group, LLC,
            dated as of January 15, 2002. (10)
   4.23     Convertible Subordinated Debenture issued to Laterman & Co., dated
            as of January 15, 2002. (10)
   4.24     Convertible Subordinated Debenture issued to Forevergreen Partners,
            dated as of January 15, 2002. (10)
   4.25     Warrant to purchase 80,000 shares of the Registrant's common stock,
            issued to Riverview Group, LLC, dated as of January 15, 2002. (10)
   4.26     Warrant to purchase 53, 334 shares of the Registrant's common
            stock, issued to Riverview Group, LLC, dated as of January 15,
            2002. (10)
   4.27     Warrant to purchase 252,854 shares of the Registrant's common
            stock, issued to Riverview Group, LLC, dated as of January 15,
            2002. (10)
   4.28     Warrant to purchase 26,666 shares of the Registrant's common stock,
            issued to Laterman & Co., dated as of January 15, 2002. (10)
   4.29     Warrant to purchase 11,953 shares of the Registrant's common stock,
            issued to Laterman & Co., dated as of January 15, 2002. (10)
   4.30     Warrant to purchase 38,619 shares of the Registrant's common stock,
            issued to Forevergreen Partners, dated as of January 15, 2002. (10)
   4.31     Convertible Subordinated Debentures and Warrants Purchase Agreement
            among the Registrant, Riverview Group, LLC, Laterman & Co. &
            Forevergreen Partners, dated as of January 15, 2002. (10)
   10.1     Agreement, dated May 19, 2000, by and between FiberCore, Inc. and
            Tyco Electronics Corporation. (5)
   10.2     Standstill Agreement, dated May 19, 2000, by and between FiberCore,
            Inc. and Tyco Electronics Corporation. (5)
   10.3     Loan Agreement, dated June 20, 2000, by and between Algar S.A.
            Empreendimentos e Participacoes, FiberCore Inc., and FiberCore
            Ltda. (2)
   10.4     Loan Agreement, dated June 20, 2000, by and between Algar S.A.
            Empreendimentos e Participacoes, FiberCore Inc., and FiberCore
            Ltda. (2)
   10.5     Stock Purchase Agreement between the Company and Crescent
            International, Ltd., dated as of August 20, 2001. (11)
   10.6     Registration Rights Agreement between the Company and Crescent
            International, Ltd., dated as of August 20, 2001. (11)
   10.7     Securities Purchase Agreement by and between Crescent International
            Ltd. and FiberCore, Inc., dated June 9, 2000. (4)
   10.8     Loan Agreement between FiberCore, Inc. and Fleet National Bank,
            dated as of December 20, 2000. (3)
   10.9     Revolving Credit Note executed by FiberCore, Inc. in favor of Fleet
            National Bank, dated as of December 20, 2000. (3)
   10.10    Limited Guaranty by Tyco International S.A., dated as of December
            20, 2000. (3)
   10.11    Pledge and Security Agreement between FiberCore, Inc. and Fleet
            National Bank, dated as of December 20, 2000. (3)
   10.12    Collateral Assignment of Patents and Trademarks and Security
            Agreement between FiberCore, Inc. and Fleet National Bank, dated as
            of December 20, 2000. (3)
   10.13    Guarantor Indemnification Agreement among Tyco International Group
            S.A., FiberCore, Inc., Mohd Aslami, Charles DeLuca and Steven
            Phillips, dated as of December 26, 2000. (3)
   21.1     List of subsidiaries of FiberCore, Inc. (7)
   23.1     Consent of Deloitte & Touche LLP.

                                     -104-
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(1)  denotes incorporated herein by reference to the Annual Report on Form 10-K
     for the year ended December 31, 1996, filed with the Commission on March
     26, 1997.

(2)  denotes incorporated herein by reference to the exhibits to the Current
     Report on Form 8-K, filed July 3, 2000, as amended July 10, 2000.

(3)  denotes incorporated herein by reference to the exhibits to the Current
     Report on Form 8-K, filed January 10, 2001.

(4)  denotes incorporated herein by reference to the exhibits to the Current
     Report on Form 8-K, filed June 15, 2000.

(5)  denotes incorporated herein by reference to the exhibits to the Current
     Report on Form 8-K, filed June 9, 2000.

(6)  denotes incorporated herein by reference to the exhibits to the
     Registration Statement on Form S-3/A, filed September 19, 2000.

(7)  denotes incorporated herein by reference to the Annual Report on Form 10-K
     for the year ended December 31, 1997, filed with the Commission on March
     26, 1998.

(8)  denotes incorporated herein by reference to the exhibits to the Quarterly
     Report on Form 10-Q, filed on May 4, 2000.

(9)  denotes incorporated herein by reference to the exhibits to the
     Registration Statement on Form S-3, filed February 12, 2002.

(10) denotes incorporated herein by reference to the exhibits to the Current
     Report on Form 8-K, filed February 5, 2002.

(11) denotes incorporated herein by reference to the exhibits to the Quarterly
     Report on Form 10-Q, filed on November 14, 2001.

(12) denotes incorporated herein by reference to the exhibits to the Quarterly
     Report on Form 10-Q, filed on November 14, 2000.

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