IXNET INC, S-1/A, 1999-07-23

IXNET INC
S-1/A, 1999-07-23
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

Previous: ALLIANCE RESOURCE PARTNERS LP, S-1/A, 1999-07-23

Next: CROTEAU INVESTMENT MANAGEMENT INC, 13F-HR, 1999-07-23

<PAGE>

As Filed with the Securities and Exchange Commission on July 23, 1999
Registration No. 333-79079

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

PRE-EFFECTIVE AMENDMENT NO. 2 TO THE
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

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

IXnet, Inc.
(exact name of registrant as specified in its certificate of incorporation)

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

<TABLE>
<S> <C> <C>
Delaware 4813 13-4060000
(IRS Employer Identification
(state or other jurisdiction (Primary Standard No.)
of incorporation or
organization) Classification Code Number)
</TABLE>

Wall Street Plaza
88 Pine Street
New York, New York 10005
(212) 412-6400
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

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

David A. Walsh
Chief Executive Officer
IXnet, Inc.
Wall Street Plaza
88 Pine Street
New York, New York 10005
(212) 412-6400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

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

Copies to:
<TABLE>
<S> <C>
Thomas N. Talley, Esq. Michael A. Conza, Esq.
Mark I. Sokolow, Esq. Testa, Hurwitz & Thibeault, LLP
Thacher Proffitt & Wood 125 High Street
Two World Trade Center Boston, Massachusetts 02110
New York, New York 10048 (617) 248-7000
(212) 912-7400
</TABLE>

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

Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

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

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+We will amend and complete the information in this prospectus. Although we +
+are permitted by U.S. federal securities laws to offer these securities using +
+this prospectus, we may not sell them or accept your offer to buy them until +
+the documentation filed with the SEC relating to these securities has been +
+declared effective by the SEC. This prospectus is not an offer to sell these +
+securities or our solicitation of your offer to buy these securities in any +
+jurisdiction where that would not be permitted or legal. +
+ +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION - JULY 23, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Prospectus
, 1999

[Logo of IXnet]

7,500,000 Shares of Common Stock

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

IXnet: The Offering:

. We provide highly . We are offering to
reliable, secure the public
and fully managed 7,500,000 shares of
communications our common stock.
services to the
worldwide financial . The underwriters
community over our have an option to
global Extranet. purchase an
additional
. IXnet, Inc. 1,125,000 shares
88 Pine Street from us to cover
New York, New York over-allotments.
10005
(212) 412-6400
. This is our initial
Proposed Symbol & public offering,
Market: and no public
market currently
exists for our
. EXNT/Nasdaq shares. We
National Market anticipate that the
initial public
offering price will
be between $18.00 -
$20.00.

. We plan to use the
proceeds from this
offering to invest
in the expansion of
our global
Extranet. We may
also use these
proceeds for
possible future
acquisitions,
strategic alliances
or investments in
property or assets
for our business.

. Closing: , 1999.

<TABLE>
---------------------------------------------------
<CAPTION>
Per Share Total
---------------------------------------------------
<S> <C> <C>
Public offering price, estimated: $ $
Underwriting fees:
Proceeds to IXnet:
---------------------------------------------------
</TABLE>

This investment involves risk. See "Risk Factors" beginning on page 7.

- --------------------------------------------------------------------------------
Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------

Joint Book-Running Managers

Donaldson, Lufkin & Jenrette Salomon Smith Barney

--------

Merrill Lynch & Co.

First Union Capital Markets Corp.

DLJdirect Inc.
<PAGE>

[Inside front cover: A statement at the top right of the
diagram reads, "The Financial Industry Extranet." Graphic
consisting of a cloud encircling the text "IXnet Global
Extranet." Surrounding the cloud are IXnet's target customer
groups identified by text with the IXnet content center with
news, transactions, quotes and video at the bottom center of
the cloud. Starting from the top and proceeding clockwise the
customer groups are: electronic trading firms, news & research
providers, investment banks, commodities/futures trading
firms, commercial banks, inter-dealer brokers, asset
managers/hedge funds, exchanges, broker-dealers and real time
content providers]

[Inside front cover fold-out: Map of the world with the names
and location of each of the 39 cities in which IXnet has
points of presence. Lines representing the Extranet connect
the cities.]
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary......................................................... 1
Risk Factors............................................................... 7
Forward-Looking Statements................................................. 15
IXnet, Inc................................................................. 16
Use of Proceeds............................................................ 18
Dividend Policy............................................................ 18
Capitalization............................................................. 19
Dilution................................................................... 20
Selected Combined and Consolidated Financial Data.......................... 21
Unaudited Pro Forma Combined and Consolidated Financial Information........ 23
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................... 27
Business................................................................. 40
Management............................................................... 61
Principal Stockholders................................................... 71
Certain Relationships and Related Transactions........................... 73
Description of Capital Stock............................................. 78
Shares Eligible for Future Sale.......................................... 79
Underwriting............................................................. 82
Legal Matters............................................................ 84
Experts.................................................................. 84
Additional Information................................................... 84
Index to Financial Statements............................................ F-1
</TABLE>

<PAGE>

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company, the common stock we are offering and the
financial statements and notes to those statements that appear elsewhere in
this prospectus. Unless otherwise indicated, the information contained in this
prospectus reflects a 43,100-for-1 stock split of IXnet, Inc.'s common stock
effected as a stock dividend on July 1, 1999 and assumes the underwriters'
over-allotment option is not exercised. We will refer to IXnet, Inc. and its
subsidiaries using "IXnet," "we," "us" and "our." We will refer to our parent
company, IPC Information Systems, Inc., and its subsidiaries, as "IPC." IPC is
the wholly-owned subsidiary of IPC Communications, Inc., whose common stock is
traded on the American Stock Exchange under the symbol IPI.

IXnet

Our Business and Services

IXnet is a leading provider of communications services to the worldwide
financial services community. We have built and operate the IXnet Extranet, a
global seamless communications network connecting financial services firms and
their business partners, as well as multiple offices within the same firm.
Through our Extranet, our customers obtain highly reliable, secure and fully
managed voice and data connectivity without having to access multiple disparate
public networks or rely on multiple customer service organizations.

We provide services tailored to meet the specialized needs of the financial
services community, including (1) managed voice and data services, (2) virtual
private network services and (3) turnkey outsourced network solutions. In
addition, we aggregate, host and distribute financially oriented content, such
as news, research, analytics and market data, for information service
providers.

Our customers receive the following benefits by connecting to our Extranet:

. access to our high performance global network that connects over 480
financial services firms;

. multiple voice and data services over a single high capacity network
connection;

. outsourced network solutions;

. on-demand access to multiple content providers;

. rapid and efficient provisioning of inter- and intra-firm communication
links;

. superior customer service and support from a single network provider;
and

. a content neutral delivery mechanism for content providers to
efficiently, economically and effectively reach their target market.

Financial service firms and their business partners comprise a large global
community that relies heavily on efficient communications, interaction among
its members and timely access to industry-related information to conduct
business. As a result, highly reliable communications services are mission-
critical to this community. Based on an industry survey and our experience, we
estimate that the market for information and communications services to the
worldwide financial services community is at least $25 billion annually and is
growing by 15% per year.

We believe our Extranet provides a unique value proposition, enabling these
firms to reliably communicate over a common multi-protocol network platform,
and to efficiently access information from multiple providers. We connect
customers to our Extranet by installing intelligent network gateways, known as
customer access nodes, or CANs, on our customers' premises. Once we have
installed a CAN at the customer site, we refer to the customer as being on-net.

1
<PAGE>

As the number of on-net customers increases, the value of the Extranet to
current and prospective customers grows. Adding key firms and sites to our
Extranet will greatly increase its value to end-users by allowing (1) customers
broader accessibility to directly connect to other on-net users, (2) quicker
delivery of dedicated communications links between firms, (3) greater cost-
efficiencies to end-users for on-net communications and (4) higher performance
communications among on-net customers.

We believe that our growing customer base will attract many of their
business partners to also become customers of our Extranet. This should create
a cycle that will attract new customers and fuel growth in the number of
services we provide to individual firms. We also believe that more content
providers will be attracted to our Extranet due to the efficient and cost-
effective method it offers to reach the desktops of our significant audience of
on-net financial services customers. We believe that as we deliver the services
of an increasing number of content providers over our Extranet, additional
customers will be attracted to the expanded content offerings on our Extranet.

Our Extranet currently connects customers in financial centers in 34
countries around the world, including New York, Chicago, Toronto, London,
Frankfurt, Paris, Zurich, Hong Kong, Tokyo, Sydney and Singapore. Our Extranet
uses advanced networking technologies such as IP and ATM. It is designed to
maximize performance and reliability through features such as redundant
dedicated fiber optic facilities, strategically located network operations
centers, or NOCs, and geographically distributed physical points of presence,
or POPs. In addition, we have three data centers where we provide hosting for
content providers and manage servers and other equipment for customers who have
outsourced their network applications to us. We currently have over 480
customers including the following:

<TABLE>
<CAPTION>
Broker-Dealers/ Asset Managers/ Inter-dealer
Investment Banks Hedge Funds Brokers Trading Firms

<S> <C> <C> <C> <C>
Bankers Trust Goldman, Sachs Charles Schwab Cantor Fitzgerald AIG Trading
Barclays Bank J.P. Morgan Fidelity Management Eurobrokers Amerex Petroleum
Bear Stearns Lehman Brothers Janus Exco CHOICE! Energy LP
CIBC Oppenheimer Merrill Lynch Moore Capital Garban ED&F Mann
Chase Manhattan Bank Morgan Stanley Dean Witter Robertson Stephens Harlow Butler FIMAT USA
Citibank NationsBanc Montgomery Sanford C. Bernstein Liberty Orion Energy
Deutsche Bank Securities Schroder MW Marshalls Power Merchants
Donaldson, Lufkin NatWest Securities Soros Fund Management Natsource PVM Oil
& Jenrette PaineWebber State Street Research Prebon Yamane Sempra Energy
Dresdner Bank Prudential Securities Wellington Management Tradition NorthAmerica Spectron Energy
First Union Salomon Smith Barney
</TABLE>

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

In addition to the customers listed above, we also host and deliver data
applications on behalf of over 30 content providers including First Call, News
Edge, Gov PX, IDEA and NYSE.

Our Strategy

Our goal is to be the leading provider of multimedia communications services
to the financial services community. Our business strategy includes the
following elements:

. Exploit our advantage of being the . Further leverage IPC's installed
first to offer a global dedicated base
communications network exclusively
to the financial services . Further penetrate our existing
community customer base

. Rapidly deploy CANs . Expand portfolio of focused
service offerings

. Accelerate network expansion
. Pursue strategic acquisitions

. Aggressively add content providers
to our Extranet

2
<PAGE>

The Offering

<TABLE>
<S> <C>
Common stock offered.............. 7,500,000 shares

Common stock outstanding after the 50,600,000 shares or 51,725,000 shares
offering......................... assuming the underwriters exercise their
over-allotment option in full.

Common stock to be held by IPC
immediately after this offering.. 43,100,000 shares

Use of proceeds................... We will use the proceeds from this offering
primarily to finance the continued
deployment and expansion of our Extranet.
Proceeds from the offering may also be used
for possible future acquisitions, strategic
alliances, or investments in property or
assets for our business. See "Use of
Proceeds."

Proposed Nasdaq National Market EXNT
symbol...........................
</TABLE>

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

The shares of common stock outstanding after this offering exclude 7,053,409
shares of common stock reserved for issuance under our stock option plan, of
which 6,530,184 shares are subject to outstanding options as of July 1, 1999 at
an exercise price of $13.96 per share. The options are not exercisable for two
and a half years, subject to certain exceptions.

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

Our principal executive offices are located at Wall Street Plaza, 88 Pine
Street, 6th Floor, New York, New York 10005 and our telephone number is (212)
412-6400. Our e-mail address is ixnet [email protected]. Our World Wide Web
address is www.ixnet.com. Information contained in our Web site does not
constitute part of this prospectus.

The following are the trademarks and service mark of IXnet: IXPrime(TM);
IXGlobal(TM); Trade24(TM); IXLink(TM); DigiHoot(TM); MetroLink SM and
Liquidity(TM). This prospectus also refers to trademarks, trade names and
service marks of other companies. Each trademark, trade name or service mark of
any other company appearing in this prospectus belongs to its holder.

3
<PAGE>

Summary Financial and Other Data

The following summary combined and consolidated balance sheet data as of
March 31, 1999 and statement of operations and other operating data for the
years ended September 30, 1996, 1997 and 1998 and for the six months ended
March 31, 1998 and 1999 have been derived from our Combined and Consolidated
Financial Statements included elsewhere in this prospectus. The summary
unaudited pro forma combined and consolidated statement of operations and other
operating data for the year ended September 30, 1998 and for the six months
ended March 31, 1999 have been derived from the unaudited pro forma combined
and consolidated financial information included elsewhere in this prospectus.
The unaudited balance sheet data as of March 31, 1999, as adjusted, gives
effect to this offering and the estimated net proceeds as of March 31, 1999.
The unaudited results of operations for the six months ended March 31, 1999 may
not be indicative of the results to be expected for the full year.

IPC acquired MXNet Inc. in February 1998. Our subsidiary, International
Exchange Networks, Ltd., acquired Saturn Global Network Services Holdings
Limited and its subsidiaries in December 1998. In connection with this
offering, IPC contributed MXNet to International Exchange Networks, and IPC
contributed International Exchange Networks to us. The historical results of
operations for IXnet for the year ended September 30, 1998 and for the six
months ended March 31, 1999 include the consolidated results of operations of
International Exchange Networks and its subsidiaries combined with the results
of operations of MXNet from February 13, 1998. Additionally, the historical
results for the six months ended March 31, 1999 include the results of
operations of Saturn from December 18, 1998.

The pro forma information contained in the following table for the year
ended September 30, 1998, represents the historical financial statements of
IXnet giving effect to the MXNet and the Saturn acquisitions as if they
occurred on October 1, 1997 and includes adjustments for (a) the results of
operations of MXNet for the period from October 1, 1997 to the date of
acquisition, and the results of operations of Saturn for the year ended July
31, 1998, (b) amortization of the goodwill resulting from the MXNet and the
Saturn acquisitions from October 1, 1997 to the date of acquisition, (c)
interest expense related to borrowings for the Saturn acquisition, (d) the net
reduction in interest resulting from the March 31, 1999 capitalization of $73.0
million of the note payable to parent and change in the related interest rate
as if it had occurred on October 1, 1997 and (e) the tax effect of such
adjustments. See "IXnet, Inc."

The pro forma information contained in the following table for the six
months ended March 31, 1999, represents the historical financial statements of
IXnet giving effect to the Saturn acquisition as if it occurred on October 1,
1997 and includes adjustments for (a) the results of operations of Saturn for
the period from October 1, 1998 to the date of acquisition, (b) amortization of
the goodwill resulting from the Saturn acquisition from October 1, 1998 to the
date of acquisition, (c) interest expense related to borrowings for the Saturn
acquisition, (d) the net reduction in interest resulting from the March 31,
1999 capitalization of $73.0 million of the note payable to parent and change
in the related interest rate as if it had occurred on October 1, 1997 and (e)
the tax effects of such adjustments.

4
<PAGE>

The information contained in the following table should be read in
conjunction with "Selected Combined and Consolidated Financial Data," "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," our Combined and Consolidated Financial Statements and
related notes, the Financial Statements of MXNet and related notes, the
Consolidated Financial Statements of Saturn and related notes, and the
unaudited pro forma combined and consolidated financial information and related
notes included elsewhere in this prospectus.

<TABLE>
<CAPTION>
Year Ended September 30, Six Months Ended March 31,
--------------------------------------- -------------------------------
1996 1997 1998 1998 1998 1999 1999
------- -------- --------- --------- --------- --------- ---------
Actual Pro forma Actual Pro forma
---------------------------- --------- -------------------- ---------
(In thousands, except per share amounts and other data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue................. $ 3,459 $ 17,838 $ 35,853 $ 62,170 $ 15,318 $ 32,611 $ 37,370
Cost of revenue
(exclusive of
depreciation and
amortization shown
separately below)...... 4,406 19,823 35,652 56,957 15,413 30,934 34,988
Sales and marketing
expense................ 1,057 4,172 8,455 8,455 3,213 4,878 4,884
General and
administrative
expense................ 2,868 3,439 5,001 11,498 2,331 2,815 4,061
Depreciation and
amortization........... 998 3,460 9,060 16,730 2,924 9,508 10,830
Special charge(1)....... -- -- 1,350 1,350 -- -- --
------- -------- --------- --------- --------- --------- ---------
Loss from operations... (5,870) (13,056) (23,665) (32,820) (8,563) (15,524) (17,393)
Interest expense, net... (247) (2,040) (3,527) (2,496) (1,521) (4,318) (2,300)
Other income (expense),
net.................... -- 117 26 26 3 (18) 5
------- -------- --------- --------- --------- --------- ---------
Loss before provision
for income taxes...... (6,117) (14,979) (27,166) (35,290) (10,081) (19,860) (19,688)
Provision for income
taxes.................. 62 229 473 563 171 257 271
------- -------- --------- --------- --------- --------- ---------
Net loss............... $(6,179) $(15,208) $ (27,639) $ (35,853) $ (10,252) $ (20,117) $ (19,959)
======= ======== ========= ========= ========= ========= =========
Basic and diluted loss
per share.............. $ (.14) $ (.35) $ (.64) $ (.83) $ (.24) $ (.47) $ (.46)
======= ======== ========= ========= ========= ========= =========
Basic and diluted
weighted average number
of common shares
outstanding............ 43,100 43,100 43,100 43,100 43,100 43,100 43,100
======= ======== ========= ========= ========= ========= =========
Cash Flow and Other
Operating Data:
Cash used in operating
activities............. $(6,240) $(14,669) $ (15,093) $ (6,166) $ (11,607)
Cash used in investing
activities............. (4,858) (3,495) (13,772) (5,680) (42,396)
Cash provided by
financing activities... 7,591 16,604 29,829 11,934 57,440
EBITDA(2)............... (4,872) (9,596) (14,605) $ (16,090) (5,639) (6,016) $ (6,563)
Capital expenditures.... 4,858 3,495 12,930 5,680 7,683
Other Data: (at period
end)
Number of POPs.......... 6 13 21 17 73
Number of CANs.......... 41 207 488 377 1,010
Number of customer
accounts(3)............ 45 131 248 178 456
</TABLE>

(footnotes on following page)

5
<PAGE>

<TABLE>
<CAPTION>
March 31, 1999
-----------------------
Actual As Adjusted(4)
-------- --------------
(In thousands)
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents............................... $ 4,061 $134,486
Total assets............................................ 125,444 255,869
Note payable to parent(5)............................... 25,522 25,522
Notes payable, net of current portion................... 7,031 7,031
Lease obligations, net of current portion............... 13,907 13,907
Total stockholder's equity.............................. 42,255 172,680
</TABLE>
- --------------------
(1) Special charge represents bonus payments and payments for cancellation of
IPC stock options relating to our employees in connection with the merger
of IPC and Arizona Acquisition Corp. in 1998. See Note 5 of the Notes to
our Combined and Consolidated Financial Statements, included elsewhere in
this prospectus.
(2) EBITDA represents earnings before interest, income taxes, depreciation and
amortization expenses. It is determined by deducting depreciation and
amortization expense from our loss from operations. EBITDA is not a
measurement of financial performance under generally accepted accounting
principles, is not intended to represent cash flow from operations and
should not be considered as an alternative to net loss as an indicator of
our operating performance or to cash flows as a measure of liquidity. We
believe that EBITDA is widely used by analysts, investors and others in the
telecommunications industry. EBITDA is not necessarily comparable with
similarly titled measures used by other companies.
(3) Generally, multiple contractual relationships with a single legal entity
are considered a single customer account. However, we are not always aware
of and, accordingly, do not always reflect combinations, mergers and
consolidations between our customers.
(4) Adjusted to reflect the sale of 7,500,000 shares of common stock at an
assumed initial public offering price of $19.00 per share, net of
underwriting discounts and offering expenses.
(5) The March 31, 1999 note payable to parent represents amounts due to IPC and
is net of the capitalization to paid-in capital of $73.0 million as of
March 31, 1999.

6
<PAGE>

RISK FACTORS

You should carefully consider the following factors and other information in
this prospectus before deciding to invest in shares of our common stock.

Our limited operating history makes evaluating our business and future
prospects difficult.

We started our business in June 1995 as International Exchange Networks,
Ltd., and, in connection with this offering, we were reorganized into a newly
formed Delaware corporation, IXnet, Inc., on May 4, 1999. We have only a
limited operating history on which you can evaluate our business and prospects.
Our prospects must be considered in light of the risks, uncertainties, expenses
and difficulties which we expect to encounter in the early stages of our
development. In order for our business to succeed, we must:

.accelerate our network expansion;

.expand and further penetrate our customer base;

.maintain and enhance the IXnet brand;

.successfully implement and execute our business and marketing strategy;

.continue to develop and upgrade our technology and global network
infrastructure;

.expand our portfolio of service offerings to meet the needs of a changing
market;

.provide superior customer service;

.respond to competitive developments; and

.attract, integrate, retain and motivate qualified personnel.

We may not be successful in accomplishing any of these things, and our
failure to do so could have a material adverse effect on our business,
financial condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

We have experienced significant operating losses and may not be able to achieve
profitability.

We have had net losses since we began operations and we may never become or
remain profitable or generate positive cash flow from operations. We had net
losses of $15.2 million for the year ended September 30, 1997 and $27.6 million
for the year ended September 30, 1998. Net loss for the six months ended March
31, 1999 was $20.1 million. We expect to continue to incur significant losses
and experience negative cash flow for the foreseeable future. We intend to
rapidly and substantially increase spending to expand our Extranet, but our
revenues may not increase as a result of our increased spending. If revenues
grow more slowly than we anticipate, or if operating expenses exceed our
expectations, we may not become profitable. While revenues have grown in recent
periods, this growth is attributable, in part, to the acquisitions we made, and
this growth may not continue.

IPC's control of us may conflict with your interests as a stockholder.

IPC controls and will continue to control us. IPC's interests may conflict
with your interests as a stockholder, and the price of our common stock may be
adversely affected as a result. IPC currently owns all of the issued and
outstanding shares of our common stock. At the completion of this offering, IPC
will own 43,100,000 shares or 85.2% of our common stock. Thus, IPC will be able
to control our management and affairs and all matters submitted to our
stockholders for approval, including the election and removal of directors, and
any merger, consolidation or sale of all or substantially all of our assets.

IPC's debt obligations restrict our ability to raise capital. Our access
to alternative sources of capital is significantly limited. We will require
additional funds to finance the expansion and development of our business
as well as fund operating losses, but our ability to raise such funds is
significantly limited by agreements entered into by IPC which are also
binding upon us. IPC has issued debt securities to the public under an
indenture and also has a credit agreement. As a subsidiary of IPC and a
guarantor under

7
<PAGE>

IPC's credit agreement, as well as under the inter-company agreement with
IPC, we are subject to the restrictions and covenants under the IPC
indenture and credit agreement. These restrictions will, among other
things, limit our ability to (1) incur indebtedness, (2) pay dividends or
make other distributions, (3) engage in sale and leaseback transactions,
(4) create liens, (5) sell our assets or (6) issue, sell or repurchase our
stock or other equity interests. See "Certain Relationships and Related
Transactions--Agreements with IPC."

There are restrictions on our ability to use the proceeds of this
offering. Under an inter-company agreement with IPC, we have agreed to
comply with the covenants and the other restrictions, limitations and
obligations under IPC's indenture. The indenture restricts our ability to
use the proceeds from this offering to fund operating losses, working
capital or debt service. See "Use of Proceeds."

We will depend on IPC for our funding needs. We depend, and after this
offering will continue to depend, on IPC to fund our operating losses,
working capital and debt service. Subject to the terms and conditions of
the inter-company agreement, IPC has agreed to continue to provide us with
ongoing financing and to obtain letters of credit on our behalf, from time
to time, upon reasonable notice from us. The amount available under this
credit facility will start at $6.25 million and increase by that amount
quarterly thereafter, up to an aggregate of $50 million during the period
beginning July 1, 1999 through June 30, 2001. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity
and Capital Resources."

However, under the terms of its credit agreement or for other reasons,
IPC may not be able to provide us with a sufficient source of funds to fund
our operating losses, working capital needs or debt service. IPC's failure
to advance funds to us in a timely fashion could have a material adverse
effect upon our growth and results of operations, which could adversely
affect the price of our common stock. The extent of IPC's leverage and its
financial condition could have important consequences to our future
operations, including but not limited to:

. increasing our vulnerability to general adverse economic and
industry conditions;

. limiting our ability to obtain additional financing to fund future
working capital, debt service, operating losses and other general
corporate requirements;

. limiting our flexibility in reacting to changes in our business and
the industry in which we compete; and

. placing us at a competitive disadvantage compared to better
capitalized competitors.

We have agreed to remain a consolidated entity with IPC. We have agreed
with IPC that, until November 2001 at the earliest, we will not take any
action that would prohibit us and IPC from being treated as a consolidated
taxable entity for federal and state income tax purposes. As a result, we
may not issue any stock that would reduce IPC's ownership of us to below
80% until that time at the earliest. This may preclude us from raising
needed capital or paying for acquisitions with our stock and could have a
negative impact on our financial condition and results of operations.

We will have substantial ongoing relationships with IPC. IPC has provided
and is expected to continue to provide us with many financial,
administrative and operational services and related support functions,
including field service, human resources and legal services. See "Certain
Relationships and Related Transactions." If IPC unexpectedly stops
providing these services for any reason, we could face significant
challenges and costs in assuming these services or finding an alternative
to IPC. This could impair our operations and could harm our financial
results. Our marketing and business plan also relies, in part, on taking
advantage of IPC's established presence as a supplier of telecommunications
hardware to the financial services community. If IPC ceases doing business
or changes its focus, we may have to increase marketing expenditures to
raise our market presence. Our legal counsel, Thacher Proffitt & Wood, is
also counsel to IPC. Consequently, we do not have legal representation
independent from IPC.

8
<PAGE>

We have pledged our assets to support IPC's borrowings and obligations under
its credit agreement.

All of our and our subsidiaries' capital stock and real and personal
property are pledged as collateral under the credit agreement. If IPC or any
of its subsidiaries, including us, breaches the credit agreement, the lenders
may pursue us for payment and take any or all of our assets, including the
stock of our operating subsidiaries, in order to satisfy IPC's obligations.
Any such actions could have a material adverse effect upon our financial
condition and results of operations. In addition, in the event of a
foreclosure on IPC's assets, the administrative agent of the lenders could
force us to register the shares of our stock held by IPC for public sale,
which could adversely affect the price of our stock.

Our directors and our executive officers may have conflicts of interest
because of their relationships with IPC.

Five of our nine directors and four of our executive officers are also
directors and/or executive officers of IPC. These directors and executive
officers will have obligations to both companies and may have conflicts of
interest with respect to matters affecting us, such as acquisitions,
financings and other corporate opportunities that may be suitable for both us
and IPC. In order for our board of directors to approve these matters, the
approval of one or more of the IPC directors will be required.

Our directors and some of our executive officers own substantial amounts of
IPC stock and options on IPC stock. Such ownership could create, or appear to
create, potential conflicts of interest when directors and officers are faced
with decisions that could have different implications for us and IPC. See
"Certain Relationships and Related Transactions" and "Principal Stockholders."

Our growth will suffer if we cannot successfully expand our Extranet.

Our growth will suffer, and we may not be able to adequately meet the
demands of existing customers or have sufficient capacity to add new
customers, if we cannot effectively expand the capacity of our Extranet. This
will require significant expenditures for hardware and software, and will also
include the opening of one additional NOC, and additional POPs, in local
markets. Although we intend to aggressively add capacity over the next two
years, at times in advance of customer demand, our efforts may not be
successful. Effective expansion will require that we:

. anticipate and prepare for future demand;

. have access to sufficient capital; and

. locate and secure satisfactory sites for the NOC and additional POPs and
implement the buildout of these sites, all of which may require
significant lead time.

Because the success of our business is dependent on the efficient and
uninterrupted operation of our Extranet, a systems failure or breach of
security could cause a significant disruption to our business.

We believe our reputation for providing reliable and efficient network
services is critical to our future success. Our Extranet and data centers are
subject to:

.damage from human error and tampering; . breaches of security;
.natural disasters; . physical break-ins;
.fire; . telecommunications failures;
.power loss; . intentional acts of vandalism;
.capacity limitations; and
.software defects; . other factors that can cause
interruptions in service or
reduced capacity for our
customers.

Although we intend to use a portion of the proceeds of this offering to
enhance the redundancy of our Extranet, it is not now, nor will it ever be,
fully redundant. Despite precautions we have taken and plan to take, the
occurrence of a natural disaster, human tampering or other unanticipated
problems could result in interruptions in the services we provide to our
customers, which could subject us to loss of business that could have a
negative impact on our financial condition and results of operations.

9
<PAGE>

We may not be able to successfully manage additional growth.

Our future success will depend in large part on whether we can improve our
operational, financial and accounting systems and expand, train and manage our
employees. We have experienced rapid growth that has placed significant demands
on our managerial, operational, financial and accounting resources. We intend
to continue to expand operations and expect to dedicate a substantial portion
of our financial and managerial resources to support our expansion. We will
also have to hire and train a sufficient number of suitably skilled employees.
Competition for qualified employees, particularly those with sales, marketing
or technical expertise is intense, and there is a limited number of persons
with relevant knowledge and experience. If we fail to manage our growth
effectively, our business, financial condition and results of operations could
be materially and adversely affected.

Because our revenues are derived primarily from the financial services
community, an economic downturn in the financial services industry could
adversely affect our business.

Almost all of our revenues are derived from, and our future success will be
dependent upon, sales to customers in the financial services community. If the
financial services industry suffers an economic downturn or other long-term
disruption, it is likely that we would experience a decline in revenues, which
would have a material adverse effect on our business, financial condition and
results of operations.

We depend on a small number of key customers.

Our two largest customers are currently Deutsche Bank and Optimark. The loss
of these customers, or a substantial reduction in the amount of services we
provide to them, could have a material adverse effect on our business,
financial condition and results of operations. Deutsche Bank accounted for
about 23% and Optimark accounted for about 14% of our consolidated revenues in
fiscal 1998. Deutsche Bank accounted for about 11% and Optimark accounted for
about 14% of our consolidated revenues for the six months ended March 31, 1999.
These customers do not have long-term contracts or minimum volume commitments,
and, accordingly, they may not maintain their current volume of business with
us.

Our management has broad discretion in the application of proceeds and may not
effectively invest the proceeds of this offering.

While we are subject to contractual restrictions on how we may use the net
proceeds of this offering, our board of directors and management have broad
discretion over how to use the proceeds. If we fail to manage the application
of the net proceeds of this offering effectively, our business, financial
condition and results of operations could be materially and adversely affected.
See "Use of Proceeds."

Our business strategy includes acquiring other businesses, but we may not be
able to identify and properly integrate acquisitions of other companies.

As a part of our business strategy, we intend to acquire other businesses.
We expect to face competition for acquisition candidates, which may limit the
number of acquisition opportunities and may lead to higher acquisition prices.
Also, we may not be able to identify, acquire or manage additional businesses
profitably or to successfully integrate any acquired businesses with our
business. Businesses that we acquire may have liabilities that we underestimate
or do not discover during our pre-acquisition investigations. Certain
liabilities, even if we do not expressly assume them, may be imposed on us as
the successor to the business. Further, each acquisition involves a number of
other special risks that could cause the acquired business to fail to meet our
expectations. For example:

. the acquired business may not achieve expected results;

. we may not be able to retain key personnel of the acquired business;

. we may incur substantial, unanticipated costs, delays or other
operational or financial problems when we try to integrate the business
with our own;

10
<PAGE>

. the transfer of required permits, authorizations or licenses may be more
difficult, time consuming or costly than we anticipated;

. our management's attention may be diverted; or

. our management may not be able to manage the combined entity effectively
or to make acquisitions and grow our business internally at the same
time.

We cannot predict the timing, size or success of any future acquisitions or
the associated capital requirements. In addition, we may not be able to obtain
acquisition financing when required, or such financing may only be available on
terms and conditions that are unacceptable to us. If we are unable to fund our
acquisition plans, our growth could be limited.

We may not be able to attract and retain key personnel we need to succeed.

Our success depends to a significant degree upon the continued contributions
of our senior management team and technical, marketing and sales personnel.
Although our key employees, such as David A. Walsh and Charles F. Auster,
currently have employment agreements with us, they may voluntarily terminate
their employment with us at any time. See "Management--Employment Agreements."
If we lose the services of these persons or other key personnel, or if we are
unable to attract additional qualified personnel or retain them, our results of
operations, service development efforts and ability to expand our business may
be materially and adversely affected.

We have many competitors, and we may not be able to compete effectively against
them.

We have many global and regional competitors, including national and
international carriers. Many of our current and potential competitors have
greater financial, engineering, marketing and other resources than us. The
continuing trend toward business combinations and strategic alliances in the
communications industry may create significant new competitors or strengthen
existing competitors. Competitive pressures could require us to reduce the
price of our services which could have a material adverse effect on our
business, financial condition and results of operations. In addition, in many
non-U.S. markets, we face competition from dominant local providers that have
long standing relationships with our target customers. See "Business--
Competition."

Our international operations make us susceptible to global economic factors,
foreign tax law issues, international business practices and currency
fluctuations.

We currently have established offices and distributors to market and sell
our services in Europe and the Asia/Pacific region. Revenue from our
international operations accounted for $15.1 million, or 46.3% of total
revenue, for the six months ended March 31, 1999. Because this period only
includes approximately three months of Saturn results of operations and due to
our anticipated international expansion, we expect the percentage of our
revenues from international operations to increase in future periods. Our
international operations may be adversely affected by one or more of the
following:

.increased cost of enforcing contractual obligations;

.unique and unanticipated telecommunications regulatory issues;

.difficulties and costs of managing our foreign operations;

.limited protection for our intellectual property rights in some countries;

.currency exchange rate fluctuations;

.political and economic instability; and

.potentially adverse tax consequences.

Our international revenues are generally denominated in local currencies.
Many of our international customers have fixed price contracts between six to
twelve months. If inflation or a fluctuation in currency exchange rates
adversely affects our revenues, it may take us several months before we can
renegotiate certain

11
<PAGE>

customer contracts. We do not currently engage in currency hedging activities;
however, we may implement a program to mitigate foreign currency risk in the
future.

Our success depends on keeping up with rapid technological changes in
communications and network equipment.

The networking services and communications market in which we operate is
characterized by rapid technological change. In order to provide our customers
with value-added services on a cost effective basis, we need to keep abreast of
and adopt, where prudent, new technologies. The cost of new technologies may be
substantial, and, if we decide to forego or delay adoption of new technologies,
we may be at a competitive disadvantage.

The critical nature of our Extranet may subject us to liability claims.

Because our Extranet provides critical global communications links to key
members of the worldwide financial services community, we may be subject to
liability claims if our customers believe that our services have failed to
perform as intended. The security services that we offer in connection with our
global Extranet cannot assure complete protection from computer viruses,
breaches, break-ins, natural disasters and other disruptive problems. Although
we attempt to contractually limit our liability in such instances, the
occurrence of these problems may result in claims against us and potential
liability. These claims, regardless of their ultimate outcome, could result in
costly litigation. They could also have a material adverse effect on our
business and reputation and on our ability to attract and retain customers for
our services.

Changes in United States, state or international government regulations could
adversely affect our business.

We provide telecommunication services that are subject to extensive federal
and state regulation. The interpretation and enforcement of laws and
regulations by the regulatory authorities that administer them vary and could
limit our ability to provide certain communications services. The FCC and
relevant state Public Utility Commissions exercise extensive authority to
regulate ownership of transmission facilities, provision of services and the
terms and conditions under which our communications services are provided. In
addition, we are required by federal and state law and regulations to file
tariffs listing the rates, terms and conditions of the services we provide. Any
failure to maintain proper federal or state tariffs or certifications or any
finding by federal or state agencies that we are not operating under
permissible terms and conditions may result in an enforcement action or
investigation, either of which could have a material adverse effect on us.

Most of the existing laws and regulations for telecommunications servces in
foreign countries were recently enacted. Consequently, there is very limited
guidance on the scope of the authority provided to us in many foreign
countries. Thus, an examination of our operations by a foreign regulatory or
governmental authority could result in a determination that we are not
operating in a manner consistent with existing law, regulations or licenses
issued to us. Such a determination could limit our ability to provide certain
communications services to or from that country and could result in substantial
fines, penalties or loss of our operating authority in such jurisdiction that
may have a material adverse effect on our business, financial condition and
results of operations.

We may be liable for the material our content providers distribute over our
Extranet.

The law relating to the liability of private network operators for
information carried on or disseminated through their networks is currently
unsettled. We may become subject to legal claims relating to the content
disseminated on our Extranet. For example, lawsuits may be brought against us
claiming that material on our Extranet which one of our customers relied on was
inaccurate. Claims could also involve matters such as defamation, invasion of
privacy and copyright infringement. Content providers operating private
networks have been sued in the past, sometimes successfully, based on the
content of material. If we have to take costly measures to reduce our exposure
to these risks, or are required to defend ourselves against such claims, our
business, financial condition and results of operations may be materially and
adversely affected.

12
<PAGE>

Year 2000 problems could disrupt our business, reduce our profits and lower the
value of your stock.

Some computers, software and other equipment include programming code in
which calendar year data is stored as only two digits. As a result of this
programming design, some of these systems, including our systems and those of
third parties that we rely upon, could fail to operate or fail to produce
correct results if "00" is interpreted to mean 1900, rather than 2000. These
problems are commonly referred to as the Year 2000 problem.

The Year 2000 problem may affect our business in many ways including:

. Network equipment we have installed for on-net customers. Once
installed, our equipment may interact with other products of the
customer and operate on systems not under our control. These factors
could affect the performance of our Extranet and/or related services if
a Year 2000 problem exists in our customer's information technology
infrastructure.

. Internal infrastructure. The Year 2000 problem could affect computers,
software and other equipment that we use internally as well as divert
management's attention from ordinary business activities. In addition to
computers and related systems, the operation of our office and
facilities equipment, such as fax machines, photocopiers, telephone
switches, security systems, elevators and other common devices may be
affected by the Year 2000 problem.

. Customers/suppliers/third-party relationships. The Year 2000 problem is
currently placing a strain on organizations' information technology
budgets and resources. Some organizations may lack sufficient resources
to undertake the type of integration projects required to adequately
address the Year 2000 problem. It is possible that our customers,
suppliers or other third parties that we rely upon will not resolve any
or all of their Year 2000 problems on a timely basis.

We do not believe that it is possible to determine with complete certainty
that all Year 2000 problems affecting us will be identified or corrected in a
timely manner. We are in the process of developing contingency plans to be
implemented as part of our efforts to identify and correct Year 2000 problems
that may affect our services; however, these plans are not yet finalized. If we
fail to identify and correct all Year 2000 problems affecting our internal
systems, or if we are forced to implement a contingency plan, our business,
financial condition or results of operations could be materially adversely
affected.

We strongly urge you to read about our Year 2000 efforts under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Impact of Year 2000."

Our use of proprietary technology may subject us to liability claims.

We could be subject to claims that we have infringed the intellectual
property rights of others. In addition, we may be required to indemnify our
global partners and customers for similar claims made against them. Any claims
against us could require us to spend significant time and money in litigation,
pay damages, develop new intellectual property or acquire licenses to
intellectual property that is the subject of the infringement claims.
Additional licenses, if required, may be costly or may not be available on
acceptable terms. If there are, intellectual property claims made against us,
they could materially and adversely affect our business, financial condition
and results of operations.

We may not be able to protect our proprietary technology.

We may not be able to adequately protect our proprietary technology, and our
competitors may independently develop technologies that are substantially
equivalent or superior to our technology. It may be possible for a third party
to copy or otherwise obtain and use our services or technology without
authorization or to independently develop similar technology. This could
adversely affect our business, financial condition and results of operations.

Our common stock may be subject to erratic price fluctuations.

From time to time, the stock market experiences significant price and volume
fluctuations, which may affect the market price of our common stock for reasons
unrelated to our performance. Recently, such volatility has particularly
impacted the stock prices of technology companies, frequently leading to costly
securities class

13
<PAGE>

action litigation. The price of our common stock may be subject to significant
fluctuations in response to numerous factors, including:

.variations in our annual or quarterly financial results or those of our
competitors;

. changes by financial research analysts in their estimates of our
earnings or our failure to meet such estimates;

. conditions in the economy in general or in the financial services,
Internet, communications and other technology industries;

.announcements of key developments by competitors;

.loss of key personnel;

. unfavorable publicity affecting our industry or us;

. adverse legal events affecting us;

. IPC's financial condition or public announcements made by IPC; or

. sales of our common stock by existing stockholders, particularly if such
sales are by our directors or officers.

The absence of an active public market for our common stock may make it
difficult for you to resell your shares at or above the offering price, and the
availability of significant amounts of common stock for sale could adversely
affect its market price.

Prior to this offering, there has been no public market for our common
stock, and an active public market for our common stock may not develop. The
initial public offering price for our common stock was determined by
negotiation between us and the representatives of the underwriters, and you may
be unable to resell your shares of common stock at or above the initial public
offering price.

IPC will own in the aggregate 43,100,000 shares, or 85.2% of our common
stock after the offering, or 83.3% if the underwriters exercise the over-
allotment option in full. If IPC sells a large portion of these shares on the
open market and at one time, our market price per share would likely decline.
You should read "Shares Eligible for Future Sale" for a more detailed
discussion of when and how many shares of our common stock may be sold after
this offering.

Purchasers of our common stock will incur immediate and substantial dilution.

The initial public offering price of the common stock is substantially
higher than the pro forma net tangible book value per share of the outstanding
common stock. As a result, you will incur immediate and substantial dilution of
$16.67 per share based upon an assumed initial public offering price of $19.00
per share. In the event we issue additional shares of common stock in the
future, you may experience further dilution. Furthermore, as of July 1, 1999,
we had issued options to purchase 6,530,184 shares of common stock at an
exercise price equal to $13.96 per share. To the extent such options are
exercised, you will experience further dilution.

14
<PAGE>

FORWARD LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial
risks and uncertainties. You can identify these statements by forward-looking
words such as "may," "will," "expect," "anticipate," "believe," "estimate" and
"continue" or similar words. You should read statements that contain these
words carefully, because they discuss:

. our future expectations;

. projections of our future results of operations or of our financial
condition; or

. other "forward-looking" information.

We believe that it is important to communicate our future expectations to
our investors. However, there may be events in the future that we are not able
to accurately predict or control. The factors listed in "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," as well as any cautionary language in this prospectus, provide
examples of risks, uncertainties and events that may cause our actual results
to differ materially from the expectations we describe in our forward-looking
statements. Before you invest in our common stock, you should be aware that the
occurrence of the events described in "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
elsewhere in this prospectus could have a material adverse effect on our
business, financial condition and results of operations.

15
<PAGE>

IXNET, INC.

Our subsidiary, International Exchange Networks, Ltd., was incorporated in
March 1993 and commenced operations in June 1995. On June 23, 1995, IPC
acquired 80% of the stock of International Exchange Networks. By acquiring
International Exchange Networks, IPC sought to position itself as the premier
company with a portfolio of services and hardware tailored to address the
unique communications needs of the financial services community.

In February 1998, IPC acquired MXNet, a provider of market data
distribution services to content providers. In April 1998, in connection with
the recapitalization of IPC, IPC acquired the remaining 20% of the outstanding
stock of International Exchange Networks.

In December 1998, International Exchange Networks acquired Saturn, a
provider of managed, premium grade voice and data communications services to
financial services firms in Europe and the Asia/Pacific region.

On May 4, 1999, in connection with this offering, IXnet, Inc., a Delaware
corporation, was incorporated, and IPC contributed (1) MXNet to International
Exchange Networks and (2) International Exchange Networks to IXnet.

As of the date of this prospectus, we are a wholly-owned subsidiary of IPC
and we own all of the outstanding shares of common stock of International
Exchange Networks and its subsidiaries, MXNet and Saturn and its subsidiaries.
After this offering, IPC is expected to own 85.2% of our common stock.

IPC

IPC was established in 1973 and for the last 26 years has manufactured
telephone equipment specifically designed to perform in the demanding
environment of the financial trading community. IPC has grown to become a
leader in providing integrated telecommunications equipment and services that
facilitate the execution of transactions by the financial trading community.

IPC completed its initial public offering in October 1994. IPC was recently
reorganized into a holding company structure and became a wholly-owned
subsidiary of IPC Communications, Inc. on May 21, 1999. IPC Communications is
publicly traded on the AMEX under the symbol IPI.

Other than IXnet, IPC's major operating units are Trading Systems and
Information Transport Systems:

Trading Systems. IPC's Trading Systems division provides sophisticated
turrets or turret systems, which consist of desktop appliances connected with
associated switching equipment and which provide highly reliable, non-blocking
voice communications for trading operations. These systems incorporate a
proprietary design, including many features designed to increase the trader's
productivity, and provide the high degree of reliability necessary due to the
time-sensitive nature of trading activity and the high potential opportunity
cost of a service outage. IPC has placed into service more than 100,000
turrets worldwide. IPC estimates that it has the largest installed base of
turrets in the world, including a majority of the installed base of turrets in
New York City and a significant presence in other major financial centers
including London.

Information Transport Systems. IPC's I.T.S. division provides cabling
infrastructure, design, installation and maintenance services for high speed
voice and data networks, including local area networks, or LANs, wide area
networks, or WANs, and data connectivity applications. IPC's I.T.S. engineers
design and implement intelligent network infrastructures to provide
connectivity to a wide array of customer-owned devices. The I.T.S. division's
expertise includes network design, and the installation of all available
physical transport media, including copper, fiber optic and coaxial cable.
I.T.S. services also include project management for network infrastructure
upgrades and on-site, as well as on-call, technical support worldwide.

16
<PAGE>

MXNet

Through the acquisition of MXNet, we entered the business of distributing
market data for content providers. We operate a virtual warehouse where we host
the data of various content providers and then distribute such data to end-
users on behalf of the content providers. Our Extranet serves as a content-
neutral delivery system to the desktops of the financial services community.
This approach allows our data provider customers to display content in the
formats they desire. Because we often are willing to expand our Extranet to
reach additional end-users targeted by our content provider customers, we
believe our Extranet is more attractive than existing distribution networks of
competing content providers. As of March 31, 1999, we were aggregating data
from more than 30 sources, 13 of which were acquired as part of the MXNet
acquisition.

Saturn

Saturn is a U.K. holding company that owns communication network operating
subsidiaries in the United Kingdom, the United States, Hong Kong, Australia,
Japan and Singapore. Saturn provides managed premium grade voice and data
communication services to the financial services community, similar to IXnet,
but focused on Europe and the Asia/Pacific region.

Our Relationship with IPC

Our relationship with IPC has provided us with a level of credibility and an
entree into the financial services sector that other emerging communications
companies in our market sector do not have. Moreover, through our relationship
with IPC, we are able to provide turret-to-turret on-net connections to the
significant installed IPC customer base and integrate our CANs into IPC turret
systems so that we can rapidly provide IPC customers with on-net services. We
also coordinate our sales and marketing effort with the IPC sales effort,
thereby offering a complete hardware and network solution for the
communications needs of financial services firms.

In connection with this offering, we have entered into agreements with IPC
to govern the various interim and ongoing relationships between us. All of the
agreements with IPC were negotiated in the context of a parent-subsidiary
relationship. Accordingly, the terms of these agreements may be more or less
favorable to us than if they had been negotiated with unaffiliated third
parties. See "Risk Factors--IPC's control of us may conflict with your
interests as a stockholder," and "--We have pledged our assets to support IPC's
borrowings and obligations under its credit agreement" and "Certain
Relationships and Related Transactions" for a more detailed description of our
relationship and inter-company agreements with IPC.

17
<PAGE>

USE OF PROCEEDS

Our net proceeds from the sale of the 7,500,000 shares of common stock we
are offering are estimated to be $130.4 million. This is based upon an assumed
public offering price of $19.00 per share and after deducting the underwriting
fees and estimated offering expenses we will pay. If the underwriters exercise
the over-allotment option in full, our net proceeds will be approximately
$150.3 million.

We expect to use the net proceeds from this offering for continued
deployment and expansion of our global Extranet, including anticipated capital
expenditures of approximately $57.7 million in the 12 months following the
offering. In addition, we may use a portion of the net proceeds from this
offering for possible future acquisitions, strategic alliances or investments
in property or assets used in our business. We currently have no commitments or
agreements to make any acquisitions. Pending use of the net proceeds of this
offering, we intend to invest the net proceeds in short term U.S. investment
grade and government securities.

Under the indenture for IPC's senior discount notes, and as agreed to by us
in our inter-company agreement with IPC, within 12 months after completion of
our initial public offering, we must either (1) invest the net proceeds from
this offering in property or assets used in our business, or invest in a
company with a business similar or related to our business, or (2) enter into
an agreement to so invest the net proceeds within 12 months after entering into
such agreement. See "Risk Factors--IPC's control of us may conflict with your
interests as a stockholder--There are restrictions on our ability to use the
proceeds of this offering" and "Certain Relationships and Related
Transactions."

DIVIDEND POLICY

We have not paid, and do not anticipate paying in the foreseeable future,
any cash dividends on our common stock. We intend to retain any earnings for
use in our growth and ongoing operations. If we decide to pay dividends in the
future, such dividends would be subject to certain contractual limitations in
IPC's credit agreement and the indenture for IPC's senior discount notes, to
which we have agreed to comply under our inter-company agreement with IPC. See
"Certain Relationships and Related Transactions--Agreements with IPC--Inter-
Company Agreement."

18
<PAGE>

CAPITALIZATION

The following table sets forth IXnet's capitalization as of March 31, 1999
on an actual basis and as adjusted to reflect our sale of 7,500,000 shares of
common stock at an assumed initial public offering price of $19.00 per share.
The capitalization information set forth in the table below is qualified by and
should be read in conjunction with the more detailed Combined and Consolidated
Financial Statements and related notes appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
March 31, 1999
---------------------
Actual As Adjusted
-------- -----------
(In thousands)
<S> <C> <C>
Cash and cash equivalents................................ $ 4,061 $134,486
======== ========
Current portion of notes payable......................... $ 4,941 $ 4,941
Current portion of capital leases........................ 4,885 4,885
Long-term debt, excluding current portion:
Note payable to parent................................. 25,522 25,522
Lease obligations...................................... 13,907 13,907
Notes payable.......................................... 7,031 7,031
-------- --------
Total long-term debt................................. 46,460 46,460
-------- --------
Stockholder's equity:
Common stock--$0.01 par value; 100,000,000 shares
authorized, actual and as adjusted; 43,100,000 issued
and outstanding, actual; 50,600,000 issued and
outstanding, as adjusted.............................. 431 506
Paid-in capital........................................ 112,084 242,434
Accumulated deficit.................................... (69,826) (69,826)
Cumulative translation adjustment...................... (434) (434)
-------- --------
Total stockholder's equity........................... 42,255 172,680
-------- --------
Total capitalization............................... $ 98,541 $228,966
======== ========
</TABLE>

The outstanding share information is based on our shares outstanding as of
March 31, 1999, as adjusted for a 43,100-for-1 stock split effected as a stock
dividend, and giving effect to the amendment of our certificate of
incorporation on July 1, 1999 that increased the number of authorized shares of
our common stock. This information excludes 6,530,184 shares of common stock
issuable upon exercise of options outstanding as of July 1, 1999 at an exercise
price of $13.96 per share, and 523,225 additional shares of common stock
reserved for issuance under our 1999 Stock Option Plan.

19
<PAGE>

DILUTION

Our net tangible book deficit as of March 31, 1999, was $12.5 million, or
$(0.29) deficit per share of common stock, after giving effect to the 43,100-
for-1 stock split effected by way of a stock dividend on July 1, 1999. Net
tangible book deficit per share represents the amount of our total tangible
assets less total liabilities, divided by the total number of shares of common
stock outstanding. Our net tangible book value as of March 31, 1999 would have
been $117.9 million, or $2.33 per share, after giving effect to the sale of
7,500,000 shares of common stock offered by us at an assumed initial public
offering price of $19.00 per share after deducting the underwriting discounts
and commissions and other estimated offering expenses. This represents an
immediate increase in net tangible book value of $2.62 per share to our
existing stockholder and an immediate dilution of $16.67 per share to new
investors purchasing shares of common stock in this offering. The following
table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................. $19.00
Net tangible book deficit per share as of March 31, 1999...... $(0.29)
Increase in net tangible book value per share attributable to
new stockholders............................................. 2.62
------
Net tangible book value per share after offering................ 2.33
------
Dilution per share to new stockholders.......................... $16.67
======
</TABLE>

The following table summarizes, as of March 31, 1999, the difference between
the existing stockholder and new stockholders with respect to the number of
shares of common stock purchased, the total consideration paid and the average
price paid per share:

<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------ -------------------- Average Price
Number Percent Amount Percent Per Share
<S> <C> <C> <C> <C> <C>
Existing stockholder..... 43,100,000 85.2% $ 90,000,000 38.7% $ 2.09
New stockholders......... 7,500,000 14.8 142,500,000 61.3 19.00
---------- ----- ------------ -----
Total................ 50,600,000 100.0% $232,500,000 100.0%
========== ===== ============ =====
</TABLE>

The foregoing discussion excludes any shares to be issued in connection with
the over-allotment option and excludes any shares of common stock issuable upon
the exercise of options. As of March 31, 1999, no options were outstanding. As
of July 1, 1999, options to purchase 6,530,184 shares of common stock with an
exercise price of $13.96 per share were outstanding.

20
<PAGE>

SELECTED COMBINED AND CONSOLIDATED FINANCIAL DATA

The statement of operations data for the years ended September 30, 1996,
1997 and 1998 and the balance sheet data as of September 30, 1997 and 1998 have
been derived from our Combined and Consolidated Financial Statements, audited
by PricewaterhouseCoopers LLP, included elsewhere in this prospectus. The
statement of operations data for the year ended September 30, 1995 and the
balance sheet data as of September 30, 1995 and 1996 have been derived from our
consolidated unaudited financial statements which do not appear in this
prospectus. The statement of operations data for the six months ended March 31,
1998 and 1999 and the balance sheet data as of March 31, 1999 have been derived
from our unaudited Combined and Consolidated Financial Statements. The
unaudited combined and consolidated interim financial statements for all
periods have been prepared on the same basis as the audited Combined and
Consolidated Financial Statements, and in our opinion reflect all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation
of such data.

Our results of operations for the year ended September 30, 1998 and for the
six months ended March 31, 1999 include the consolidated results of operations
of International Exchange Networks and its subsidiaries combined with the
results of operations of MXNet from February 13, 1998. Additionally, our
results of operations for the six months ended March 31, 1999 include the
consolidated results of operations of Saturn from December 18, 1998.

The information contained in the following table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," our Combined and Consolidated Financial Statements
and related notes, the Financial Statements of MXNet and related notes, and the
Consolidated Financial Statements of Saturn and related notes, included
elsewhere in this prospectus.

<TABLE>
<CAPTION>
Six Months Ended
Year Ended September 30, March 31,
----------------------------------- ------------------
1995 1996 1997 1998 1998 1999
------ ------- -------- -------- -------- --------
(In thousands, except per share amounts and other
data)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue................ $ -- $ 3,459 $ 17,838 $ 35,853 $ 15,318 $ 32,611
Cost of revenue
(exclusive of
depreciation and
amortization shown
separately below)..... 500 4,406 19,823 35,652 15,413 30,934
Sales and marketing
expense............... -- 1,057 4,172 8,455 3,213 4,878
General and
administrative
expense............... 229 2,868 3,439 5,001 2,331 2,815
Depreciation and
amortization.......... -- 998 3,460 9,060 2,924 9,508
Special charge (1)..... -- -- -- 1,350 -- --
------ ------- -------- -------- -------- --------
Loss from operations... (729) (5,870) (13,056) (23,665) (8,563) (15,524)
Interest expense, net.. (3) (247) (2,040) (3,527) (1,521) (4,318)
Other income (expense),
net................... 49 -- 117 26 3 (18)
------ ------- -------- -------- -------- --------
Loss before provision
for income taxes...... (683) (6,117) (14,979) (27,166) (10,081) (19,860)
Provision for income
taxes................. -- 62 229 473 171 257
------ ------- -------- -------- -------- --------
Net loss............... $ (683) $(6,179) $(15,208) $(27,639) $(10,252) $(20,117)
====== ======= ======== ======== ======== ========
Basic and diluted loss
per share............. $ (.02) $ (.14) $ (.35) $ (.64) $ (.24) $ (.47)
====== ======= ======== ======== ======== ========
Basic and diluted
weighted average
common shares
outstanding........... 43,100 43,100 43,100 43,100 43,100 43,100
====== ======= ======== ======== ======== ========
Cash Flow and Other
Operating Data:
Cash used in operating
activities............ $(576) $(6,240) $(14,669) $(15,093) $ (6,166) $(11,607)
Cash used in investing
activities............ -- (4,858) (3,495) (13,772) (5,680) (42,396)
Cash provided by
financing activities.. 5,735 7,591 16,604 29,829 11,934 57,440
EBITDA (2)............. (729) (4,872) (9,596) (14,605) (5,639) (6,016)
Capital expenditures... -- 4,858 3,495 12,930 5,680 7,683
Other Data (at period
end):
Number of POPs......... 2 6 13 21 17 73
Number of CANs......... -- 41 207 488 377 1,010
Number of customer
accounts (3).......... -- 45 131 248 178 456
</TABLE>

21
<PAGE>

<TABLE>
<CAPTION>
September 30, March 31,
----------------------------- ---------
1995 1996 1997 1998 1999
------ ------ ------ ------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents............ $5,159 $1,616 $ 525 $ 1,255 $ 4,061
Total assets......................... 6,431 13,703 27,646 60,332 125,444
Note payable to parent (4)........... 1,474 7,026 20,072 43,629 25,522
Notes payable, net of current
portion............................. -- -- -- -- 7,031
Lease obligations, net of current
portion............................. -- 3,429 9,576 11,570 13,907
Total stockholder's equity
(deficit)........................... 4,845 890 (8,581) (14,959) 42,255
</TABLE>
- ---------------------
(1) Special charge represents bonus payments and payments for cancellation of
stock options to our employees in connection with the merger of IPC and
Arizona Acquisition Corp. in the year ended September 30, 1998. See Note 5
of Notes to our Combined and Consolidated Financial Statements included
elsewhere in this prospectus.

(2) EBITDA represents earnings before interest, income taxes, depreciation and
amortization expenses. It is determined by deducting depreciation and
amortization expense from our loss from operations. EBITDA is not a
measurement of financial performance under generally accepted accounting
principles, is not intended to represent cash flow from operations and
should not be considered as an alternative to net loss as an indicator of
our operating performance or to cash flows as a measure of liquidity. We
believe that EBITDA is widely used by analysts, investors and others in the
telecommunications industry. EBITDA is not necessarily comparable with
similarly titled measures used by other companies.

(3) Generally, multiple contractual relationships with a single legal entity
are considered a single customer account. However, we are not always aware
of and, accordingly, do not always reflect combinations, mergers and
consolidations between our customers.

(4) The March 31, 1999 note payable to parent represents amounts due to IPC and
is net of the capitalization to paid-in capital of $73.0 million as of
March 31, 1999.

22
<PAGE>

UNAUDITED PRO FORMA COMBINED AND CONSOLIDATED
FINANCIAL INFORMATION

The following unaudited pro forma combined and consolidated financial
information is based on our historical Combined and Consolidated Financial
Statements and gives effect to the MXNet acquisition on February 13, 1998 and
the Saturn acquisition on December 18, 1998.

Our historical results of operations for the year ended September 30, 1998
and for the six months ended March 31, 1999 include the consolidated results of
operations of International Exchange Networks and its subsidiaries combined
with the results of operations of MXNet from February 13, 1998. Additionally,
our historical results for the six months ended March 31, 1999 include the
results of operations of Saturn from December 18, 1998. Earnings per share
reflects our common stock as if it had been outstanding for the periods
presented.

The unaudited pro forma combined and consolidated statement of operations
for the year ended September 30, 1998 gives effect to the MXNet and Saturn
acquisitions as if they had occurred on October 1, 1997. The pro forma results
of operations for the year ended September 30, 1998 include the historical
results of Saturn for the year ended July 31, 1998. The unaudited pro forma
combined and consolidated statement of operations for the six months ended
March 31, 1999 gives effect to the Saturn acquisition as if it had occurred on
October 1, 1997. As the MXNet and Saturn acquisitions are included in the
historical balance sheet as of March 31, 1999, contained elsewhere in this
prospectus, no pro forma balance sheet has been provided.

The unaudited pro forma combined and consolidated financial information and
accompanying notes should be read in conjunction with the historical financial
statements of IXnet, MXNet and Saturn, and related notes, included elsewhere in
this prospectus. The unaudited pro forma combined and consolidated financial
information does not purport to represent what our results of operations would
have been had the MXNet and Saturn acquisitions occurred on such dates or to
project our results of operations or financial position for any future period
or date.

23
<PAGE>

IXnet, Inc.
UNAUDITED PRO FORMA COMBINED AND
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended September 30, 1998
(In thousands, except per share amounts)

<TABLE>
<CAPTION>
Saturn MXNet
-------- ------------
Year October 1,
ended 1997 to
July 31, February 13, Pro forma
Historical 1998 1998 adjustments Pro forma
---------- -------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenue................. $ 35,853 $25,784 $ 533 $ 62,170
Cost of revenue
(exclusive of
depreciation and
amortization shown
separately below)...... 35,652 21,305 -- 56,957
Sales and marketing
expense................ 8,455 -- -- 8,455
General and
administrative
expense................ 5,001 5,753 744 11,498
Depreciation and
amortization........... 9,060 1,479 384 $ 908 (a) 16,730
4,899 (b)
Special charge.......... 1,350 -- -- -- 1,350
-------- ------- ----- ------- --------
Loss from operations.. (23,665) (2,753) (595) (5,807) (32,820)
Interest (expense)
income, net............ (3,527) 13 -- (4,249)(c) (2,496)
5,267 (f)
Other income, net....... 26 -- -- -- 26
-------- ------- ----- ------- --------
Loss before provision
for income taxes..... (27,166) (2,740) (595) (4,789) (35,290)
Provision (benefit) for
income taxes........... 473 (16) -- 106 (e) 563
-------- ------- ----- ------- --------
Net loss.............. $(27,639) $(2,724) $(595) $(4,895) $(35,853)
======== ======= ===== ======= ========
Basic and diluted loss
per share.............. $ (0.64) $ (0.83)
======== ========
Basic and diluted
weighted average number
of shares outstanding.. 43,100 43,100
======== ========
</TABLE>

See notes to unaudited pro forma combined and consolidated financial
information.

24
<PAGE>

IXnet, Inc.
UNAUDITED PRO FORMA COMBINED AND
CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended March 31, 1999
(In thousands, except per share amounts)

<TABLE>
<CAPTION>
Saturn
--------------------
October 1, 1998 Pro forma
Historical to December 18, 1998 adjustments Pro forma
---------- -------------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue................. $ 32,611 $4,759 $ 37,370
Cost of revenue
(exclusive of
depreciation and
amortization shown
separately below)...... 30,934 4,054 34,988
Sales and marketing
expense................ 4,878 6 4,884
General and
administrative
expense................ 2,815 1,246 4,061
Depreciation and
amortization........... 9,508 257 $ 1,065 (b) 10,830
-------- ------ ------- --------
Loss from operations.. (15,524) (804) (1,065) (17,393)
Interest expense, net... (4,318) (1) (2,300)
(840)(d)
2,859 (f)
Other (expense) income,
net.................... (18) 23 5
-------- ------ ------- --------
(Loss) income before
provision for income
taxes................ (19,860) (782) 954 (19,688)
Provision (benefit) for
income taxes........... 257 (92) 106 (e) 271
-------- ------ ------- --------
Net (loss) income..... $(20,117) $ (690) $ 848 $(19,959)
======== ====== ======= ========
Basic and diluted loss
per share.............. $ (0.47) $ (0.46)
======== ========
Basic and diluted
weighted average number
of shares outstanding.. 43,100 43,100
======== ========
</TABLE>

See notes to unaudited pro forma combined and consolidated financial
information.

25
<PAGE>

IXnet, Inc.
NOTES TO UNAUDITED PRO FORMA COMBINED AND CONSOLIDATED
FINANCIAL INFORMATION
Year Ended September 30, 1998 and
Six Months Ended March 31, 1999

(a) Reflects the amortization of goodwill for the MXNet Acquisition using a
2.25 year life from October 1, 1997 to the date of the MXNet acquisition,
assuming the acquisition occurred on October 1, 1997.

(b) Reflects the amortization of goodwill for the Saturn Acquisition using a
ten-year life for the year ended September 30, 1998 and from October 1,
1998 to the date of the Saturn acquisition, assuming the acquisition
occurred on October 1, 1997.

(c) Represents interest expense for the year ended September 30, 1998 on
borrowings to finance the Saturn acquisition, assuming the acquisition
occurred on October 1, 1997.

<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Note payable to IPC in the amount of $35.7 million
bearing interest at a U.S. bank prime rate plus 1/4 of
one percent, estimated at 8.75%......................... $ 3,121
Marshalls Note, a $7.5 million promissory note issued by
us and guaranteed by IPC bearing interest at the U.K.
Base Rate, as defined, plus three percent, estimated at
9.25%, compounded monthly, payable over three years..... 785
Saturn Note payable to Marshalls in the amount of $5.0
million payable in monthly installments over two years
bearing interest at 9.25%............................... 343
-------
Total.................................................. $ 4,249
=======
</TABLE>
(d) Represents interest expense from October 1, 1998 to the date of the
acquisition on borrowings to finance the Saturn acquisition, assuming the
acquisition occurred on October 1, 1997.

<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Note payable to IPC......................................... $ 678
Marshalls Note.............................................. 117
Saturn Note................................................. 45
-----
Total..................................................... $ 840
=====
</TABLE>

(e) Reflects the tax effect of the pro forma adjustments impacting foreign
operations at the foreign statutory tax rate. All pro forma adjustments
impacting domestic operations increase the net operating loss carryforward
deferred tax asset and corresponding valuation allowance and result in a
net effect of zero.

(f) Reflects the reduction of interest expense in connection with the March 31,
1999 capitalization of $73.0 million of note payable to parent, to paid-in
capital as if it occurred on October 1, 1997, net of the increase in
interest expense resulting from the change in the inter-company borrowing
rate to a U.S. bank prime rate plus two percent.

26
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read together with our
Combined and Consolidated Financial Statements, the Financial Statements of
MXNet and the Consolidated Financial Statements of Saturn and related notes to
these statements appearing elsewhere in this prospectus.

Overview

In 1995, we began building our Extranet and offering voice and data
services. We funded the initial construction of our Extranet, including capital
expenditures and working capital, through inter-company investments and loans
provided by our parent, IPC. As of March 31, 1999, our Extranet was comprised
of two NOCs, three data centers, 73 POPs, more than 1,000 CANs placed on
customer premises and high capacity bandwidth facilities. Our Extranet connects
over 480 customers in financial centers in 34 countries around the world,
including New York, Chicago, Toronto, London, Frankfurt, Paris, Zurich, Hong
Kong, Tokyo, Sydney and Singapore.

Components of Revenues

We offer a full range of services to meet the needs of our customers,
including the following voice and data communications services:

. Premium voice--dedicated private voice lines connecting financial firms
globally;

. Managed bandwidth--fully managed dedicated bandwidth facilities;

. Outsourcing--end-to-end management of a customer's entire communications
network;

. Switched voice--high quality voice communications services;

. Shared IP--network delivery and hosting of third party market data,
research, analytics, news and other trading information to the desktop,
also known as our Liquidity service; and

. Frame relay--dedicated transport of facilitated data applications.

We currently derive a majority of our revenues from sales of premium voice,
managed bandwidth and outsourcing services, and to a lesser extent switched
voice, shared IP and other services. Our services are billed on a monthly basis
in advance, except for switched voice services which are billed monthly after
service is provided. Revenue is recorded as services are provided.

Pricing policies

Rates for our premium voice, managed bandwidth and frame relay services are
determined by geographic location and bandwidth utilization. For frame relay
service there is frequently an additional pricing component for optional
telecommunications equipment deployed on customers' premises. These fees may be
adjusted for customer volume commitments and term of contract.

The primary components of pricing for switched voice are duration of call
and geographic location, and may be adjusted for customer volume commitment,
term of contract and whether the call is to an on-net customer.

Rates for our outsourcing service are determined by geographic location,
bandwidth utilization, telecommunications equipment deployed on the customers'
premises, level of service requested and any custom requirements. The rate may
be adjusted for customer volume commitments and term of contract.

The components of pricing shared IP may include the following charges paid
by content providers: (1) an access fee to connect to our Extranet, (2) a fee
to deliver service to end-users and (3) fees associated with housing of
equipment and customer application support. The access and delivery fees are
determined by

27
<PAGE>

geographic location and bandwidth utilization. The hosting fee is determined by
amount of space and level of required service. The other component of pricing,
paid either by the end-user or the content provider, is a fee for end-user
access to the Extranet. This fee is determined by geographic location and
bandwidth utilization and may be adjusted for volume commitment and term of
contract.

Long term agreements

The terms of our agreements typically range from one to five years and are
determined based on the level of service requested. Customers who outsource
their entire network needs to us tend to have longer term agreements, up to
five years. Our ability to obtain fixed term agreements from our customers
provides us with a certain level of predictability as to revenue generation. We
continue to penetrate our customer base by marketing additional services to
existing customers, adding new customer locations and renewing the term of
existing agreements with our current customers. Revenues for the six months
ended March 31, 1999 generated from our installed customer base at September
30, 1997 increased in excess of 20% as compared to the same period for the
prior year. This growth includes the impact of lost customer revenue from this
customer base and excludes revenue from customers added after September 30,
1997. We also provide services to some of our customers on a month-to-month
basis.

Components of Costs and Expenses

Cost of revenue

Cost of revenue consists primarily of leased local and long distance circuit
costs, and personnel and related operating expenses associated with network
operations, customer support and field service support. Depreciation and
amortization related to the cost of our NOCs, POPs, CANs, and indefeasible
rights to use cable and fiber optic lines, or IRUs, are included in
depreciation and amortization expense. The increase in these expenses relates
primarily to the expansion of our network and resulting increases in leased
circuit, maintenance, personnel, facilities, and customer support costs.
Although we expect that cost of revenue will continue to increase as our
customer base increases, we anticipate that such expenses as a percentage of
revenues will decrease over time. These expenses may be incurred prior to the
realization of anticipated revenue. We intend to lease or buy higher capacity
local and long distance circuits and expect to realize the associated benefits
of lower unit costs as our network utilization increases. In addition, as
revenues grow, we expect to realize economies of scale associated with a
relatively fixed operating infrastructure.

Sales and marketing expense

Sales and marketing expense consists primarily of personnel costs,
commissions, bad debt, travel and entertainment, marketing and advertising. We
market our services to the financial services community primarily through our
direct salesforce. We intend to significantly expand our salesforce within the
U.S., Europe and the Asia/Pacific region over the next 12 to 18 months through
the hiring of highly motivated personnel who have backgrounds in network
services or experience with the specialized communication needs of the
financial services community. Although we compensate our sales force employees,
in part, on a commission basis, hiring, training, integrating and retaining
these new hires nevertheless requires substantial expenditures in advance of
any increased revenues that may arise from the sales effort of new hires. We
estimate that an average of three months elapses between the hiring of a new
sales employee and the realization of recognizable productivity, and
approximately another two months elapses before any significant revenues
result. We expect that sales and marketing expenses will increase in the future
as we expand our sales and marketing staffs to keep pace with our rapid growth
both domestically and internationally but that such expenses will decrease over
time as a percent of revenue.

General and administrative expense

General and administrative expense consists primarily of salaries and
occupancy costs for executive, financial, and management information systems
personnel. Certain accounting and management information

28
<PAGE>

systems functions, human resources, legal, executive and administrative
services have historically been performed under inter-company understandings,
and will in the future be performed under an inter-company agreement with IPC.
See "Risk Factors--IPC's control of us may conflict with your interests as a
stockholder" and "Certain Relationships and Related Transactions--Agreements
with IPC--Inter-Company Agreement." The related costs of providing such
services have been, and will continue to be, allocated based upon the direct
and indirect utilization of the specific services. Indirect expenses were
allocated based upon the relation of our headcount to the combined headcount
of us and IPC. The costs related to such allocation represented 18.2%, 24.8%,
30.6%, and 34.1% of general and administrative expenses for the three years
ended September 30, 1996, 1997 and 1998 and six months ended March 31, 1999,
respectively. We expect that general and administrative expenses will increase
in the future as we expand our management and administrative staffs to keep
pace with our rapid growth both domestically and internationally, but that
such expenses will decrease over time as a percent of revenue.

Depreciation and amortization

Depreciation and amortization expense includes the allocation of cost for
property, plant and equipment and goodwill over their expected useful lives.
Property, plant and equipment, excluding IRU and leasehold improvements, are
depreciated over five years. The cost of IRUs are amortized over the leased
term, generally 20 to 25 years, leasehold improvements are amortized over the
life of the lease term, generally five years, and goodwill is amortized over
periods ranging from 2.25 to ten years.

Network Expansion

Since the beginning of our operations, we have undertaken a program of
developing and expanding our Extranet. We have made significant investments in
network capacity and telecommunications equipment, including routers, CANs,
transmission electronics, switches, circuits and other equipment to produce a
technologically advanced global Extranet. Historically, a large portion of our
network expense was associated with the development of our Extranet and only
undertaken if there existed customer demand. Under this success-based network
deployment model, we limited the investment in our Extranet to additional
customer demand. Recently, we have begun to make greater network investments
in certain strategic areas in anticipation of increased customer demand.
Investments in CANs and network capacity through acquisitions of IRUs and the
buildout of our POPs will continue to represent our most significant capital
expenditures over the next 12 months and are expected to increase
substantially from historical levels.

Depending on the services required by the customer, a CAN typically costs
between $2,000 and $50,000 and may consist of one or more of the following:

. router--a device which connects networks and supports multiple
protocols;

. multiplexer--electronic equipment which allows two or more signals to
pass over one communications line;

. channel bank--a device which aggregates many slow speed voice or data
connections onto one high-speed link; and

. digital line interface card or DLIC--a card with the capacity to
interface digital lines that are installed into IPC's turret systems.

Deferred Compensation

During May 1999, our board of directors and our sole stockholder, IPC,
approved the IXnet, Inc. 1999 Stock Option Plan, authorizing the grant of
options to purchase up to 7,053,409 shares of our common stock. At that time,
options to purchase 6,530,184 shares were granted to employees, directors and
others at an exercise price of $13.96 per share. Except for 1,763,352 options
granted to our Chief Executive Officer which vested immediately, such options
vest over four years. All such options become exercisable, to the extent then
vested, 30 months from the date of grant, subject to certain exceptions.

29
<PAGE>

In connection with this issuance of stock options, we will record deferred
compensation in the aggregate amount of approximately $26 million, based upon
the deemed fair market value for accounting purposes of our common stock at the
date of grant. Approximately $8.0 million of the deferred compensation will be
expensed in our June 30, 1999 quarter, with the balance being amortized over
the vesting period of the options. In addition, certain of these options will
be treated as variable options for accounting purposes and may result in
additional deferred compensation expense in future periods as the value of our
shares changes over the vesting period.

Acquisitions

MXNet Inc.

On February 13, 1998, IPC acquired all of the issued and outstanding common
stock of MXNet, a wholly-owned subsidiary of National Discount Brokers Group,
Inc., and paid $6.7 million by the issuance of a promissory note. This
acquisition was accounted for using the purchase method of accounting and
resulted in $5.5 million of goodwill, which is being amortized on a straight-
line basis over 2.25 years. IPC contributed the shares of MXNet to us on May 4,
1999.

Saturn Global Network Services Holdings Limited

On December 18, 1998, International Exchange Networks acquired all of the
issued and outstanding shares of Saturn from Marshalls 106 Limited. This
acquisition was accounted for using the purchase method of accounting. As a
result of the acquisition, we recorded approximately $49.2 million of goodwill,
which is being amortized on a straight-line basis over ten years.

The purchase price for Saturn included a cash payment of $35.7 million made
through borrowings from IPC, and the issuance of a promissory note guaranteed
by IPC in the amount of $7.5 million. In addition, we assumed indebtedness of
Saturn due to Marshalls in the amount of $5.0 million. Under the agreement, the
Marshalls note is subject to a working capital adjustment and right of offset.
This working capital adjustment was settled on June 8, 1999 resulting in a
reduction of our obligation by approximately $1.9 million.

Results of Operations

The following table presents the components of our results of operations
data as a percentage of our revenues:

<TABLE>
<CAPTION>
Six Months Ended
Year Ended September 30, March 31,
----------------------------- -------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenue................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue........... 127.4 111.1 99.4 100.6 94.9
Sales and marketing
expense.................. 30.6 23.4 23.6 21.0 15.0
General and administrative
expense.................. 82.9 19.3 14.0 15.2 8.6
Depreciation and
amortization............. 28.9 19.4 25.3 19.1 29.2
Special charge............ -- -- 3.8 -- --
-------- ------- ------- -------- --------
Loss from operations.... (169.7) (73.2) (66.0) (55.9) (47.6)
Interest expense, net..... (7.1) (11.4) (9.8) (9.9) (13.2)
Other income (expense),
net...................... -- 0.7 0.1 0.0 (0.1)
-------- ------- ------- -------- --------
Loss before provision
for income taxes....... (176.8) (84.0) (75.8) (65.8) (60.9)
Provision for income
taxes.................... 1.8 1.3 1.3 1.1 0.8
-------- ------- ------- -------- --------
Net loss................ (178.6)% (85.3)% (77.1)% (66.9)% (61.7)%
======== ======= ======= ======== ========
</TABLE>

30
<PAGE>

Historical Operating Trends

Cost of revenue as a percentage of revenue has declined over the periods
reported. This cost has decreased as a result of improved utilization of our
Extranet as well as more favorable unit pricing from carriers.

Sales and marketing expense as a percentage of revenue has declined over
the periods reported. This expense has decreased as a result of higher
incremental revenue generation per sales representative.

General and administrative expense as a percentage of revenue has declined
over the periods reported. This expense has decreased as a result of increased
leverage of fixed administrative charges.

Depreciation and amortization as a percentage of revenue has increased over
the periods reported. This expense has increased as a result of increased
amortization of goodwill associated with the MXNet and Saturn acquisitions and
increase in fixed assets associated with the expansion of our Extranet.

Comparison of the six months ended March 31, 1999 to the six months ended
March 31, 1998

Revenue. Revenue was $32.6 million for the six months ended March 31, 1999,
an increase of $17.3 million, or 112.9%, from $15.3 million for the six months
ended March 31, 1998. Of this increase, $10.8 million related to revenues from
Saturn, which we acquired in December 1998, and MXNet, which we acquired in
February 1998. The balance of the increase was primarily due to increased
revenue from the growth in our customer base of 62.4%, from 178 customers at
March 31, 1998 to 289 customers at March 31, 1999, excluding the 167 customers
of Saturn, and, to a lesser extent, from growth in revenue from our March 1998
customer base.

Cost of revenue. Cost of revenue was $30.9 million for the six months ended
March 31, 1999, an increase of $15.5 million, or 100.7%, from $15.4 million
for the six months ended March 31, 1998. The increase was primarily due to
increased leased circuit costs and, to a lesser extent, the increase in
operations personnel from 85 at March 31, 1998 to 125 at March 31, 1999.
Leased circuit costs were $22.2 million for the six months ended March 31,
1999, an increase of $11.3 million, or 103.7%, from $10.9 million for the six
months ended March 31, 1998. This increase was due to the expansion of our
customer base as well as increased penetration of existing customer accounts.

Sales and marketing expense. Sales and marketing expense was $4.9 million
for the six months ended March 31, 1999, an increase of $1.7 million, or
51.8%, from $3.2 million for the six months ended March 31, 1998. This
increase was primarily due to a $1.4 million increase in costs associated with
the growth in our salesforce and related support personnel, through both
internal growth and the Saturn and MXNet acquisitions. Provisions for bad
debts for the six months ended March 31, 1999 was $0.5 million, or 1.6% of
revenue, as compared to $0.4 million, or 2.5% of revenue, for the six months
ended March 31, 1998. The decrease in the rate of the provision for bad debt
was primarily due to controls implemented in the fourth quarter of 1998 to
minimize bad debt expense in future periods.

General and administrative expense. General and administrative expense was
$2.8 million for the six months ended March 31, 1999, an increase of $0.5
million, or 20.8%, from $2.3 million for the six months ended March 31, 1998.
This increase was primarily due to an increase in the costs of certain shared
administrative and general services provided by IPC, personnel costs related
to internal growth and acquisitions, and, to a lesser extent, higher occupancy
and professional fees.

Depreciation and amortization. Depreciation and amortization was $9.5
million for the six months ended March 31, 1999, an increase of $6.6 million,
or 225.2%, from $2.9 million for the six months ended March 31, 1998. This
increase was primarily due to the increase in property, plant and equipment in
connection with the expansion of our Extranet and the $3.1 million of
amortization of goodwill associated with the Saturn and MXNet acquisitions.
The six months ended March 31, 1999 included only one full fiscal quarter of
amortization of goodwill related to the Saturn acquisition.

31
<PAGE>

Interest expense, net. Interest expense, net was $4.3 million for the six
months ended March 31, 1999, an increase of $2.8 million, or 183.9%, from $1.5
million for the six months ended March 31, 1998. This increase was primarily
due to higher average borrowings from IPC during the six months ended March 31,
1999 as compared to the 1998 period in order to fund the Saturn acquisition,
losses from operations, debt service payments and capital expenditures. Also
contributing to the increase in interest expense, net, were increased capital
lease obligations related to certain capital expenditures. As a result of the
$73.0 million contribution to paid-in capital of the then outstanding $98.5
million note payable to IPC as of March 31, 1999, interest expense is expected
to decrease. As of March 31, 1999, the outstanding balance on the note payable
to IPC was $25.5 million.

Provision for income taxes. The provision for income taxes consisted of
foreign taxes. As of September 30, 1998, and March 31, 1999, we had federal net
operating loss carryforwards of approximately $50.0 million and $65.0 million,
respectively. These net operating loss carryforwards may be carried forward in
varying amounts until 2013. In accordance with generally accepted accounting
principles, we have provided a valuation allowance for the net deferred tax
asset resulting from these carryforwards, since it is more likely than not we
would not realize these benefits on a stand alone basis. However, under our tax
sharing arrangement with IPC, we will be reimbursed by IPC to the extent that
IPC receives a tax benefit related to the inclusion of our tax losses in the
consolidated federal income tax return of IPC. Since we currently can not
derive this tax benefit on a stand alone basis, these benefits are treated by
us as a contribution to paid-in capital.

Comparison of the year ended September 30, 1998 to the year ended September
30, 1997

Revenue. Revenue was $35.9 million for the year ended September 30, 1998, an
increase of $18.0 million, or 101.0% from $17.8 million for the year ended
September 30, 1997. Approximately $15.6 million of the increase was primarily
due to growth in our customer base of 89.3%, to 248 customers at September 30,
1998 from 131 customers at September 30, 1997. The balance of the increase was
primarily due to the MXNet acquisition.

Cost of revenue. Cost of revenue was $35.7 million for the year ended
September 30, 1998, an increase of $15.8 million, or 79.9%, from $19.8 million
for the year ended September 30, 1997. The increase was primarily due to
expanding and maintaining the leased bandwidth to service the customers on our
Extranet. The largest component of cost of revenue, leased circuit costs, was
$24.8 million for the year ended September 30, 1998, an increase of $10.9
million, or 78.7%, from $13.9 million for the year ended September 30, 1997.
This increase was due to the expansion of our customer base as well as
increased penetration of existing customer accounts.

Sales and marketing expense. Sales and marketing expense was $8.5 million
for the year ended September 30, 1998, an increase of $4.3 million, or 102.7%,
from $4.2 million for the year ended September 30, 1997. This increase was
primarily due to an increase in sales and related personnel to 70 at September
30, 1998 from 32 at September 30, 1997. The balance of the increase resulted
from an increase in the provision for bad debts to $1.7 million for the year
ended September 30, 1998, as compared to $0.3 million for the year ended
September 30, 1997. $1.0 million of this increase was due to write-offs
relating to three customers that ceased doing business. Due to controls
implemented in the fourth quarter of fiscal 1998 we expect bad debts as a
percentage of revenue to decrease.

General and administrative expense. General and administrative expense was
$5.0 million for the year ended September 30, 1998, an increase of $1.6
million, or 45.4%, from $3.4 million for the year ended September 30, 1997. The
increase was primarily due to additional personnel and an increase in the
allocation of certain shared administrative and general expenses provided by
IPC.

Depreciation and amortization. Depreciation and amortization was $9.1
million for the year ended September 30, 1998, an increase of $5.6 million, or
161.9%, from $3.5 million for the year ended September 30, 1997. This increase
was primarily due to the increase in property, plant and equipment during the
year

32
<PAGE>

ended September 30, 1998, as well as $1.5 million of goodwill amortization
associated with the MXNet acquisition.

Special charge. In April 1998, IPC completed its recapitalization by way of
merger with Arizona Acquisition Corp. In connection with the recapitalization,
certain of our employees received bonuses of $0.5 million and payments of $0.9
million in consideration of the cancellation of their IPC stock options. See
Note 5 of the Notes to our Combined and Consolidated Financial Statements
included elsewhere in this prospectus.

Interest expense, net. Interest expense, net was $3.5 million for the year
ended September 30, 1998, an increase of $1.5 million, or 72.9%, from $2.0
million for the year ended September 30, 1997. The increase was primarily due
to higher average borrowings from IPC to fund operations, the MXNet
acquisition, debt service payments and capital expenditures, as well as
interest expense on increased capital lease obligations associated with certain
capital expenditures.

Provision for income taxes. The provision for income taxes consisted of
foreign taxes.

Comparison of the year ended September 30, 1997 to the year ended September
30, 1996

Revenue. Revenue was $17.8 million for the year ended September 30, 1997, an
increase of $14.4 million, or 415.7%, from $3.5 million for the year ended
September 30, 1996. The increase was primarily due to the growth in the
customer base of 191.1%, to 131 customers at September 30, 1997 from 45
customers at September 30, 1996, as well as increased penetration of existing
customer accounts.

Cost of revenue. Cost of revenue was $19.8 million for the year ended
September 30, 1997, an increase of $15.4 million, or 349.9%, from $4.4 million
for the year ended September 30, 1996. The increase was primarily due to costs
associated with expanding and maintaining our Extranet. The largest component
of cost of revenue was leased circuit costs, which was $13.9 million for the
year ended September 30, 1997, an increase of $11.4 million, or 456.0%, from
$2.5 million for the year ended September 30, 1996. This increase was due to
the expansion of our customer base as well as increased penetration of existing
customer accounts.

Sales and marketing expense. Sales and marketing expense was $4.2 million
for the year ended September 30, 1997, an increase of $3.1 million, or 294.7%,
from $1.1 million for the year ended September 30, 1996. This increase was
primarily due to salaries and related costs associated with the increased
number of personnel to 32 at September 30, 1997 from 20 at September 30, 1996.

General and administrative expense. General and administrative expense was
$3.4 million for the year ended September 30, 1997, an increase of $0.6
million, or 19.9%, from $2.9 million for the year ended September 30, 1996.
This increase was primarily due to professional fees associated with
establishing our presence in foreign countries.

Depreciation and amortization. Depreciation and amortization was $3.5
million for the year ended September 30, 1997, an increase of $2.5 million, or
246.7%, from $1.0 million for the year ended September 30, 1996. This increase
was primarily due to the increase in property, plant and equipment.

Interest expense, net. Interest expense, net was $2.0 million for the year
ended September 30, 1997, an increase of $1.8 million from $0.2 million for the
year ended September 30, 1996. The increase was primarily due to higher average
borrowings from IPC to fund operations and capital expenditures, as well as,
increased capital lease obligations.

Provision for income taxes. The provision for income taxes consisted of
foreign taxes.

Quarterly Results

The following tables set forth certain unaudited quarterly financial data,
and such data expressed as a percentage of revenue, for the six quarters ended
March 31, 1999. We believe that the unaudited financial

33
<PAGE>

information set forth below has been prepared on the same basis as the audited
financial information included elsewhere in this prospectus and includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the information. The operating results for any quarter are
not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------------------------------
1997 1998 1999
------- ------------------------------------- -------
Dec 31 Mar 31 June 30 Sep 30 Dec 31 Mar 31
------- ------- ------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenue................. $ 7,390 $ 7,928 $ 9,917 $10,618 $12,752 $19,859
Cost of revenue
(exclusive of
depreciation and
amortization shown
separately below)...... 7,770 7,643 9,439 10,800 12,458 18,476
Sales and marketing
expense................ 1,352 1,861 2,247 2,995 2,092 2,786
General and
administrative
expense................ 762 1,569 1,472 1,198 1,215 1,600
Depreciation and
amortization........... 1,289 1,635 2,692 3,444 3,922 5,586
Special charge.......... -- -- 1,350 -- -- --
------- ------- ------- ------- ------- -------
Loss from operations.... $(3,783) $(4,780) $(7,283) $(7,819) $(6,935) $(8,589)
======= ======= ======= ======= ======= =======
EBITDA(1)............. $(2,494) $(3,145) $(4,591) $(4,375) $(3,013) $(3,003)
<CAPTION>
Quarter Ended
---------------------------------------------------------
1997 1998 1999
------- ------------------------------------- -------
Dec 31 Mar 31 June 30 Sep 30 Dec 31 Mar 31
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenue................. 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Cost of revenue
(exclusive of
depreciation and
amortization shown
separately below)...... 105.1 96.4 95.2 101.7 97.7 93.0
Sales and marketing
expense................ 18.3 23.5 22.7 28.2 16.4 14.0
General and
administrative
expense................ 10.3 19.8 14.8 11.3 9.5 8.1
Depreciation and
amortization........... 17.4 20.6 27.2 32.4 30.8 28.1
Special charge.......... -- -- 13.6 -- -- --
------- ------- ------- ------- ------- -------
Loss from operations.... (51.2)% (60.3)% (73.4)% (73.6)% (54.4)% (43.2)%
======= ======= ======= ======= ======= =======
EBITDA(1)............. (33.8)% (39.7)% (46.3)% (41.2)% (23.6)% (15.1)%
</TABLE>
- ---------------------
(1) EBITDA represents earnings before interest, income taxes, depreciation and
amortization expenses. It is determined by deducting depreciation and
amortization expense from our loss from operations. EBITDA is not a
measurement of financial performance under generally accepted accounting
principles, is not intended to represent cash flow from operations and should
not be considered as an alternative to net loss as an indicator of our
operating performance or to cash flows as a measure of liquidity. We believe
that EBITDA is widely used by analysts, investors and others in the
telecommunications industry. EBITDA is not necessarily comparable with
similarly titled measures used by other companies.

Our quarterly operating results have fluctuated and will continue to
fluctuate from period to period for the foreseeable future depending upon such
factors as:

. the success of our efforts to expand our customer base, and to sell
additional services to our existing customer base,

. changes in and the timing of expenditures relating to the continued
expansion of our Extranet,

. the success of our efforts to add content providers to our Extranet,

. the development of new service offerings,

. changes in pricing policies by us or our competitors,

. the growth in our salesforce, and

. the timing of acquisitions.

34
<PAGE>

In view of the significant historical growth of our operations, we believe
that period-to-period comparisons of our financial results should not be relied
upon as an indication of future performance and that we may experience
significant period-to-period fluctuations in operating results in the future.
We expect to focus in the near term on building and increasing our customer
base and increasing our Extranet utilization both through internal growth and
through acquisitions which may require us from time to time to increase our
expenditures for personnel, marketing, global network infrastructure and the
development of new services offerings. For information regarding our source of
funds, see "Certain Relationships and Related Transactions--Agreements with
IPC--Inter-Company Agreement."

We have made significant investments in our technology and global network
infrastructure and in our sales, marketing and administrative personnel during
the fiscal quarter ended June 30, 1999 and expect to continue to make such
investments over the next few fiscal quarters. In addition, revenue was
benefited by approximately $1.1 million in each of the three fiscal quarters
ended March 31, 1999 due to a carry-over contract resulting from the MXNet
acquisition, which contract expired in accordance with its terms during the
quarter ended June 30, 1999. As a result of the foregoing, and because a number
of months generally elapses between the hiring of a new sales employee and the
realization of additional revenue attributable to the employee, we anticipate
that revenue for the next few fiscal quarters following March 31, 1999 will not
increase at the same rate as in prior periods, and that cost of revenue, sales
and marketing expense and general and administrative expense will increase as a
percentage of revenue.

Liquidity and Capital Resources

Since the commencement of our operations in 1995, we have relied primarily
on IPC to fund our operating cash requirements, property, plant and equipment
expenditures, debt service payments and acquisitions. We have also obtained
financing for certain of our network equipment, which is either guaranteed by
IPC and/or partially supported by letters of credit issued under IPC's credit
agreement. In addition, we obtained certain seller financing for the Saturn
acquisition, which has been guaranteed by IPC. From inception to March 31,
1999, the aggregate net amount of inter-company funding, exclusive of
guarantees and letters of credit, was approximately $98.5 million, of which
$73.0 million was contributed to equity.

Financing arrangements. Subject to the terms and conditions of the inter-
company agreement, IPC has agreed to continue to provide us with ongoing
financing and to obtain letters of credit on our behalf. The amount available
under the inter-company agreement will start at $6.25 million and increase by
that amount quarterly thereafter, up to an aggregate of $50 million during the
period beginning July 1, 1999 through June 30, 2001. On June 30, 2001, all
amounts loaned and outstanding under the inter-company agreement will become
immediately due and payable. In addition, IPC, in its sole discretion, will
continue to provide guarantees of our obligations.

IPC has two sources of funds from which it can fund our working capital
needs. The first is from its cash flow and the second is through its $65
million secured credit facility, consisting of a $20 million term loan facility
and a revolving credit facility of up to $45 million. The credit facility is
administered by General Electric Capital Corporation on behalf of the lenders
and is governed by a credit agreement. However, IPC will not make loans to us,
obtain letters of credit on our behalf or provide us with guarantees if, our
request for a loan, issuance of a letter of credit or guarantee (1) is
prohibited under IPC's credit agreement, (2) would result in a default or event
of default under IPC's credit agreement or (3) would result in a default or
event of default under the indenture for IPC's senior discount notes. All
borrowings under the inter-company agreement will be evidenced by demand notes,
however IPC has agreed not to demand payment on those notes until June 30,
2001, unless (1) an event of default under IPC's credit agreement occurs or (2)
a change in control occurs, in which case all amounts owing under the inter-
company agreement will be immediately due and payable upon demand. A change in
control will occur if IPC ceases to own at least 50% of our voting securities.

35
<PAGE>

Under the inter-company agreement, all currently outstanding and any future
loans from IPC will be made at a rate per annum equal to 2% over the base rate
under IPC's credit agreement. The base rate under IPC's credit agreement is
equal to the higher of (1) the rate of interest announced publicly by Citibank,
N.A. at its head office in New York as its base rate and (2) 1/2 of 1% per
annum above the federal funds rate, as defined in IPC's credit agreement. In
addition, any amounts loaned by IPC to us which are outstanding on July 1, 1999
will bear interest at a rate equal to 2% over the base rate and will not reduce
the amount of funding that will be available to us.

The inter-company agreement provides that any letters of credit or
guarantees provided by IPC which were outstanding on July 1, 1999 shall
continue in full force and effect at no cost to us on their same terms and
conditions until their expiration. Loans from IPC and letters of credit
procured by IPC which were outstanding on July 1, 1999 will not reduce the
amounts available to us under the inter-company agreement.

We will reimburse IPC for the applicable costs, fees and charges incurred by
IPC in obtaining letters of credit or for providing guarantees to us after July
1, 1999 or payments made by IPC in connection with any enforcement by third
parties of such letters of credit and guarantees. All other costs under IPC's
credit agreement will continue to be borne by IPC.

The inter-company agreement also provides for the allocation between us and
IPC of certain allowances provided for in IPC's credit agreement, which include
sales of assets, investments and debt that may be incurred.

Cash Flows

Cash flows from operating activities can vary significantly from period to
period depending upon the timing of operating cash receipts and payments,
particularly accounts receivable, prepaid expenses and other assets, and
accounts payable and accrued liabilities. During the three years ended
September 30, 1998, our net losses were the primary component of net cash used
in operating activities, offset by significant non-cash depreciation and
amortization expenses. Net cash used in operating activities was $11.6 million
for the six months ended March 31, 1999, as compared to $6.2 million for the
six months ended March 31, 1998.

Cash used in investing activities was $42.4 million, and $5.7 million for
the six months ended March 31, 1999 and 1998, respectively. The largest
components of cash used in investing activities during the six months ended
March 31, 1999 resulted from $34.7 million used for the Saturn Acquisition and
$7.7 million used for expenditures for property, plant and equipment, which
consisted primarily of network equipment. Investments in our network and
facilities during the year ended September 30, 1998 resulted in total additions
to fixed assets of $22.9 million. Of this amount, $6.4 million was financed
under vendor or other financing arrangements, $3.6 million related to IRU
facilities acquired under an installment purchase contract due within one year,
and $12.9 million was expended in cash. For the year ended September 30, 1997,
total additions to fixed assets were $13.2 million, of which $9.7 million was
financed and $3.5 million was expended in cash. For the year ended September
30, 1996, total additions to fixed assets were $9.5 million, of which $4.6
million was financed and $4.9 million expended in cash. We intend to continue
to invest in the expansion of our Extranet and future acquisitions.

Cash provided by financing activities was $57.4 million for the six months
ended March 31, 1999 as compared to $11.9 million for the six months ended
March 31, 1998. The increase was primarily due to $35.7 million in borrowings
from IPC, which we used to finance the Saturn acquisition.

Commitments, Capital Expenditures and Future Financing Requirements

As of March 31, 1999, we had capital lease commitments to certain
telecommunications vendors totaling $18.8 million payable in various years
through 2003 of which $4.9 million were due within one year. Additionally, as
of March 31, 1999, we were obligated to make future minimum lease payments for
property,

36
<PAGE>

leased circuits, IRUs and equipment of $41.3 million under non-cancellable
operating leases expiring in various years through 2009.

Capital expenditures were $7.7 million for the six months ended March 31,
1999. In addition, we had notes in the aggregate amount of $12.0 million
outstanding as of March 31, 1999 to the former shareholders of Saturn, of which
$4.9 million is due within one year.

Installation of CANs, acquisition of IRUs and the buildout of our POPs will
continue to be our most significant capital expenditure items over the next 12
months. We expect to continue to acquire high capacity bandwidth to enhance our
global network capabilities in North America, Europe and the Asia/Pacific
region which would be accompanied by capital expenditures in the deployment of
POPs. We expect that our purchase of property, plant and equipment will
increase substantially from historic levels and that the approximately $130.4
million in net proceeds from this offering, along with third party equipment
financing arrangements, will be sufficient to meet our needs for property,
plant and equipment for at least the next 12 months. See "Use of Proceeds."

As of March 31, 1999, we had available cash of $4.1 million. We are
currently generating operating losses and expect to continue to do so for the
foreseeable future. Under the indenture for IPC's senior discount notes, the
net proceeds from this offering may not be used to fund our working capital
needs. We believe that we will need additional working capital, along with the
funding of our debt obligations, which consist of capital lease obligations,
installment payments for IRUs and payments on the notes to Saturn. See
"Business--The IXnet Extranet" for a discussion of our plans to purchase fiber
optic facilities and IRUs. Under IPC's credit agreement and our inter-company
agreement with IPC, we are restricted from seeking additional debt or equity
financing other than debt financing from IPC for working capital and other
operating costs. Accordingly we will continue to rely upon IPC to fund these
requirements.

Other Possible Strategic Relationships and Acquisitions

We intend to make strategic acquisitions as appropriate opportunities arise
to expand our service offerings, expand our Extranet and/or increase our
customer base. See "Risk Factors--Our business strategy includes acquiring
other businesses, but we may not be able to identify and properly integrate
acquisitions of other companies."

Foreign Exchange Rate Risk

We conduct our business in more than 34 countries, and transactions from
these foreign operations are denominated in local currencies. With respect to
these foreign operations, we are exposed to foreign currency fluctuations for
our net working capital positions. Foreign currency fluctuations have not had a
significant impact on our revenues or operating results. We currently do not
have a foreign exchange hedging program; however, we may implement a program to
mitigate foreign currency transaction risk in the future. Although our foreign
operations are subject to economic, fiscal and monetary policy of foreign
governments, to date these factors have not had a material effect on our
results of operations or liquidity. See "Risk Factors--Our international
operations make us susceptible to global economic factors, foreign tax law
issues, international business practices and currency fluctuations."

On January 1, 1999, several members of the European Union established fixed
conversion rates between their existing sovereign currencies and adopted the
Euro as their new legal currency. Our international operations are transacted
primarily using British pound sterling as the functional currency. Since its
adoption, the Euro has not had a material adverse effect on our business or
financial condition.

Effects of Recently Issued Accounting Standards

37
<PAGE>

establishes standards for the way companies report information about operating
segments in annual financial statements. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. This standard is effective for our year ending September 30, 1999.
Financial statement disclosures for prior periods are required to be restated.
We are in the process of evaluating the disclosure requirements. The adoption
of SFAS No. 131 will have no impact on our financial position, results of
operations or cash flows.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives and
Hedging Activities," which establishes accounting and reporting standards for
derivative instruments and hedging activities. This standard is effective for
all fiscal quarters of fiscal years beginning after June 15, 1999. We do not
currently use derivative financial instruments.

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Cost of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 is effective for financial
statements for fiscal years beginning after December 15, 1998. We do not
anticipate that the adoption of this standard will have a material effect on
our financial position, results of operations or cash flows.

Impact of Year 2000

The Year 2000 issue is the result of computer-controlled systems using two
digits rather than four to define the applicable year. For example, computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including among other
things, a temporary inability to process transactions, deliver products and
services to customers, send invoices, or engage in similar normal business
activities.

Our state of readiness. We have assessed and are in the process of
implementing and validating the Year 2000 readiness of our CANs, the
communications equipment in our POPs, network management systems, and internal
accounting, billing and office systems. Certain of our CANs require hardware
and software updates, which, in many cases, necessitate one or more site
visits. We have contracted with the original equipment manufacturer of some of
our CANs to complete such updates by July 1999. We believe that substantially
all of the communications equipment in our POPs are currently Year 2000 ready.
Our Network Management Systems have been upgraded and are Year 2000 ready. In
July 1999, we will begin the conversion to our new internal accounting
enterprise-wide system, currently in use at most of our parent company
locations. Such system is Year 2000 ready and we anticipate completion by
August 1999. Our new billing system, which should be operational by August
1999, has been purchased from a third-party source and is being tailored to our
specific requirements and has been stated to be Year 2000 ready. Our office
systems, which are comprised primarily of personal computers, file servers and
routers, as well as software applications, are expected to be Year 2000 ready.

We are currently in the process of obtaining Year 2000 readiness
documentation from suppliers of our domestic and international communication
bandwidth. By July 1999, we plan on having an evaluation of the potential risk
associated with those suppliers that may not be Year 2000 ready. We anticipate
such suppliers will be located outside of the areas where the majority of our
customers are located. If we determine that certain carriers pose a threat to
our Extranet, we will notify our customers in advance that it may be necessary
to discontinue service to that region in order to maintain the integrity of our
Extranet.

Costs. Most of our expenses in connection with Year 2000 readiness have
related to, and are expected to continue to relate to, the operating costs
associated with time spent by employees in the evaluation process and Year 2000
readiness matters. Our costs associated with Year 2000 readiness issues,
excluding the cost of implementing our new accounting system which is being
borne by our parent company, is currently anticipated to be less than $2.0
million of which approximately $900,000 has been incurred to date and $900,000
has been committed.

38
<PAGE>

Potential Risks. While we believe that we are taking the necessary steps to
identify and correct any Year 2000 problems in our systems, we may discover
Year 2000 readiness problems in our systems or services that will require
substantial correction. Our failure to fix or replace our internally developed
software, third-party software, hardware or services on a timely basis could
result in the loss of revenues, increased operating costs, the loss of
customers and other business interruptions any of which could have a material
adverse effect on our business, results of operations and financial condition.
Moreover, the failure to adequately address Year 2000 readiness issues related
to our services could result in claims of mismanagement, misrepresentation or
breach of contract and related litigation, which could be costly and time-
consuming to defend. We also cannot assure you that third-party providers of
products and services, including telecommunications companies, and our customer
base consisting primarily of firms in the financial services industry, will be
Year 2000 ready. The failure of such entities to be Year 2000 ready could
result in a systematic failure, beyond our control. Such failures may result in
prolonged telecommunications or electrical failure, or the inability of our
customers to make payment for services rendered, which could have a material
adverse effect on our business, results of operations and financial condition.
In addition, under IPC's credit agreement, we are subject to a covenant that we
will be Year 2000 compliant by August 31, 1999. Failure of either IPC or us to
reach Year 2000 compliance by such date will result in a breach of such
agreement.

In a recent SEC release regarding Year 2000 disclosure, the SEC stated that
public companies must disclose the most reasonably likely worst case Year 2000
scenario. Although it is not possible to assess the likelihood of any of the
following events, each must be included in a consideration of worst case
scenarios:

. widespread failure of electrical, gas, and similar suppliers serving us;

. widespread disruption of the services provided by common communications
carriers;

. disruption to the means and modes of transportation for us and our
employees, contractors, suppliers and customers;

. significant disruption to our ability to gain access to, and remain
working in, office buildings and other facilities;

. the failure of our mission-critical computer hardware and software
systems, including both internal business systems and systems
controlling operational facilities; and

. the failure of third-party banking and finance systems.

We urge you to read "Risk Factors--Year 2000 problems could disrupt our
business, reduce our profits and lower the value of your stock."

If we cannot operate effectively after December 31, 1999, we could, among
other things, face substantial claims by customers or loss of revenue due to
service interruptions, inability to fulfill contractual obligations or bill
customers accurately and on a timely basis, and increased expenses associated
with litigation, stabilization of operations following critical system failures
and the execution of contingency plans. We could also experience an inability
by customers and others to pay us for our services on a timely basis or at all.
Under these circumstances, the adverse effects, although not quantifiable at
this time, would be material.

Contingency Plans. We are engaged in an ongoing Year 2000 readiness
assessment and are in the process of developing contingency plans. The results
of our enterprise-wide system conversion and responses received from vendors
and service providers will be taken into account in determining the nature and
extent of such contingency plans.

39
<PAGE>

BUSINESS

IXnet is a leading provider of communications services to the worldwide
financial services community. We have built and operate the IXnet Extranet
connecting financial services firms and their business partners as well as
multiple offices within the same firm on a seamless network. Through our
Extranet, our customers obtain highly reliable, secure and fully managed voice
and data connectivity without having to access multiple disparate public
networks or rely on multiple customer service organizations.

We provide services tailored to meet the specialized needs of the financial
services community, including managed voice and data services, virtual private
network services and turnkey outsourced network solutions. In addition, we
aggregate, host and distribute financial oriented content, such as news,
research, analytics and market data, for information service providers,
enabling them to efficiently reach this community. Our on-net customers receive
the following benefits by connecting to our Extranet:

. access to our high performance global network that connects over 480
financial services firms and their business partners;

. multiple voice and data services over a single high capacity network
connection;

. outsourced network solutions;

. on-demand access to multiple content providers;

. rapid and efficient provisioning of inter- and intra-firm communication
links;

. superior customer service and support from a single network provider;
and

. a content neutral delivery mechanism for content providers to
efficiently, economically and effectively reach their target market.

Financial service firms and their business partners comprise a large global
community that relies heavily on efficient communication, interaction among its
members and timely access to industry-related information to conduct business.
As a result, highly reliable communications services are mission-critical to
this community. We believe our Extranet provides a unique value proposition,
enabling these firms to reliably communicate in any manner over a common multi-
protocol network platform; and to efficiently access information from multiple
providers. We connect customers to our Extranet by installing intelligent
network gateways, known as CANs, on our customers' premises. Once we have
installed a CAN at the customer site, we refer to the customer as being on-net.

.customers broader accessibility to directly connect to other on-net users;

. quicker delivery of dedicated communications links between firms;

. greater cost efficiencies to end-users for on-net communications; and

. higher performance communications among on-net customers.

We believe that our growing customer base of financial services firms will
attract many of their business partners to also become customers of our
Extranet. This should create a cycle that will attract new customers and fuel
growth in the number of services we provide to individual firms. We also
believe that more content providers will be attracted to our Extranet due to
the efficient and cost-effective method it offers to reach the desktops of our
significant audience of on-net financial services customers. We believe that as
we deliver the services of an increasing number of content providers over our
Extranet, additional customers will be attracted to the expanded content
offerings on our Extranet.

40
<PAGE>

Our Extranet currently connects customers in financial centers in 34
countries around the world, including New York, Chicago, Toronto, London,
Frankfurt, Paris, Zurich, Hong Kong, Tokyo, Sydney and Singapore. Our Extranet
employs (1) Internet protocol, or IP, a networking technology which tracks the
Internet address of nodes, routes outgoing messages, and recognizes incoming
messages, and (2) asynchronous transfer mode, or ATM, a high bandwidth, low-
delay, connection-oriented switching technique. The Extranet is designed to
maximize performance and reliability through features such as redundant
dedicated fiber optic facilities, strategically located NOCs and geographically
distributed physical POPs. In addition, we have three data centers where we
provide hosting for content providers and manage servers and other equipment
for our customers who have outsourced their network applications to us. We have
over 480 customers and have deployed approximately 1,000 CANs globally.

Financial Services Community

Members of the financial services community include broker-dealers,
investment banks, asset managers/hedgefunds, inter-dealer brokers, electronic
trading firms, commodities/futures trading firms, content providers, exchanges,
trade execution systems, correspondents, clearing and settlement firms, and
insurance companies. Members of this community rely upon communications, to
conduct their business and demand uniform, highly reliable and secure
communications services, including access to real-time financial industry
information in a highly efficient and cost effective manner. Further, many of
the financial institutions operate globally and require these communications
services to be provided on a worldwide basis. Additionally, most members of the
financial services community interact to a great extent with many other
members. The exchange of information, such as pricing, indications of interest,
market data, news, research and confirmation of trades, characterizes the
interdependent relationships among the various members.

Communication Trends in the Financial Services Community

The financial services community represents a large, quickly growing market,
spending significant amounts of money on technology and communications each
year. The Wall Street Telecommunications Association membership survey
estimated that its 170 members had combined 1997 budgets in excess of $17
billion for information and communications services. This represents only a
portion of the total communications services market for the financial services
community as this association includes only those firms doing business in New
York. Based on this survey and our experience in the industry, we estimate that
the market for information and communications services to the worldwide
financial services industry is at least $25 billion annually and that this
market is currently growing by an average of more than 15% per year.

The growing demand for information and communications services is being
driven by a number of factors, including continued industry globalization,
expansion of emerging markets and increasing volume of market transactions. The
increase in market transactions is largely a result of the growth of electronic
trading, new trading markets arising from the deregulation of industries such
as the United States energy market, the lengthening of the trading day and
increased cross border flow of capital.

Movement towards outsourcing of private communications networks. Over the
past decade, many financial services firms committed vast resources to building
private networks to meet their exacting global communications requirements.
However, many of those firms, as well as many new financial services firms, are
moving away from relying on private networks because of, in part, the capital
and personnel costs of maintaining and operating these networks, the limited
usefulness of intra-firm only solutions and the difficulty and cost of
incorporating technological innovations. Accordingly, firms are increasingly
looking to fully managed services and/or outsourced networks to address their
communications needs.

Proliferation of content providers and a growing need for a content neutral
delivery mechanism. The financial services community relies heavily on its
ability to gain access to electronically disseminated data such as market
quotes, news and trade confirmations, as well as research and other analytical
tools and applications to increase the utility of information, expedite
business decisions and obtain access to electronic trading. Over the last
several years, the number of firms providing data to the financial services
community has grown

41
<PAGE>

dramatically in response to the rapid growth in the size of the financial
services community and the growth in the volume of market transactions. More
than 1,400 firms currently provide content to the financial services community,
and the number of such firms continues to increase.

Most content providers do not own the networks that deliver their data
because they do not want to incur the high capital and personnel costs
necessary to build such networks as well as the ongoing cost of operating and
maintaining the network. Such firms are often left to rely on one of the few
large content providers who own their own networks to deliver their content.
This arrangement is not ideal for such firms because (1) such large firms are
often their competitors, (2) the means of delivery established by such large
content providers is optimized for their data and not that of other content
providers, often causing other content providers' data to be displayed in a
less effective manner, (3) content providers may have limited opportunities to
brand their products and receive market recognition and (4) distribution is
limited to the clients of such large content providers. For these reasons, many
content providers are seeking alternatives to efficiently and effectively
deliver their content over a content neutral delivery mechanism.

Current Communications Environment in the Financial Services Community

The financial services community currently has the following limited
alternatives to address its unique communications requirements:

. building private networks;

. utilizing the common carriers' public networks; or

. utilizing the public Internet.

However, these alternatives do not provide a complete and efficient means of
handling the exacting global communications needs of the financial services
community.

Building a private network often requires the commitment of substantial
development time, capital and personnel as well as ongoing operating and
maintenance costs. Additionally, integrating a private network with separate
public and other private infrastructures and transmission protocols is often
difficult and hampers the flow of inter-firm information that is critical to
the financial services community.

Broad-based common carriers' public networks do not offer the performance,
quality, services, reliability, speed or single point of responsibility that
are available through a dedicated private network. Public networks consist of
numerous non-homogeneous systems and services offered by a multiplicity of
local providers in different national markets. Presently, a large portion of
international communications, including services marketed by some of the
largest telecommunications carriers, are typically conducted through disparate
public networks and service organizations. For example, an international data
or voice connection may be routed through a local exchange carrier, a domestic
international carrier, a foreign international carrier and a foreign local
exchange carrier. Problems related to determining why a network has failed and
which carrier is responsible for reestablishing a communication connection may
be more difficult to resolve on these public networks. In contrast, a dedicated
private network offers end-to-end network monitoring and a single point of
contact for all matters of accountability.

Although the Internet has become a mainstream vehicle for communications and
on-line consumer trading, it is not well suited for critical financial services
applications. The drawbacks of the Internet include the lack of reliability,
limited security and the absence of a single governing authority and contact
point for all matters of accountability.

42
<PAGE>

The IXnet Solution

We have built and operate the IXnet Extranet, a global seamless
communications network that connects financial services firms and their
business partners, as well as multiple offices within the same firm, on a high
performance network. Through our Extranet, our customers obtain the benefits of
a dedicated private network, including highly reliable and secure global voice
and data connectivity, with the additional benefits of:

. seamless inter-firm connectivity;

. a fully managed and/or outsourced network solution through one contact
point for all matters of accountability; and

. not having to incur the substantial cost of building, maintaining and
operating a sophisticated network infrastructure.

The following graphic depicts the fully managed end-to-end service of our
Extranet:

[Graphic consisting of two boxes each containing a turret and a customer
access node, symbols and the text "customer premises" connected by a
horizontal line. Segments of the line are denoted, from left to right, "local
exchange carrier", "international carrier", "international carrier" and "local
exchange carrier". Also connecting the two customer sites is a second line
which peaks above the horizontal line. At the peak of the second line is the
text "IXnet End-to-End Network Management".]

We offer many significant advantages over our competition, including:

. High performance global network. Our Extranet is a scalable network that
currently provides seamless connectivity to over 480 customers in 34
countries. Our Extranet was built using the latest networking
technologies and redundant fiber optic facilities, which enable us to
reliably, securely and efficiently deliver multiple services worldwide.
We employ a uniform platform throughout our Extranet consisting
primarily of Newbridge Networks and Cisco Systems networking
technologies, enabling us to provide mission-critical voice and data
services over dedicated fiber optic facilities. In addition, we deploy
ATM switches in the backbone to support high bandwidth multimedia
applications in combination with IP switches for specialized data
delivery. In contrast, many of our competitors have legacy networks
optimized for voice telephony and low speed data services and cannot
easily adapt their network architecture to accommodate the current
diverse and mission-critical communications requirements of the evolving
financial services community.

. Fully managed end-to-end network services. By connecting customers to
our Extranet through a CAN physically located at each on-net customer
site, we are able to provide fully managed end-to-end network services.
Once a CAN is deployed, we are able to remotely monitor, administer and
provision network connections to the customer site and in many cases
directly to the desktop. In addition, we are a single point of
responsibility for the installation, maintenance and operation of our
services and equipment. We provide technical support 24 hours per day,
seven days per week, and utilize IPC's global field service personnel to
address local network issues in many of the cities where we provide
service. As a result, customers that connect to our Extranet enjoy the
benefits of a seamless private network without having to coordinate
service offerings among multiple local and long haul carriers and their
respective customer service organizations.

. Multiple communication services through a single pipe. By deploying CANs
at our customer sites, we are able to provide bundled services over a
single, high capacity network connection. CANs serve as

43
<PAGE>

multi-purpose gateways that support commonly used voice and data
protocols as well as specialized protocols such as financial information
exchange, commonly referred to as FIX, for trading applications. CANs
typically connect to our Extranet through a high capacity connection
enabling customers to cost-effectively provision multiple voice and data
services as opposed to ordering single, low capacity circuits from a
local carrier. In addition, because the CAN is a scaleable platform, we
can rapidly deploy new services such as video delivery to the desktop
over our current infrastructure. We believe that we are one of the only
companies focused on the financial services community that globally
delivers such a broad base of voice and data services through a single
network connection.

. Critical mass of on-net customers. We have established a customer base
of over 480 of the world's top financial services firms on our Extranet.
We have just begun to penetrate our current customer base and believe
that this core group of financial services firms will attract many of
their business partners to also become customers of our Extranet. This
should create a cycle that will further fuel growth in the number of our
customers and penetration of our current customer base. We also believe
that as we continue to penetrate our customer base with more services
and attract other large financial services firms to our Extranet, it
will become increasingly difficult for competitors to establish
themselves in our market sector.

. Singular focus on the financial services community. Our singular focus
enables us to offer services tailored to the specialized needs of our
customers. Unlike many of our competitors who offer services to a broad
base of customers with wide ranging communications requirements, our
approach is to focus only on the exacting requirements of the financial
services community. For example, our understanding of the trading
environment and our customers' needs led us to develop our DigiHoot
Service, a specialized open voice conference system allowing continuous
voice contact between trading floors. In addition, the combination of
our management team's great depth of knowledge and experience in
providing communications services to financial services firms and our
relationship with IPC, provides us with significant advantages over our
competitors.

. IPC relationship. IPC is a worldwide market leader in providing voice
trading systems to the financial services community and has served this
market for more than 25 years. IPC has provided us with a level of
credibility and an entree into the financial services sector, which
other emerging communications companies in our market sector do not
have. Moreover, through our relationship with IPC, we are able to (1)
provide turret-to-turret on-net connections among the significant
installed IPC customer base and (2) integrate our CANs into IPC turret
systems so that we can rapidly provision IPC customers with on-net
services. We also coordinate our sales and marketing efforts with the
IPC sales efforts, thereby offering a complete hardware and network
solution for the communications needs of financial services firms.

. High level of customer service and flexibility in customer relations. We
offer services at cost competitive prices and dedicate considerable
resources to providing the highest quality global network with well-
qualified and responsive customer service representatives. We monitor
and manage our Extranet from our NOCs, 24 hours per day, seven days per
week. Together with IPC, we have a worldwide presence of field service
representatives and, in many cases, on-site technical support personnel.
We are also focused on offering highly customized solutions for all of
our customers' service, billing and reporting needs. In addition to our
broad portfolio of globally available services, our Extranet allows us
to implement solutions that meet the individual connectivity needs and
requirements of each customer. Our billing system also allows us to
generate customized reports for customers. This customization approach
differentiates us from our competition, which are large organizations
with standard products, prices and support and who are not generally
known for flexibility and customization. This approach also
differentiates us from our many other competitors, who offer low prices
with limited quality, availability, service offerings and customer
support.

44
<PAGE>

. Corporate position as content neutral. Unlike the few large content
providers who have their own networks and carry the content of their
competitors to the desktop, we are not in competition with content
providers who use our Extranet. We are focused on being an efficient and
effective distribution vehicle for the content of others, not on being a
content provider ourselves. Our Extranet serves as a content neutral
delivery system to the desktops of the financial services community.
This approach allows our customers to display content in the formats
they desire. Because we often are willing to expand our Extranet to
reach additional end-users targeted by our content provider customers,
we believe our Extranet is more attractive than existing distribution
networks of competing content providers.

Our Strategy

Our goal is to be the leading provider of multimedia communications services
to the financial services community. Our business strategy includes the
following elements:

. Exploit first mover advantage. We are the first company to offer network
services through a dedicated Extranet exclusively focused on the
financial services community. We intend to significantly leverage our
first mover position by aggressively expanding our direct salesforce and
investing in the IXnet brand. In addition, we will continue to invest in
our Extranet to expand its capacity and reach in order to offer a
greater array of bandwidth intensive services to our customer base. We
believe that the high concentration of communications traffic among a
relatively defined number of financial services members should enable us
to achieve sufficient customer concentration that will make us the
preferred service provider to the financial services community.

. Rapidly deploy CANs. Adding key firms and sites to our Extranet will
greatly increase its value by enabling us to offer greater inter-firm
connectivity. This should enable us to attract larger numbers of
potential customers, which, in turn, will further increase the value of
our Extranet. We expect that the addition of new customers to our
Extranet will also attract new content providers to our Extranet who
seek to deliver content to our expanded customer base. Similarly, we
believe that as the number of content providers whose services we
deliver over our Extranet increases, additional customers will be
attracted to the expanded content on our Extranet.

. Accelerate network expansion. We are focused on expanding the
infrastructure of our Extranet to extend our addressable market, enhance
reliability and increase cost efficiencies. We currently plan to begin
construction of a new NOC in the Asia/Pacific region in 1999 to expand
our regional presence. We also intend to build physical POPs in certain
cities in which we do not yet have a presence to expand the reach of our
Extranet and in those cities where we do have a presence to meet
customer demand and provide redundancy. This will allow us to reach more
potential customers and increase the value of our Extranet to current
customers. In order to maintain our superior quality and highly reliable
services, we intend to acquire more bandwidth through leases and IRU
agreements from multiple vendors to increase the Extranet's redundancy,
capacity and capability.

. Aggressively add content providers to our Extranet. We intend to become
the best delivery vehicle for content providers who want to reach the
financial services community. We will seek to accomplish this goal by
remaining a content neutral delivery system and by offering content
providers a cost-effective method of reaching their target market
through a network gateway or by having us host their content at one of
our data centers. We also believe that our core customer base will
attract content providers who want to reach the largest financial
services firms in a highly efficient manner.

. Further leverage IPC's installed base. We will continue to leverage our
parent company's existing long term customer relationships in the
financial services community into new IXnet business opportunities,
including through the launch of bundled network and equipment services.
In addition, during the next six months, we intend to take advantage of
our exclusive arrangement with IPC under our maintenance agreement and
begin buying and integrating DLICs, a specific type of CAN with voice
service capabilities, in each new IPC turret system sold. This will
enable us to rapidly provision services to on-net IPC customers.

45
<PAGE>

. Further penetrate our existing customer base. We currently have a
significant established customer base encompassing many of the key
global financial services firms, but we capture only a small percentage
of their communications services expenditures. We will seek to further
penetrate our customer base by aggressively marketing additional
services to our existing customers that we can rapidly provision through
our installed CANs and expanding our selling efforts to IPC's
significant customer base. As the number of on-net users increases, the
value of the Extranet to current and prospective customers grows.

. Expand portfolio of focused service offerings. We plan to continuously
expand our service offerings to help further penetrate our customer
base, attract new customers and increase the value of our Extranet.
Within the next 12 months, we plan to offer real-time collaborative
capability including video streaming applications delivered directly to
the desktop to support analyst presentations and electronic roadshows.
We are also planning to offer user initiated service provisioning, which
will allow our on-net customers to remotely provision additional
services.

. Pursue strategic acquisitions. We intend to make strategic acquisitions
as appropriate opportunities arise in order to expand our service
offerings, broaden the reach of our Extranet and increase our customer
base.

46
<PAGE>

Services

We offer our customers a variety of specialized voice and data services over
our Extranet. The following table sets forth a brief description and the
benefits of each of our branded services. We are capable of providing any one
of these services either alone or in combination with one or more other
services, or collectively as part of our management of the customer's entire
network.

<TABLE>
<CAPTION>
Branded
Service Description Benefits Services

- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Premium voice Dedicated voice Access to high quality voice DigiHoot
communications lines services without the need to MetroLink
which are primarily used build a private network.
in conjunction with
turrets and trading
applications.
- ---------------------------------------------------------------------------------------------------
Virtual private voice Seamless global virtual Fast call connect time, industry- IXGlobal
network private network with a wide abbreviated dialing and cost Trade24
single uniform effective for on-net customers.
technology platform and
global toll free
feature.
- ---------------------------------------------------------------------------------------------------
Switched voice High quality voice Competitive rates and simplified IXPrime
communications worldwide billing.
with simplified pricing.
- ---------------------------------------------------------------------------------------------------
Managed bandwidth Fractional digital Access to high quality digital IXLink
lines, referred to as T- services without the need to
1/E-1, with end-to-end build a private network.
service management for
connections between
LANs, WANs and data
centers.
- ---------------------------------------------------------------------------------------------------
Outsourcing End-to-end management of Outsourcing enables customers to Trader Connect
a customer's entire focus on core business by placing
network. responsibility for network and
hardware on IXnet.
- ---------------------------------------------------------------------------------------------------
Shared IP Network delivery of Efficient distribution method for Liquidity
third-party news, content providers. Simplicity of
research, analytics, multiple services through a
market data and other single network connection for
trading applications via end-users.
data center hosting and
our Extranet.
- ---------------------------------------------------------------------------------------------------
Frame relay Transport for data Cost effective alternative to IXFrame
applications. Includes leased line networks.
router deployment and
management.
</TABLE>

Our branded services are described below.

DigiHoot. Our DigiHoot hoot & holler networks are specialized open line
voice conference systems utilized by trading firms to allow continuous voice
contact between various trading floors. Our DigiHoot service is a desktop to
desktop managed solution delivered over the Extranet combined with IPC's
Tradenet turret systems, known as Tradenet MX turret systems, and speaker
systems. We support DigiHoot globally with 24-hour network management and
customer support including remote diagnostics. DigiHoot service can be rapidly
provisioned and reconfigured to meet our customers' demands for a flexible
trading environment.

47
<PAGE>

MetroLink. MetroLink is a digital private line service that connects IPC's
Tradenet MX customers within a metropolitan area. We serve as a single source
provider of hardware and connectivity from turret to turret. Compared to the
analog connections typically available in the market, MetroLink provides faster
circuit provisioning, end-to-end managed digital connectivity, reduced
installation cost and rapid circuit reconfigurations at a competitive price.
Metrolink is currently offered in the New York metropolitan area and we intend
to offer Metrolink within the next 12 months within other metropolitan areas.
We also intend to provide this service between customers in different cities.

IXGlobal. IXGlobal, our on-net switched voice service, provides a seamless
international virtual private voice network service to the financial services
community over a uniform switching platform. Because we provide end-to-end
connectivity among all our on-net customers, we are able to offer the same high
performance characteristics presently available only on dedicated private
networks. Features of IXGlobal include: preferential and competitive pricing
for on-net calls, fast call completion and advanced features such as caller
name and ID, abbreviated dialing plans and customized billing formats.

Trade24. Trade24 is a service that allows our customers to offer their
customers 24 hours per day, seven days per week global toll free access.
Trade24 routes calls to an active trading floor regardless of the time of day,
day of week or holiday schedule. Call routing can be managed rapidly and
remotely to accommodate business requirements or unexpected situations such as
weather conditions or disaster recovery.

IXPrime. IXPrime is our off-network switched voice service. Features of
IXPrime include switched or dedicated originating access and flat rate pricing
for calls.

IXLink. IXLink provides a premium end-to-end managed digital service for
voice and/or data transmission with bandwidth available from 64Kbps to 768Kbps.
IXLink's features include end-to-end circuits which eliminate the need for
multiple vendors, bandwidth on demand, simplified billing from a single
worldwide service provider and shorter provisioning intervals.

TraderConnect. TraderConnect service is provided in connection with the IPC
Trading Systems division for a fully integrated solution. As part of this
service, Tradenet MX turret systems are located in our POPs. TraderConnect
enables a customer to utilize the features of the turret system remotely and
also access our various network services.

Liquidity. Liquidity is a turnkey managed data network service based on IP
technology. Liquidity provides, over a single network connection, secure and
reliable delivery of time-sensitive financial information and applications,
such as market data, access to institutional electronic trading systems and
routing of messages such as FIX used in the electronic trading process.
Standard Liquidity features include a customer-site router and network
connection which is supplied, owned and managed by us, as well as network
performance guarantees and several levels of optional content data center
hosting including complete outsourcing.

IXFrame. IXFrame is a managed data network service using frame relay as its
underlying technology and including managed customer-site routers.

We also provide the following services:

Content Hosting. We provide content hosting services that permit financial
information services providers to deliver data to the desktop of the financial
services community without having to invest significantly in technology,
infrastructure or operations staff. The level of hosting services we provide
scales from simple co-location to fully outsourced network solutions.

Outsourcing. We provide end-to-end management of a customer's network
including network services and hardware. We take complete responsibility for
building, operating and maintaining the network, enabling our customers to
focus on their core business and avoid the cost of maintaining a network. In
addition, as the hardware often resides on our premises, our outsourcing
customers are not required to dedicate space and facilities for network
equipment.

48
<PAGE>

Bandwidth Resale. We provide leased bulk bandwidth at speeds of 768Kbps and
above for various customer applications. This is a cost effective service for
customers with large bandwidth requirements.

Dedicated Internet Access. We offer dedicated high-speed continuous access
to the Internet to customers. This service is provided at speeds up to 1.5Mbps.

The IXnet Extranet

Overview

We have created a global Extranet built specifically to meet the stringent
communications requirements of the financial services community. Our Extranet
provides highly reliable and secure communications and minimizes the likelihood
of any single point of failure.

Our Extranet is built upon the following strategic principles:

. Establish a uniform network equipment platform using best of breed
vendors. We have selected and deployed a uniform equipment platform
throughout our Extranet. Our strategy ensures that our services are
available with the same features and functionality globally. We utilize
hardware, software and facilities vendors who are known for their high
quality products and technologies and have achieved broad acceptance.
Some of our vendors include Cisco Systems Inc., Newbridge Networks
Corporation and Nortel Networks Corporation. These vendors have
facilitated our deployment of the advanced technologies such as IP and
ATM.

. Deploy CANs on customer premises. Our strategy is to place CANs on
customer premises and to link those CANs to our POPs through high
capacity facilities. These CANs enable us to manage the network end-to-
end on a full time basis and rapidly provision services.

. Primarily utilize a success-based network deployment model. The
scalability of our network enables us to enter each new market with a
small POP and build to a larger presence as our business grows.
Similarly, at most new customer sites, we deploy a CAN on a customer's
premises and augment the CAN to accommodate increasing demand for
additional services.

. Utilize multiple carriers to ensure diverse network routing. We use
multiple carriers to obtain our local access, domestic and international
long haul backbone facilities. Diverse routing among several carriers
ensures maximum availability and reliability of our Extranet.

. Reduce network costs by purchasing segments on fiber optic
facilities. Due to the growing supply of international bandwidth, the
cost of bandwidth has declined significantly. We have and will continue
to aggressively take advantage of this positive development to reduce
our bandwidth costs, which are a significant portion of our capital
expenditure plan and expense structure. Currently, a majority of our
capacity is leased. We intend to purchase bandwidth as and when
purchasing would be advantageous and more cost effective than leasing
bandwith. We have purchased and are committed to purchase IRUs on
numerous international cable systems in the Atlantic, the Pacific and
intra-Europe, which has enabled us to increase our bulk bandwidth in a
highly cost effective manner.

Global Network Infrastructure

We have deployed our global network infrastructure to 39 financial centers
worldwide. The Extranet consists of IXnet-owned switches, NOCs, POPs, data
centers and CANs, and primarily leased fiber optic facilities.

Our Extranet utilizes a uniform equipment platform based on Newbridge
network management technology, and augmented with Nortel Networks switches for
enhanced voice services and Cisco routers for enhanced data

49
<PAGE>

services. Newbridge network access nodes and network management software are
located at our POPs, while CANs are directly installed at the customers'
premises. The Newbridge platform provides advanced global network management
which allows for rapid provisioning and end-to-end network diagnostics from our
NOCs to our customers' premises. We own two Nortel Networks digital switches
located in New York and London that allow for universal availability of
services, rapid provisioning of services, short call setup times and a single
network management and control system. We have deployed Cisco products for
various network functions including core routing, distribution routing and
customer premises routing. The advanced features and built-in scalability of
the Cisco routers enable us to offer high quality and globally advanced data
services such as Liquidity and IXFrame.

The infrastructure of our Extranet includes the following components:

. Network operations centers. We have deployed NOCs in the financial
districts of New York and London, each of which serves as a control
center of our Extranet. Each NOC is staffed 24 hours per day, seven days
per week, and houses the specialized equipment necessary for managing
our Extranet. The NOCs contain workstation-based software systems
utilizing state of the art graphical user interfaces to provide a global
view of our Extranet, including all CANs worldwide. This network
management system allows for the display of alarms for all network
faults, testing of the network for adverse conditions, re-routing of
traffic to other equipment or facilities, and remote maintenance for
certain network faults. While the New York NOC concentrates on the
Americas and Asia, it also acts as the overall NOC for our entire
Extranet. The London NOC services Europe but also acts as a backup
system for the New York NOC and is capable of supporting the entire
Extranet if required. We currently plan to begin construction within the
next 12 months of a new NOC in the Asia/Pacific region in order to
expand our presence.

. Points of presence. We have 73 POPs in 39 financial centers worldwide.
POPs house the network transmission equipment required to provide all
IXnet services to the financial community. A POP enables us to bring our
broad portfolio of services through the local high speed access facility
in a prompt and cost effective manner. These POPs are built to high
standards with highly reliable power supply systems, backup power
capability, separate humidity control and air conditioning, raised
equipment flooring, static electricity control and security, fire and
other control systems. POPs are either located in facilities owned and
operated by us or are co-located in other facilities through
arrangements with other carriers. Equipment in the POPs may include:

. Newbridge products for global transmission bandwidth management as
well as ATM switching;

. Nortel Networks and other voice switches; and

. Various other equipment, such as Stratum 1 clocking, echo
cancellers, compression equipment, digital cross connection systems,
test equipment and patch panels.

The following is a list of cities in which our 73 POPs are currently
located. And, if more than one, the number of POPs:

<TABLE>
<CAPTION>
Americas Europe Asia/Pacific
-------- ------ ------------
<S> <C> <C> <C>
Atlanta Amsterdam Luxembourg Adelaide
Boston Athens Madrid Auckland
Chicago (3) Brussels Milan (3) Brisbane
Houston Budapest (2) Paris (2) Hong Kong (4)
Los Angeles (3) Copenhagen (2) Rotterdam Melbourne (3)
New York (3) Dublin Stockholm Perth
San Francisco Frankfurt (4) Vienna Philippines
San Jose Geneva (2) Warsaw Singapore (3)
Toronto (2) Helsinki Zurich (2) Sydney (6)
London (4) Tokyo (3)
Wellington
</TABLE>

50
<PAGE>

In cities with developing demand for our services, such as in emerging and
secondary markets, we service our customers as off-network customers through
our relationships with carriers who have established a presence in such
locations until there is sufficient demand, at which point we would build a
POP at that location. As of March 31, 1999, we were providing service in over
250 off-net cities. Over the next 12 months, we intend to build POPs in a
number of these cities in order to expand our network footprint, and to build
additional POPs in those cities where we already have a presence in order to
meet customer demand and provide redundancy. New POPs will only be built after
careful consideration of the size of the market opportunity, customer demand,
the regulatory environment and the competitive situation as well as the costs
to enter and support the market. Emerging financial markets may be a large
growth opportunity in the coming years and will be closely monitored.

Some of the other markets where we are considering building POPs over the
next several years include:

.Sao Paolo (Brazil);

.Montreal (Canada);

.Denver, Stamford, Miami (U.S.);

.Shanghai (China);

.Kuala Lumpur (Malaysia);

.Seoul (S. Korea);

.Johannesburg (S. Africa);

.Prague (Czech Republic); and

.Moscow (Russia).

. Data centers. Our POPs in New York, London and Jersey City, New Jersey
also house Liquidity content centers. These data centers enable us to
host and distribute the content of various content providers. Equipment
in the data centers includes:

.Extreme Networks--layer 3 switches;

.Bay Networks--distribution routers; and

.Cisco Systems--inter-data center and dial backup routers.

Additional data centers will be built to complement existing or new POPs
based on demand.

. Customer access nodes. A key differentiator of our Extranet is our
deployment of CANs on customer premises. CANs vary in size and
complexity based on customer needs and requirements, but may include one
or more of a Newbridge multiplexer, a Cisco router or a DLIC, which is a
device that connects the customer's turret directly to our network for
voice circuits. All CANs can be controlled by us remotely, enabling us
to fully manage the network end-to-end and to rapidly provision
services. In addition, CANs are scalable to allow for future growth as a
customer's requirements expand. CANs are connected to our closest POP by
fiber optic facilities utilizing diverse redundant local facilities
where possible.

. Backbone facilities. In connecting POP to POP, we have both leased and
purchased various T-1/E-1/DS-3 long haul facilities worldwide. We lease
fiber optic facilities from major international facilities-based
carriers such as MCI WorldCom Inc., Frontier/GlobalCenter, Williams
Communications Group, Inc., Sprint Communications Company, L.P., Cable &
Wireless plc, Singapore Telecommunications Limited, Hongkong Telecom,
France Telecom, British Telecommunications plc, Teleglobe Inc, Sprint
Canada Inc., Bell Canada, Swisscom, Telstra Corporation Limited, Hermes
and Deutsche Telekom AG. In addition, we are focused on buying IRUs. In
addition, we have purchased or committed to purchase IRUs on projects
such as: TAT12/13, TAT 14, Gemini, Southern Cross, CANTAT 3, Germany-
U.K. 6, Japan-U.S. and NTL. We expect to further expand our Extranet in
this manner to support growth as well as to improve cost efficiencies.

51
<PAGE>

. Local loop facilities. We utilize many local facilities-based carriers
to connect our POPs and CANs. For example, in the New York area, we have
contracted with major local providers such as Bell Atlantic Corporation,
MCI WorldCom Inc. and AT&T Corp. to provide diversely routed, fiber
optic facilities from our POP to the customers' premises. Where
possible, we utilize carriers that employ fiber optic ring protection
for reliability and disaster recovery.

Sales and Marketing

Our sales and marketing activities are targeted to members of the financial
services community in the key financial centers worldwide. Our customers
include members of the financial services community including broker-dealers,
investment banks, asset managers/hedge funds, inter-dealer brokers, electronic
trading firms, commodities/futures trading firms, content providers, exchanges,
trade execution systems, correspondents, clearing and settlement firms, and
insurance companies.

The major components of our sales strategy are as follows:

. Utilize a direct salesforce. We have deployed a dedicated and
experienced salesforce in many of the major cities worldwide where we
have operational POPs. As of March 31, 1999, our salesforce consisted of
28 commissioned salespeople: 16 of whom were in the Americas, seven of
whom were in Europe and five of whom were in the Asia/Pacific region.
Because our salespeople are regionally based, they are able to consult
prospective customers face-to-face to discuss their network needs and
technical requirements and develop tailored solutions. Our sales
representatives also market our services to financial institutions at
industry seminars and trade shows. Our salespeople are familiar with the
applications, requirements and technical terminology of the financial
services community as well as its unique business practices.

We have developed programs to attract and train high quality, motivated
sales representatives who, in addition to having strong financial
services industry backgrounds, technical skills and knowledge of
industry applications, have consultative sales experience. These
programs include competitive compensation plans including stock option
pools, technical sales training and consultative selling technique
training. Sales representatives from our United States and international
operations jointly attend training programs in order to ensure an
integrated sales approach domestically and internationally.

. Expand our salesforce. We believe that our rate of growth is directly
related to the size and productivity of our sales force. As a result we
are focused on expanding our salesforce over the next 12 to 18 months
through the hiring of motivated personnel who have backgrounds in
network services or experience with the specialized communications needs
of the financial services community. We intend on growing our salesforce
both within North America and in Europe and the Asia/Pacific area. Until
the full deployment is complete to all major cities, some foreign
markets will be handled through distributor relationships.

. Focus sales efforts on strategic customer sites. We place emphasis on
adding customers and CANs in sites that we believe are strategic in
nature. Strategic sites are those with which our existing on-net
customers or potential customers are interested in communicating, such
as those with large trading or processing volume.

. Leverage the salesforces of our content providers. The salesforces of
our content providers have, in effect, become secondary salesforces for
us by selling their content delivered over our Extranet to their end-
users. In order to access this content, end-users must connect to our
Extranet, if they are not connected already. These secondary salesforces
have been able to significantly grow the number of on-net user sites on
the Extranet.

. Coordinate joint sales efforts worldwide. Our regional salesforces work
together in a cooperative and coordinated manner to create higher levels
of customer satisfaction which we believe will lead to additional
business. This approach maximizes the benefits of selling our services
locally as well as

52
<PAGE>

globally and confers a unified corporate level sales relationship
between our regional salesforces for our customers worldwide.

. Coordinate joint sales efforts with IPC salesforce. Coordinating the
efforts of our salesforce with the IPC salesforce has helped to
introduce our Extranet to the significant installed base of IPC
customers. IPC's salesforce is provided with incentives to reach certain
sales targets in connection with their sales of our services.

We maintain a high profile in the financial services marketplace with
targeted marketing and public relations efforts. We place our company
information and press releases in many financial services industry
publications such as the Security Industry News, Wall Street and Technology
and Trading Technology Week. We actively participate in financial industry
organizations such as the Wall Street Telecommunications Association and the
Securities Industry Association and seminars such as the "On-Line Securities
Trading Seminar" and the "Future of Buy Side/Sell Side Transaction
Technologies" which enable our representatives to communicate our vision and
capabilities directly to prospective customers. Moreover, we are highly
visible at key industry trade shows including "IT for Wall Street" and the
"SIA Technology Management Conference."

Customers

Our customers are members of the financial services community. The
following is a representative list of customers from whom we generated at
least $25,000 in revenues during the six months ended March 31, 1999. Deutsche
Bank and Optimark Inc. accounted for 23% and 14%, respectively, of our
consolidated revenues for the fiscal year ended September 30, 1998, and 11%
and 14%, respectively, of our consolidated revenues for the six months ended
March 31, 1999.

<TABLE>
<S> <C> <C>
ABN Amro Incorporated Fuji Securities Incorporated Moore Capital
AIG Trading Corporation Futuresource/Bridge, L.L.C. Morgan Stanley Dean Witter & Co.
American Express
International Garban Broking Services Ltd. M. W. Marshall & Company Limited
Australia and New Zealand
Banking Group Generic Trading Inc. National Australia Bank Limited
BancBoston Robertson Stephens
Inc. GFI Ltd NationsBanc Montgomery Securities LLC
Bank of Montreal GNI Limited NatSource Inc.
The Bank of Nova Scotia Goldman, Sachs & Co. NatWest Securities Corp.
Bankers Trust Company Greenwich Capital Corp. Nesbitt Burns Inc.
Banque Paribas Gruntal & Co., L.L.C. Optimark Inc.
Barclays Bank PLC Hambrecht & Quist LLC OTA Limited Partnership
Bayerische Vereinsbank
Aktiengesellschaft Harlow Butler U.K. Ltd. Paloma Partners L.L.C.
Bear, Stearns & Co. Inc. Herzog Heine Geduld, Inc. Paine Webber Group Inc.
BT Alex. Brown Incorporated Hilliard Farber & Co. Inc. Power Merchants Group
Cantor Fitzgerald, L.P. HSBC Bank USA Prebon Yamane (USA) Inc.
Carr Futures Inc. ING Baring Furman Selz LLC Prudential Securities Incorporated
The Chase Manhattan Bank Intercapital Government Securities, Inc. RBC Dominion Securities Inc.
CHOICE! Energy LP ITG Inc. Rabobank International Ltd.
CIBC Oppenheimer Corp. Janus Distributors, Inc. Republic National Bank of New York
Citibank, N.A. J B Were & Son Inc. Reuters Holdings Plc
Commerzbank
Aktiengesellschaft Jefferies International Ltd. Salomon Smith Barney Inc.
Credit Agricole Indosuez J.P. Morgan & Co. Incorporated Sanford C. Bernstein & Co. Inc.
Credit Suisse First Boston,
Inc. Lazard Freres & Co. LLC SBC Warburg Dillon Read LLC
Dawnay Day & Co. Ltd. Lehman Brothers Inc. Schroder & Co. Inc.
D.E. Shaw & Co. Ltd. Liberty Eurasia Ltd. SG Cowen Securities Corporation
Deutsche Bank Long Term Capital Company Societe Generale
Donaldson, Lufkin & Jenrette Lloyd's Bank Soros Fund Management Company
Dresdner Bank AG Martin Brokers (U.K.) PLC Standard Bank London Ltd.
ED&F Mann International Meitan Traditional Co., Ltd. Standard Chartered Bank
Eurobrokers AS Merrill Lynch & Co., Inc. The Toronto Dominion Bank
Fiduciary Trust Co. Mitsui Trust & Banking Co., Ltd. Tradition North America Inc.
FIMAT USA, Inc. Moneyline Corporation Union Bank of Switzerland
First Union Corporation Moody's Investors Service, Inc. Westpac Banking Corporation
</TABLE>

53
<PAGE>

The following is a representative list of our content provider customers:

A-T Financial Information NewsEdge Corporation
NYSE
DataView LLC
Generic Trading PC Trader
Gov PX Sagemaker
IDEA TCAM (Technologies Inc.)
Market News Service International Townsend Analytics
MoneyLine Corporation
Moody's Investors Services WavePhore Labs
Wireless Financial Service

Neonet Securities

Customer Service

High quality customer service and support are critical to our objective of
retaining and developing our customer base. We differentiate ourselves from
many of our competitors by customizing solutions and providing individualized
support to our customers. For example, we utilize customized billing in local
currencies and provide reports designed to address the specific needs of our
customers. To support a customer's business requirements, we make available
numerous IXnet resources, including technical support, engineers and project
managers in the pre-implementation phase and customer service representatives
and help desk personnel in the post-implementation phase. To ensure a rapid
response and remedy to any customer network concerns, we monitor and manage our
Extranet from our NOCs, 24 hours per day, seven days per week. When necessary,
we also dispatch IPC's global field service personnel to address certain local
network issues.

In addition to person-to-person customer service, we are developing other
methods of customer support through our Internet web site. We plan to include
various types of reporting, customer communication and billing, and we may
include payment and customer initiated order entry.

Case Studies

The following examples illustrate how three of our customers are using our
services and capabilities described in this prospectus to meet their
significant business needs:

Deutsche Bank. In 1995, Deutsche Bank sought to build a network to
interconnect its trading desks on a global basis, allowing traders to be in
constant voice contact with each other. These hoot & holler networks would
effectively create a virtual trading environment within Deutsche Bank. We
brought a worldwide outsourced solution to Deutsche Bank, providing both
network and hardware with local support for over 4,000 traders in more than 20
countries.

We deployed the initial hoot & holler networks for Deutsche Bank in late
1995 and early 1996. Since then, Deutsche Bank has added other voice and data
services in numerous locations throughout the world. Our relationship with
Deutsche Bank exemplifies the global reach and enhanced services that we offer
our customers.

Optimark. Optimark Technologies Inc. has developed a new electronic
securities trading computer-based matching system designed to anonymously match
buyers and sellers.

Optimark Technologies needed a vast communications network to interconnect
its customers (over 200 major asset managers/funds nationwide), its data center
in Toronto, Canada and its various partners including the Pacific Stock
Exchange in California and Securities Industry Automation Corporation in New
York. Optimark Technologies sought to outsource its entire network to one
network provider, and to that end, evaluated us and a number of other
companies. Optimark Technologies selected us in June 1997 for numerous reasons.
The most critical was our understanding of the trading environment and our
willingness to manage all aspects of hardware and network deployment, the
Extranet's flexibility, our senior management's

54
<PAGE>

commitment to the project and devoting the necessary technical and other
personnel necessary to design their trading system. To date, we have deployed
this network, including customer premises electronics of servers and routers to
more than 200 Optimark Technologies customers nationwide.

The Optimark Technologies relationship demonstrates the attractiveness of
our service offerings to companies seeking to deliver information or
applications to the financial services community. Optimark Technologies is
continuing to grow substantially by adding additional asset managers, exchanges
and partners as well as increasing its network requirements to its existing
locations.

MoneyLine. MoneyLine Corporation aggregates real-time market data, news,
commentary, historical prices, analytics and interactive applications from the
world's financial markets and delivers such information and applications to its
customers' desktops in a cost effective manner.

As a relatively new company, MoneyLine did not have a network to deliver its
information to potential customers, nor did it have the internal expertise to
establish such a network. Accordingly, MoneyLine sought a turnkey network
solution for the distribution of its information. Through our Extranet, we were
able to offer and rapidly deploy a highly reliable, secure, and fully
outsourced and managed network solution capable of delivering MoneyLine's
content to the desktops of MoneyLine's target market.

MoneyLine is able to direct its financial and technical resources toward
developing its application and building its business rather than developing and
maintaining a communications network. Today MoneyLine and IXnet are
implementing service to firms nationwide.

Competition

Our competition varies geographically and by service offerings. Currently,
while no one company dominates the voice and data communications market for the
financial services industry, many companies compete with us in individual
service categories and on a regional basis. We compete with and expect
continued competition from:

. Large interexchange carriers and partnerships. Many of the large
carriers, such as MCI WorldCom Inc., Cable & Wireless plc, Global One
and the AT&T Corp./British Telecommunications plc venture, are expanding
their capabilities to support high-speed, end-to-end communications
services. These large carriers compete with us in the areas of switched
voice, outsourcing, premium voice and frame relay. Increasingly, their
bundled services include high-speed local access combined with
metropolitan and wide area networks services and we expect them to offer
combined data, voice and video services over these networks in the
future. These carriers have greater financial, marketing and
technological resources, have already deployed large scale networks,
have large numbers of existing customers and enjoy strong brand
recognition, and, as a result, are significant competitors.

. Specific product competitors and other communications companies. Several
companies, such as EQUANT N.V., Infonet Services Corporation, GAINS and
GTE Internetworking, have focused on competing within a particular
service category and offer some of the same communications services
including frame relay, managed bandwidth, premium voice and outsourcing.
These companies have significant experience in offering tailored
services and sell themselves as experts in such services and related
technology. We believe that they have the financial capability and
technical expertise to expand their existing networks and service
offerings to become more competitive.

. Common carriers. Common carriers, such as British Telecommunications
plc, France Telecom and the former Bell Operating Companies, have
extensive regional networks. Common carriers currently provide some
communications services to many members of the financial services
community in their market area. These common carriers compete with us in
the areas of switched voice and managed

55
<PAGE>

bandwidth services and have marketing, financial and technical resources
substantially greater than ours. Common carriers are expanding the
capabilities of their network services and may be able to offer bundled
services that would be competitive with us if they receive regulatory
approval.

. Content providers. Content providers, such as Bloomberg L.P., Bridge
Information Systems, Inc. and Reuters Holdings Plc, have developed
extensive communications networks in the financial services industry and
distribute their content and the content of other providers. Although
they have wide distribution in the industry, their focus is on content,
not network services. In addition, while they are potential customers
for our services, they also compete directly with us in the content
delivery segment of our business. Further, these companies have
substantial resources and brand recognition.

. Resellers. Resellers, such as Business Networks International Inc.,
Sector, Inc. and WESTCom Corp., resell other companies' network services
and do not focus on building or managing their own networks. They
principally compete on price and do not focus on network quality,
features or functionality.

Depending on the specific competitor, we compete on the basis of many
elements, including customer service, quality, reliability, network security,
service provisioning speed, service features, functionality and cost
effectiveness.

Regulatory Environment

The telecommunications services that we provide must be structured to
comply with the laws and regulations of national, state and local government
agencies in countries we serve. The primary regulatory policy of the United
States in this area is to promote effective competition in the United States
telecommunications service market, including the market for international
services. The United States government has advocated that competitive
international markets will provide incentives for further market entry both in
the United States and foreign markets. Many other countries are also moving
toward the implementation of competitive market structures.

United States Regulatory Considerations

For domestic telecommunication services in the United States, the FCC and
State PUCs have direct jurisdiction, granted by statute, over all aspects of
our telecommunications service offerings. With international traffic, however,
the United States regulatory structure is limited to the origination or
termination of telecommunications services in the United States. As a result,
the United States and each foreign country share jurisdiction over policies
and regulations controlling international telecommunications services between
the two. Thus, the United States cannot unilaterally implement a regulatory
policy for international telecommunications, thereby limiting the impact a
domestic statute, such as the Telecommunications Act, can have in developing a
new structure for international telecommunications.

In the United States, our telecommunications services are subject to the
Communications Act of 1934, as amended by various statutes, including the
Telecommunications Act and the FCC's regulations promulgated thereunder, as
well as the applicable laws and regulations of the various states as
administered by the relevant PUCs. The recent trend in the United States, for
both federal and state regulation of telecommunications service providers, has
been in the direction of reduced regulation. Despite recent trends toward
deregulation, the FCC and relevant PUCs continue to exercise extensive
authority to regulate ownership of transmission facilities, telecommunications
services and the terms and conditions under which our services are provided.
In addition, we are required by federal and state laws and regulations to file
tariffs listing the rates, terms and conditions of the telecommunications
services we provide. Any failure to maintain proper federal and state tariffs
or certification or any finding by the federal or state agencies that we are
not operating under permissible terms and conditions may result in an
enforcement action or investigation, either of which could have a material
adverse effect on our business.

56
<PAGE>

We and Saturn currently hold several FCC authorizations for
telecommunications services. These authorizations permit us to acquire
interests in submarine cable and international satellite facilities previously
authorized by the FCC. We can also resell private lines that are not
interconnected to the public switched telephone network for communication
services between the United States and all other countries, other than those
listed on the FCC's exclusion list published from time to time and offer
switched service by the use of private lines interconnected to the public
switched telephone network for service between the United States and a number
of approved countries.

State PUCs exercise jurisdiction over intrastate services which are
communications that originate and terminate in the same state. We hold a
certificate of public convenience and necessity to resell forms of telephone
service within New York State and have the appropriate authority to offer
intrastate service in a number of other states.

Regulatory requirements pertinent to our operations have recently changed
and will continue to change as a result of the World Trade Organization Basic
Telecommunication Agreement, federal legislation, court decisions, and new and
revised policies of the FCC and PUCs. In particular, the FCC continues to
refine its international service rules to promote competition, reflect and
encourage liberalization in foreign countries. To the extent the FCC is
successful in this endeavor, a more competitive environment for international
telecommunications services is likely to develop. This may increase competition
and alter our ability to compete with other service providers. It also may
impact our ability to provide certain services, or introduce new services. The
impact on our operations of any changes in applicable regulatory requirements
cannot be predicted. As the regulatory regimes change in the United States and
elsewhere, our authorizations also may need to be adjusted.

International Regulatory Considerations

Significant liberalization of telecommunications regulation in a number of
countries has provided us with greater flexibility to obtain authorizations to
provide service. The specific licensing approach or regulation of our services
has differed from country-to-country depending on the status of deregulation
and the development of competition in each country.

Canada. We were recently granted a Class A license in Canada that allows us
to provide international telecommunications services to the public in Canada
and operate telecommunications facilities used in transporting basic
telecommunications service traffic between Canada and another country.

United Kingdom. The United Kingdom generally permits competition in all
sectors of the telecommunications market, subject to licensing requirements and
license conditions. Individual licenses (with standard conditions) are required
for the provision of facilities-based services and for the resale of leased
lines. Our subsidiary holds both an International Facilities Based
Telecommunications License and International Simple Voice Resale licenses in
the United Kingdom. The IFBTL entitles us to acquire indefeasible rights of use
on international satellites and submarine cable systems, to resell
international private lines, as well as interconnect with, and lease capacity
at, wholesale rates from, facility-based carriers. The ISVR license allows us
to resell international private lines, as well as interconnect with, and obtain
capacity at wholesale rates from facility-based carriers.

Other European Union Countries. Prior to January 1, 1998, a majority of the
EU, European Union, countries maintained the position that all or most
telecommunications services were under the exclusive jurisdiction of state-
sanctioned monopolies. Under that regulatory regime, provision of many
competitive telecommunications services was strictly limited to particular
services or banned to preserve the privileged position of the state-sanctioned
monopoly. Effective January 1, 1998, the EU required that member states
liberalize their telecommunications regulations to permit the introduction of
competition in all sectors of the

57
<PAGE>

telecommunications market. These regulatory reforms have been implemented over
the last year. Nonetheless, we initiated service prior to these reforms. In
some cases, we were able to take advantage of a special status granted to
closed user groups. CUGs are communities of interest that are common among a
company and its subsidiaries or group of companies. The EU definition of CUGs
looks to see if the link between the members of the group is a common business
activity. We and our subsidiaries fit this definition of CUGs in several
countries. In addition, in several EU countries, we structured our service
offerings to not require interconnection to the local public switched telephone
network. Based on CUG status and/or lack of interconnection to the public
switched network, we have been granted licenses in Belgium, Ireland and Italy
to provide voice and data services to CUGs. Additionally, our subsidiaries are
able to operate in France, Germany and the Netherlands without the need for
licenses in these countries. In these cases, we provide private line and
virtual private network voice services and a full range of data services.

Switzerland. Although Switzerland is not part of the EU, it has followed the
EU's market liberalization approach. Even prior to the January 1, 1998 opening
of the Swiss telecommunications market, we, through our subsidiaries, have been
able to provide private line and virtual private network voice services and a
full range of data services in Switzerland due to our status as a CUG and our
lack of interconnection to the Swiss public switched telephone network.

Japan. On January 27, 1997, the Japanese Ministry of Post & Telephone
granted our Japanese subsidiary a Special Type II telecommunications carrier
license. This license allows us to provide virtual private network and private
line voice services, data transmission services, image transmission services,
packet switched data transmission and managed digital network services.

Hong Kong. On June 10, 1997, our subsidiary received from the Hong Kong
Government Office of the Telecommunications Authority a Public Non-Exclusive
Telecommunications Service, license for the
provision of virtual private network services. This license allows us to
provide virtual private network services for customers for the purpose of
carrying out telecommunications between companies involved in the financial
services industry.

Singapore. On October 21, 1997, the Telecommunications Authority of
Singapore granted our Singapore subsidiary a license to operate a network in
Singapore for CUGs actively involved in the financial services industry for the
provision of data services including bandwidth on demand, frame relay, ATM and
multi-protocol transport services.

Brazil. On April 28, 1998, Anatel, the Brazilian Agencia Nacional de
Telecomunicacoes, granted our Brazilian subsidiary a Brazilian Limited Service
License to offer specialized limited telecommunications services to and from
Brazil. This license allows us to provide virtual private network and private
line voice and data services to CUGs. Since the issuance of the Limited Service
License, Anatel has notified us that we must satisfy certain technical
requirements or face loss of our license. We are in the process of satisfying
these requirements.

Expansion Into Other Foreign Countries

We intend to expand our operations into other jurisdictions as such markets
deregulate and we are able to offer a full range of services to our customers.
However, in countries that enact legislation intended to deregulate the
telecommunications sector or that have made commitments to open their markets
to competition in the WTO Agreement, there may be significant delays in the
adoption of implementing regulations and uncertainties as to the implementation
of the deregulatory programs which could delay or make more expensive our entry
into such additional markets. Our ability to enter a particular market and
provide telecommunications services, particularly in developing countries, is
dependent upon the extent to which the regulations in a particular market
permit new entrants. In some countries, regulators may make subjective
judgments in

58
<PAGE>

awarding licenses and permits, without any legal recourse for unsuccessful
applicants. In the event we are able to gain entry to such a market, no
assurances can be given that we will be able to provide a full range of
services in such market, that we will not have to significantly modify our
operations to comply with changes in the regulatory environment in such market,
or that any such changes will not have a material adverse effect on our
business, results of operations or financial condition.

In those countries where we are strictly prohibited from offering service,
we may enter into a relationship with the state-sanctioned telecommunications
monopoly so that our services can be offered in that jurisdiction. In these
situations, the local telecommunications service provider would provide the
facilities and offer local services to our customers. It is likely that
services would cost more in these situations. There are, however, certain
countries which do not require licensing for the provision of
telecommunications network services.

Employees

As of May 31, 1999, IXnet and its subsidiaries employed 252 persons,
including 56 in sales and marketing, 27 in customer service and support, 18 in
finance and administration, 18 in engineering and 123 in network operations. We
believe that our future success will depend in part on our continued ability to
attract, hire, integrate, retain and motivate highly qualified sales,
technical, and managerial personnel, and upon the continued service of our
senior management and key sales and technical personnel. None of our employees
are represented by a labor union. We have never experienced a work stoppage and
believe our relationship with our employees is good.

Properties

Our properties consist of a combination of real estate leases in our name
and certain real estate facilities we share with IPC, the terms of which are
governed by our inter-company agreement with IPC. See "Certain Relationships
and Related Transactions--Agreements with IPC--Inter-Company Agreement--Real
Estate."

We lease directly:

. 14,000 square feet in New York City where our New York NOC and primary
POP are located, under subleases expiring in March 2002;

. 9,400 square feet in Newark, New Jersey where our second New York area
POP is currently being built, under a lease expiring in April 2009;

. 5,300 square feet in Chicago, Illinois where our Chicago POP is located,
under a lease expiring in June 2002;

. 4,900 and 2,400 square feet in Sydney and Melbourne, Australia; 1,900
square feet in Hong Kong; 1,340 square feet in Singapore; and 1,330
square feet in Tokyo, Japan, of office space and housing for
telecommunications equipment through leases acquired as part of the
Saturn acquisition;

. 2,200, 450 and 175 square feet, primarily for telecommunications
equipment housing in Paris, France, and Zurich and Geneva, Switzerland,
respectively; and

. Various smaller spaces under lease or collocation agreements for
telecommunications equipment housing in Frankfurt, Milan, New York,
Chicago, Los Angeles and San Jose.

We occupy the following portions of IPC-leased space:

. 24,500 square feet in New York City where our executive and U.S. sales
headquarters is located, under leases expiring in November 2002;

. 8,400 square feet in London, England, where our European headquarters
and London NOC are located, under leases expiring in December 2010; and

59
<PAGE>

. Various spaces, with square footage between 750 and 3,000 in Atlanta,
Georgia, Boston, Massachusetts, Chicago, Illinois, Houston, Texas, Los
Angeles and San Francisco, California and Toronto, Canada, where our
branch sales and operations personnel and telecommunications equipment
are located.

Our use of and the costs associated with the facilities occupied under IPC
leases are outlined under certain provisions of our inter-company agreement
with IPC. Typically, charges for such facilities are allocated pro-rata, based
upon the relative percentage of space occupied by us or IPC, with company-
specific charges applied directly to the respective company.

Legal Proceedings

Neither we nor any of our subsidiaries are involved in any material pending
legal proceedings.

60
<PAGE>

MANAGEMENT

Directors and Executive Officers

The following table shows information about our executive officers and
directors, including their ages as of March 31, 1999. Each person holds the
same positions with both IXnet, Inc. and International Exchange Networks, Ltd.
Each director began service as a director of International Exchange Networks as
indicated in such director's biography and began service as a director of IXnet
upon its formation in May 1999.

<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Richard W. Smith 46 Chairman of the Board
(1)(2).................
David A. Walsh.......... 37 Chief Executive Officer and Director
Gerald E. Starr......... 45 President and Director
Charles F. Auster....... 47 Executive Vice President, Chief Operating Officer
and Director
James M. Demitrieus .... 51 Executive Vice President and Chief Financial Officer
Brian L. Reach.......... 44 Senior Vice President, Finance
Anthony M. Servidio..... 53 Senior Vice President, Sales
William E. Walsh........ 32 Senior Vice President, Corporate Operations
Robert D. Woog.......... 52 Senior Vice President, Network Development
Ronald D. Corwin........ 58 Chief Marketing and Corporate Communications Officer
John M. Faccibene....... 53 Managing Director, Americas
Peter N. Hase........... 41 Managing Director, Europe
Drew Kelton............. 40 Managing Director, Asia Pacific
Paul Pluschkell......... 34 Vice President, Liquidity Group
Richard M. Cashin, Jr. 46 Director
(2)....................
Douglas T. Hickey
(1)(2)................. 43 Director
Douglas J. Mello ....... 56 Director
John T. Sharkey ........ 62 Director
Peter A. Woog (1)....... 56 Director
</TABLE>
- ---------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.

Richard W. Smith has served as our Chairman of the Board and a director
since May 1999. He has served as a general partner of the general partners of
Allegra Capital Partners III, L.P. since May 1995, of Lawrence, Tyrrell, Ortale
& Smith, L.P. since December 1985, and of Lawrence, Tyrrell, Ortale & Smith II,
L.P. since July 1990. He is also a director of IPC, as well as several private
companies. He has participated in the private equity industry since 1979 and
was formerly employed by Citicorp Venture Capital, Ltd.

David A. Walsh founded our company in May 1993. Mr. Walsh has served as our
Chief Executive Officer since April 1998 and as a director since May 1993. From
June 1993 to May 1999, he served as our President. Mr. Walsh has also served as
an Executive Vice President and director of IPC since May 1998. Mr. Walsh also
co-founded Voyager Networks in 1993 and served as its Chief Executive Officer
and President until June 1995, when International Exchange Networks, Ltd.
commenced operations. Voyager Networks was a New York City based Internet and
data communications company which was acquired by GlobalCenter and then sold to
Frontier Corporation in February 1998. Prior to June 1993, Mr. Walsh held
various technology related positions in the financial community, including at
the New York Commodities Exchanges (NYCE, CSCE, NYMEX, COMEX), Garban/Garvin
Guybutler, an interdealer broker of government bonds, and Drexel Burnham
Lambert Trading Corporation.

Gerald E. Starr has served as our President and a director since May 1999.
Mr. Starr has served as President and Chief Executive Officer and a director of
IPC since December 1998. From January 1997 to December 1998, he was IPC's
Executive Vice President, Turret Systems and from February 1996 to January

61
<PAGE>

1997, he was IPC's Vice President of Manufacturing and Engineering. Since April
1995, he has also served as President of IPC Bridge, Inc., a wholly-owned
subsidiary of IPC, which acquired the assets of Bridge Electronics, Inc. in
April 1995. Mr. Starr founded Bridge Electronics, Inc. in 1987 and built it
into a leading provider of digital open line speaker systems to the foreign
exchange trading industry. Mr. Starr was the President and a director of Bridge
Electronics, Inc. from its founding until it ended its operations in April
1995. Previously, Mr. Starr founded Turret Equipment Corporation in 1980 and
sold it to Tie Communications in 1984, where he remained until 1990.

Charles F. Auster has served as our Executive Vice President and Chief
Operating Officer and has been a director since May 1998. Mr. Auster was a
founding beneficial stockholder of IXnet, and from February 1994 to June 1995,
Mr. Auster served as our Executive Vice President of Finance and Operations and
a director. From December 1995 until he negotiated the sale of Voyager
Networks, Inc. to GlobalCenter, in February 1998, he served as its President
and Chief Executive Officer and as one of its directors. From September 1991 to
March 1993, he served as Executive Vice President and a director of Ameritrade,
Inc., a Washington-based trade and investment banking firm. Mr. Auster is a
director of American Utilicraft, a design and manufacturing aircraft company,
Lucent Digital Video, an internal venture of Lucent Corp., and several
charitable organizations. Mr. Auster is a member of the District of Columbia
Bar and the Virginia Bar.

James M. Demitrieus has served as our Chief Financial Officer since July 15,
1999. Mr. Demitrieus negotiated the acquisition of Ecoban Finance Limited by SK
Global America, Inc. in September 1990, and served as Ecoban's President and
Chief Executive Officer from its acquisition to June 1999. From September 1993
to June 1998, Mr. Demitrieus served as the President and Chief Executive
Officer of SK Global America, Inc., and from September 1990 to September 1993,
he served as its Executive Vice President and Chief Financial Officer. From
1986 to 1990, he served as First Vice President and then as Senior Vice
President and Chief Operating Officer for Drexel Burnham Lambert, Inc.'s
commodity division. Prior to 1986, Mr. Demitrieus served as a controller and
Chief Accounting Officer at Freeport-McMoRan, Inc. and a manager of financial
controls at ITT Corporation.

Brian L. Reach has served as our Senior Vice President, Finance since July
15, 1999 and served as our Chief Financial Officer from May 1997 until July 14,
1999. Mr. Reach has also served as Chief Financial Officer of IPC since May
1997, as Vice President of IPC since November 1997 and as a director of IPC
since December 1998. Prior to joining IPC, Mr. Reach was employed by the
Celadon Group Inc., an international transportation company, as its Chief
Financial Officer from November 1993 to April 1996, and its Vice President--
Special Projects from April 1996 to April 1997. From September 1990 through
November 1993, he served as Chief Financial Officer of Cantel Industries, Inc.,
an international distributor of medical and scientific products and ergonomic
seating. Mr. Reach is a Certified Public Accountant.

Anthony M. Servidio was a founding stockholder of our company and has served
as our Senior Vice President, Sales since June 1995. From February 1990 to June
1995, Mr. Servidio served as Vice President of Sales of WorldCom's Banking and
Finance team. From June 1985 to February 1990, Mr. Servidio served as Vice
President, Sales with TRT/FTC Communications, a full service telecommunications
carrier. From July 1965 to June 1985, Mr. Servidio held various sales
responsibilities with RCA Global Communication, a larger inter-exchange
carrier, including Vice President of the Banking and Finance Division.

William E. Walsh has served as our Senior Vice President, Corporate
Operations since March 1999 and our Vice President of Marketing from October
1995 to March 1999. From August 1990 through October 1995, Mr. Walsh served as
Director of Marketing, Director of New Business Development, National Business
Manager, and Product Manager with Kirschner Medical Corporation, a medical
device manufacturer with global sales and operations. His responsibilities
included marketing, product management and developing new business. From July
1988 through August 1990, he held product management positions with Thackray
Reconstructive Systems and Osteonics Corporation.

Robert D. Woog has served as our Senior Vice President, Network Development
since April 1997 and our Vice President of Global Operations from July 1995 to
April 1997. Mr. Woog also served as a director from May 1998 to May 1999. From
April 1988 to July 1995, Mr. Woog served as Vice President of Trading

62
<PAGE>

Systems for Positron Industries, a trading turret manufacturer. He was
responsible for sales, installation, service and maintenance of all turret
products. From June 1986 to December 1987, Mr. Woog was Director of Quality
Assurance for Communications Techniques, Inc., a telecommunications equipment
manufacturer. He also served as Executive Vice President of Digital Transervice
Corporation from 1985 to 1986. Mr. Woog held various positions with AT&T Long
Lines from 1968 to 1985. Mr. Woog also served as Assistant Director General for
the Telecommunications Company of Iran from 1975 to 1978.

Ronald D. Corwin has served as our Chief Marketing and Corporate
Communications Officer since June 1999. Previously, he was Executive Vice
President of the American Stock Exchange from October 1994 to June 1999. Mr.
Corwin also served as Executive Vice President, Regional Markets Group, at
NatWest Bancorp from January 1994 to October 1994 and held a variety of
positions in the wholesale and retail banking sectors from 1990 to 1994. Prior
to that time, Mr. Corwin held various positions at Citicorp/Citibank including
five years in Europe as Regional Manager for Citicorp/Citibank retail
businesses in seven western European countries. He has also held positions at
Bank Leumi and the State University of New York.

John M. Faccibene has served as our Managing Director, Americas since March
1999 and our Vice President of Network Implementation from December 1998 to
March 1999. From September 1997 until December 1998, Mr. Faccibene was an
executive director at CIBC Oppenheimer, Corp., an investment banking firm,
where he was responsible for all technology, management and expenses for
communications/market data services and trading floors. From June 1988 until
August 1997, he was a senior vice president of Garban plc, an interdealer
broker of government bonds, where he was also responsible for communications
and trading floors. Mr. Faccibene is a director of Avesta Technology, a
software start-up company, Timestep, a software security company, and Netrix, a
network hardware company. He also served as a director of several financial and
telecommunications industry organizations, including the Security Industry
Association, the Wall Street Telecommunications Executive Committee and NYNEX
Executive Forum.

Peter N. Hase has served as our Managing Director, Europe since December
1998. Prior to joining us, Mr. Hase was the Business Development Manager,
Europe of Saturn Global Network Services from November 1993 until we acquired
it in December 1998. His responsibilities included all network development
activities throughout the European Region, which included 13 countries. Mr.
Hase also served as a director of Saturn Global Network Services from 1997
until it was acquired. From February 1990 to November 1993, Mr. Hase served as
a national sales manager for Midland Network Services, Ltd. Prior to that time,
he served as a regional sales manager of Racal Milgo UK and a senior account
manager for Tricom Communications.

Drew Kelton has served as our Managing Director, Asia Pacific since December
1998. Prior to joining us, Mr. Kelton was a founder and the Managing Director
of Saturn Global Network Services from September 1992 until we acquired it in
December 1998. His responsibilities included sales and operations in the Asia
Pacific area. From January 1984 to August 1992, Mr. Kelton held various sales
and marketing positions with Timeplex. From September 1981 to January 1984, he
was a sales engineer for Plessey Telecommunications, and, from July 1980 to
July 1981, he served as a development engineer with Standard Telecommunications
Laboratories.

Paul Pluschkell has served as our Vice President, Liquidity Group since
February 1998. From March 1997 until IPC acquired MXNet in February 1998, Mr.
Pluschkell served as President and Chief Executive Officer of MXNet. From
August 1995 to February 1997, Mr. Pluschkell was the Sales Manager of Open
Systems and IMS Technical Manager for the Northeast Region of Reuters America,
a provider of news and information. From August 1994 to August 1995, Mr.
Pluschkell served as the Chief Information Officer of Rumson Capital
Management, LLP, an asset management group. Prior to working at Rumson Capital
Management, LLP, he held various positions with Reuters.

Richard M. Cashin, Jr. has served as a director since April 1998. Mr. Cashin
has been employed by Citicorp Venture Capital, Ltd. since September 1980, and
has been President since December 1994. Mr. Cashin

63
<PAGE>

is a director of IPC, as well as Cable Systems International, Inc., Delco Remy
International, Inc., Delta Terminal Services, Inc., Euromax International plc,
Fairchild Semiconductor Corporation, FFC Holding, Inc., Gerber Childrenswear
Inc., Hoover Group, Lifestyle Furnishings International, Ltd., MSX
International, Inc., Thermal Engineering International Corporation and Titan
Wheel International, Inc.

Douglas T. Hickey has served as a director since May 1999. Mr. Hickey has
served as President and Chief Executive Officer and a director of Critical
Path Inc. since October 1998. From February 1998 to October 1998, Mr. Hickey
served as Executive Vice President of Frontier Corporation, a
telecommunications company, and as President of Frontier GlobalCenter. From
July 1996 to February 1998, Mr. Hickey served as President and Chief Executive
Officer of GlobalCenter, Inc., a web hosting company. In February 1998,
GlobalCenter was acquired by Frontier. From December 1994 to July 1996, Mr.
Hickey was President of Internet services at MFS Communications, a provider of
high-speed fiber-optic services. From September 1990 to November 1994, Mr.
Hickey was general manager of North American sales and field operations at
Ardis, a Motorola company.

Douglas J. Mello has served as a director since May 1999. Mr. Mello was
employed by Bell Atlantic, and its predecessor corporations, from 1965 to
March 1999. He served as President, Large Business Sales--North of Bell
Atlantic from August 1997 to March 1999. From March 1996 to August 1997, he
was NYNEX Vice
President--Business Marketing & Sales, responsible for all business customers
in the New York and New England areas. From January 1994 to March 1996, he
served as Vice President--Sales for NYNEX Corporation. Prior to 1994, Mr.
Mello was the Group Vice President--Manhattan Market Area for New York
Telephone, were he was responsible for the provisioning of telecommunications
technology from 1985 to 1991, Mr. Mello was President of Business Information
Systems Corp. Mr. Mello is a director of Telexis Co. and Netrix Corporation.

John T. Sharkey has served as a director since May 1999. Mr. Sharkey served
in various positions with MCI WorldCom, including Vice President, from June
1986 to April 1999. He was responsible for assisting in the design and
implementation of their corporate large account program. From May 1984 to June
1986, he was Regional Director of Major Accounts at Southern New England
Telephone. From December 1982 to March 1984, Mr. Sharkey was Vice President of
National Accounts with Optimum System, Inc., a Silicon Valley start up voice-
messaging company. Prior to December 1982, Mr. Sharkey held positions with
General Electric Company and ROLM Corporation. Mr. Sharkey is a director of
Mutual of America Institutional Funds and several charitable organizations.

Peter A. Woog has served as a director since May 1999. Mr. Woog has served
as President and Chief Executive Officer for Cable Systems International since
October 1995. From May 1989 to October 1995, Mr. Woog was AT&T's Copper Cable
Products Vice President, responsible for the copper cable products business
unit. Mr. Woog also serves as President and Chief Executive Officer and a
director of Cable Systems Holding Company. Mr. Woog is chairman of the board
of directors of IPC and is a director of Arizona Association of Industries and
The Samaritan Health Systems.

Under the terms of the Amended and Restated Investors Agreement, dated as
of April 9, 1998, and amended on May 21, 1999, by and among IPC, Cable Systems
Holding, LLC, Cable Systems International, Inc., Allegra Capital Partners III,
L.P., Richard P. Kleinknecht, David A. Walsh, Anthony M. Servidio and Charles
F. Auster, IPC agreed to vote for David A. Walsh to be on our board of
directors for as long as we remain a wholly-owned subsidiary of IPC. After
this offering we will no longer be wholly owned by IPC. Under the terms of
their employment agreements, we have agreed that Messrs. David A. Walsh and
Charles F. Auster would serve as directors.

David A. Walsh and William E. Walsh are brothers. Peter A. Woog and Robert
D. Woog are brothers.

Information About Our Board of Directors

Composition. Our certificate of incorporation sets the size of our board of
directors at between three and eleven members, and our by-laws empower the
board of directors to decide how many directors we will have

64
<PAGE>

within that range. Following this offering, our board of directors will
consist of nine members. Each director shall be elected at the annual meeting
of stockholders, and shall hold office until such director's successor is
elected and qualified or until such director's earlier resignation or removal.

Director Compensation. In the past, we have not paid our directors any
compensation for their service as directors. We will pay each of our non-
employee directors a retainer of $20,000 for each fiscal year in which they
served as a director. We will only pay this retainer to our non-employee
directors who attended at least 75% of the total number of meetings of the
board of directors held in that fiscal year. We have also granted options to
purchase 79,351 shares of our common stock to each of our non-employee
directors under our 1999 Stock Option Plan. For additional information about
the 1999 Stock Option Plan, please refer to the discussion under the caption
"Executive Compensation--IXnet Stock Option Plan." For the purposes of
director compensation, Messrs. Douglas T. Hickey, Douglas J. Mello, John T.
Sharkey, Richard W. Smith, Richard M. Cashin and Peter A. Woog, are considered
non-employee directors. Mr. Richard W. Smith has elected not to receive the
cash retainer. We do not pay additional compensation for service as a member
or as the chairman of a board committee.

Committees. Historically, our board of directors has not used a committee
structure in managing our affairs. However, it has now established standing
audit and compensation committees. Among other functions, the audit committee
will:

. make recommendations to the board of directors regarding the selection
of independent auditors;

. review the results and scope of the audit and other services provided by
our independent auditors;

. review our financial statements; and

. review and evaluate our internal control functions.

The compensation committee will establish a compensation philosophy to be
applied in making compensation decisions for our executive officers, set
executive officer salaries and administer our executive officer bonus plans as
well our 1999 Stock Option Plan.

Compensation Committee Interlocks and Insider Participation

Prior to May 1998, our board was responsible for establishing executive
officer compensation. However, in practice S. Terry Clontz, the then serving
Chief Executive Officer, and Brian L. Reach, the Chief Financial Officer, were
responsible for establishing executive officer compensation. The compensation
of Messrs. S. Terry Clontz and Brian L. Reach was set by the compensation
committee of IPC and by their employment agreements. Beginning in May 1998,
David A. Walsh, in consultation with the compensation committee of IPC,
determined the compensation of our executive officers, other than Mr. Anthony
M. Servidio. Messrs. David A. Walsh's and Anthony M. Servidio's compensation
was set by the compensation committee of IPC and by their employment
agreements.

From October 1, 1997 to May 22, 1998, our board consisted of Messrs. David
A. Walsh, Anthony M. Servidio, Richard Kleinknecht, Peter Kleinknecht and
Russell Kleinknecht. From May 22, 1998 to September 30, 1998, our board
consisted of Messrs. David A. Walsh, Charles F. Auster, S. Terry Clontz and
Robert D. Woog.

Messrs. David A. Walsh, Anthony M. Servidio, Charles F. Auster and S. Terry
Clontz served as executive officers during these periods. During our fiscal
year ended September 30, 1998, none of our executive officers served as a
director or member of the compensation committee or equivalent body of another
entity, except IPC, of which any of our directors was an executive officer.

65
<PAGE>

Executive Compensation

The following table provides information about the compensation earned by
our Chief Executive Officer during the year ended September 30, 1998, and by
the four other most highly compensated persons serving as our executive
officers at September 30, 1998. The table also provides information about an
additional executive officer who would be included in the table if his salary
for the period employed was annualized. We refer to these six executive
officers as our named executive officers.

The table includes, under the column captioned Salary, any pre-tax deferrals
made under the IPC 401(k) plan with respect to the year ended September 30,
1998. The column captioned Securities Underlying Options Granted reflects
options granted under the IPC Information Systems, Inc. 1998 Stock Incentive
Plan with an exercise price or $10.50 per share to purchase shares of IPC
Communications common stock.

The column captioned Other Annual Compensation does not include certain
perquisites and other personal benefits, securities or property where the
aggregate value does not exceed the lesser of $50,000 or 10% of the officer's
salary and bonus.

Summary Compensation Table

<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation
------------------------------ ------------
Securities
Underlying
Fiscal Other Annual Options All Other
Name and Principal Position Year Salary Bonus(1) Compensation Granted Compensation
- --------------------------- ------ -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David A. Walsh........... 1998 $199,423 $281,250 $44,745(2) 184,704 $195,000(3)
Chief Executive Officer 1997 190,000 -- -- -- --
1996 190,000 128,938 -- -- --

Brian L. Reach........... 1998 186,153 370,000 8,400(2) 92,352 4,800(3)
Senior Vice President,
Finance 1997 58,462 23,100 2,000(2) -- 2,000(3)
and former Chief
Financial Officer(4) 1996 -- -- -- -- --

Anthony M. Servidio(5)... 1998 190,000 195,833 44,745(2) -- 136,252(3)
Senior Vice President,
Sales

Robert D. Woog(5)........ 1998 138,918 202,500 -- 46,176 66,168(3)
Senior Vice President,
Network Development

William E. Walsh(5)...... 1998 122,393 56,875 -- 46,176 64,227(3)
Senior Vice President,
Corporate Operations

Charles F. Auster(5)(6).. 1998 75,000 48,750 -- 92,352 37,687(3)
Chief Operating Officer
and
Executive Vice President
</TABLE>
- ---------------------

(1) The cash bonus payments shown in the table for the year ended September 30,
1998 with respect to all of the named executive officers include (a) except
for Mr. Anthony M. Servidio, cash bonus payments awarded to them under the
IPC Information Systems Management Performance Plan, (b) cash payments made
in connection with the successful completion of IPC's recapitalization
transaction to Messrs. David A. Walsh, Anthony M. Servidio and Robert D.
Woog of $150,000 each, Mr. Brian L. Reach of $60,000 and Mr. William E.
Walsh of $10,000 and (c) in connection with IPC's recapitalization
transaction, Mr. Brian L. Reach received a payment of $204,000 in lieu of a
stock option grant by IPC. The cash payments made to Mr. Anthony M.
Servidio also include the minimum guaranteed commission payments required
to be made to him pursuant to his Amended and Restated Employment Agreement
dated December 18, 1997.
(2) Includes $44,745 paid by us on behalf of Messrs. David A. Walsh and Anthony
M. Servidio for legal fees incurred by them in connection with the
negotiation of their Amended and Restated Employment Agreements with us and
with respect to other company related matters. These amounts also include a
tax gross-up payment made by us to each officer in respect of the payment
of these legal fees. With respect to Mr. Brian L. Reach, consists of
payments for automobile allowance.

66
<PAGE>

(3) Includes (a) cash payments made pursuant to IPC's recapitalization
transaction to settle outstanding stock option grants made under the IPC
Information Systems, Inc. 1994 Stock Option Plan in the following amounts:
for Mr. David A. Walsh, $195,000; for Mr. Anthony M. Servidio, $130,000;
for Mr. Robert D. Woog, $62,000 and Mr. William E. Walsh, $62,000; (b)
amounts paid by IXnet as matching and/or profit sharing contributions to
the 401(k) Plan; (c) a $1,500 cash payment made to Mr. Anthony M. Servidio
for a successful employee referral and (d) a consulting fee totaling
$37,687 paid to Mr. Charles F. Auster.

(4) The compensation reported for Mr. Brian L. Reach includes compensation for
services to IPC. For the years ended September 30, 1998 and 1997, 20% and
12%, respectively, of Mr. Brian L. Reach's compensation was allocated to us
for services he performed as our Chief Financial Officer. His compensation
is charged to us pursuant to the allocation of indirect general and
administrative expenses by IPC, and may not reflect the actual portion of
his time spent acting as our Chief Financial Officer. Mr. Brian L. Reach's
compensation for the year ended September 30, 1997, reflects a partial year
because he joined IPC and us during that year.
(5) Compensation for the years ended September 30, 1996 and 1997 for the named
executive officers is not shown here, because it has not previously been
disclosed in filings with the SEC.
(6) Mr. Charles F. Auster became an executive officer in May 1998. His
compensation, including a pro-rated bonus, reflects the period from May
until September 1998. For the year ended September 30, 1998, Mr. Charles F.
Auster's compensation, on an annualized basis, would have been $210,000
plus a bonus equal to an additional 50% of his salary.

Employment Agreements

The following describes the terms of our employment agreement, with our
executive officers. The descriptions of these agreements do not purport to be
complete and are qualified in their entirety by reference to the full text of
the agreements, which have been filed as exhibits to the registration statement
of which this prospectus is a part.

Employment Agreement with David A. Walsh. International Exchange Networks is
a party to an amended and restated employment agreement dated as of December
18, 1997, and amended on June 1, 1999, with David A. Walsh under which he
serves as Chief Executive Officer and a director. This agreement has a five-
year term and provides for Mr. Walsh to receive a minimum annual base salary of
$225,000 and a discretionary cash bonus with a target of no less than $175,000
each year. Mr. Walsh also receives medical, insurance, retirement and other
types of fringe benefits and perquisites that are commensurate with his
position with us. Under his employment agreement, Mr. Walsh was granted an
option to purchase 1,763,352 shares of our common stock, on May 4, 1999. In the
event that Mr. Walsh terminates his employment with us prior to the expiration
of the term for good reason, or if we terminate his employment other than for
just cause, we would be required to pay him an amount equal to the product of
the greater of three or the number of years remaining in the term and the sum
of Mr. Walsh's then-current base salary and bonus.

Employment Agreement with Charles F. Auster. International Exchange Networks
is a party to an amended employment agreement dated as of May 1, 1998, and
amended on June 1, 1999 with Charles F. Auster under which he serves as
Executive Vice President, Chief Operating Officer and a director. This
agreement has a rolling four year term that converts to a fixed four year term
if either party notifies the other of an election to discontinue the
extensions, or upon the termination of Mr. Auster's employment. Mr. Auster is
paid a base salary of $210,000 and is eligible for an annual discretionary
bonus, as determined by the Board. In the event that Mr. Auster terminates his
employment with us prior to the expiration of the term for good reason, or if
we terminate his employment other than for just cause, we would be required to
pay him an amount equal to one year's salary and a bonus in an amount equal to
50% of his then-current base salary.

Employment Agreement with James M. Demitrieus. International Exchange
Networks is a party to an employment agreement dated as of July 1, 1999 with
James M. Demitrieus under which he serves as our Executive Vice President and
Chief Financial Officer as of July 15, 1999. This agreement has a rolling four
year term that converts to a fixed four year term if either party notifies the
other of an election to discontinue

67
<PAGE>

the extensions, or upon the termination of Mr. Demitrieus's employment. Under
the employment agreement, Mr. Demitrieus is entitled to receive an annual base
salary of $200,000 and an annual bonus with a target of 50% of his base salary.
In the event that Mr. Demitrieus terminates his employment with us prior to the
expiration of the term for good reason, or if we terminate his employment other
than for just cause, we would be required to pay him an amount equal to one
year's salary and a prorated bonus for the portion of the calendar year that he
worked at the time of the termination.

Employment Agreement with Anthony M. Servidio. International Exchange
Networks is a party to an amended and restated employment agreement dated as of
December 18, 1997 with Anthony M. Servidio under which he serves as Senior Vice
President, Sales. Mr. Servidio's employment agreement has a five-year term. Mr.
Servidio is entitled to receive a minimum annual base salary of $190,000 and a
commission-based bonus with a guaranteed minimum draw of $110,000 annually. In
the event that Mr. Servidio terminates his employment with us prior to the
expiration of the term for good reason, or if we terminate his employment other
than for just cause, we would be required to pay him an amount equal to three
year's salary and bonus.

Employment Agreement with William E. Walsh. International Exchange Networks
is a party to an employment agreement dated as of June 1, 1999 with William E.
Walsh under which he serves as Senior Vice President, Corporate Operations. Mr.
Walsh's employment agreement has a rolling four year term that converts to a
fixed four year term if either party notifies the other of an election to
discontinue the extensions, or upon the termination of Mr. Walsh's employment.
Under the employment agreement, Mr. Walsh is entitled to receive an annual base
salary of $150,000 and is eligible to receive an annual bonus with a target of
50% of his base salary. In the event that Mr. Walsh terminates his employment
with us prior to the expiration of the term for good reason, or if we terminate
his employment other than for just cause, we would be required to pay him an
amount equal to one year's salary and a prorated bonus for the portion of the
calendar year that he worked at the time of the termination.

Employment Agreement with John M. Faccibene. International Exchange Networks
is a party to an employment agreement dated as of June 1, 1999 with John
Faccibene under which he serves as Managing Director, Americas. This agreement
has a rolling four year term that converts to a fixed four year term if either
party notifies the other of an election to discontinue the extensions, or upon
the termination of Mr. Faccibene's employment. Under the employment agreement,
Mr. Faccibene is entitled to receive an annual base salary of $144,000 and an
annual bonus with a target of 50% of his base salary. In the event that Mr.
Faccibene terminates his employment with us prior to the expiration of the term
for good reason, or if we terminate his employment other than for just cause,
we would be required to pay him an amount equal to one year's salary and a
prorated bonus for the portion of the calendar year that he worked at the time
of the termination.

Employment Agreement with Peter N. Hase. Saturn Global Network Services (UK)
Ltd., a wholly owned indirect subsidiary of International Exchange Networks, is
a party to an employment agreement dated as of August 6, 1998 with Peter N.
Hase under which he serves as Regional Director, Europe. Mr. Hase's employment
agreement has an initial term of two years and is automatically renewable for
successive one-year terms, unless either party notifies the other of an
election to terminate 90 days prior to any scheduled renewal. Mr. Hase is paid
a base salary of Sterling 90,000 and is eligible for an annual discretionary
bonus with a target of 40% of his base salary. In the event that Mr. Hase
terminates his employment with us prior to the expiration of the term for good
reason, or if we terminate his employment other than for just cause, we would
be required to pay him an amount equal to the greater of one year's salary or
his salary for the remainder of the term, in addition to any bonus that he
would have received had such termination not occurred.

Employment Agreement with Drew Kelton. Saturn Global Network Services Pty
Ltd., a wholly owned indirect subsidiary of International Exchange Networks, is
a party to an employment agreement dated as of August 6, 1998 with Drew Kelton
under which he serves as Regional Director, AsiaPacific. Mr. Kelton's
employment agreement has an initial term of two years and is automatically
renewable for successive one-year terms, unless either party notifies the other
of an election to terminate 90 days prior to any scheduled renewal.

68
<PAGE>

Mr. Kelton is paid a base salary of $185,000 Australian, and is eligible for an
annual discretionary bonus with a target of 40% of his base salary. In the
event that Mr. Kelton terminates his employment with us prior to the expiration
of the term for good reason, or if we terminate his employment other than for
just cause, we would be required to pay him an amount equal to the greater of
one year's salary or his salary for the remainder of the term, in addition to
any bonus that we would have received had such termination not occurred.

Employment Agreement with Paul Pluschkell. International Exchange Networks
is a party to an employment agreement dated as of June 1, 1999 with Paul
Pluschkell under which he serves as an executive officer. This agreement has a
rolling four year term that converts to a fixed four year term if either party
notifies the other of an election to discontinue the extensions, or upon the
termination of Mr. Pluschkell's employment. Under the employment agreement, Mr.
Pluschkell is entitled to receive an annual base salary of $150,000 and an
annual bonus in an amount to be determined by the Board, provided, however,
that in no event will the sum of the base salary and annual bonus for any
calendar year be less than $240,000. In addition, if he is employed by us on
February 13, 2000, we are obligated to make an additional one-time bonus
payment to him of $208,000. In the event that Mr. Pluschkell terminates his
employment with us prior to the expiration of the term for good reason, or if
we terminate his employment other than for just cause, we would be required to
pay him an amount equal to one year's salary and a prorated bonus for the
portion of the calendar year that he worked at the time of the termination.

Our employment agreements with each of our executive officers also provide
each of them with continued benefit coverage in the event that we terminate
their employment without cause during the term of the agreement, or if one of
them terminates his employment for good reason. The agreements also contain
provisions preventing such officer from competing with us or soliciting our
employees during and, for specific periods, after the term of employment.

Stock Option Grants

IPC Stock Option Plan. The following table shows information about options
granted during the year ended September 30, 1998 to our named executive
officers under the IPC Information Systems, Inc. 1998 Stock Incentive Plan. All
of the options granted during the year ended September 30, 1998 were options to
purchase common stock of IPC and were granted under this plan. All of these
options have a ten-year term, are exercisable at the fair market value of the
IPC Communications common stock on the date of grant and are fully vested due
to accelerated vesting provisions based on IPC Communications common stock
achieving specified fair market levels for specified periods.

Option Grants in Year Ended September 30, 1998

<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Share Price Appreciation
Individual Grants for Option Term(1)
---------------------------------------------- ---------------------------
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration 5% 10%
Name Granted Fiscal Year(2) ($/Share) Date ($) ($)
---- ---------- -------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
David A. Walsh.......... 184,704 16.7 10.50 4/30/08 1,219,673 3,090,891
Brian L. Reach.......... 92,352 8.3 10.50 4/30/08 609,837 1,545,446
Anthony M. Servidio..... -- -- -- -- -- --
Robert D. Woog.......... 46,176 4.2 10.50 4/30/08 304,918 772,723
William E. Walsh........ 46,176 4.2 10.50 4/30/08 304,918 772,723
Charles F. Auster....... 92,352 8.3 10.50 4/30/08 609,837 1,545,446
</TABLE>
- ---------------------
(1) Represents the potential value of options granted at assumed 5% and 10%
rates of compounded annual stock appreciation for ten years from the date
the options were granted.
(2) These percentages represent the percent of total options granted to our
employees and employees of IPC.

69
<PAGE>

Prior to the consummation of the IPC recapitalization transaction on April
30, 1998, our executive officers participated in the IPC 1994 Stock Option
Plan. As of the recapitalization, each option outstanding under that plan was
cancelled in consideration of a cash payment equal to the product of (1) the
excess, if any, of $10.50 over the per share exercise price of such option and
(2) the number of shares of IPC common stock subject to such option. The
following table shows information about options granted to our named executive
officers under this plan which were canceled and for which cash payments were
made:

Aggregated Option Exercises in Year Ended
September 30, 1998 and Year-End Option Values

<TABLE>
<CAPTION>
Former Option Plan Stock Incentive Plan
-------------------------------- ---------------------------------------------------
Number of Securities
Options Underlying Unexercised Value of Unexercised In-
Canceled Value Options at Fiscal the-Money Options
under Former Realized on Year-End (#) at Fiscal Year-End ($)
Name Option Plan (#) Cancellation ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------ --------------- ---------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
David A. Walsh.......... 30,000 195,000 0/184,704 0/0
Brian L. Reach.......... 0 0 0/92,352 0/0
Anthony M. Servidio..... 20,000 130,000 0/0 0/0
Robert D. Woog.......... 13,000 62,000 0/46,176 0/0
William E. Walsh........ 13,000 62,000 0/46,176 0/0
Charles F. Auster....... 0 0 0/92,352 0/0
</TABLE>
- ---------------------
Except for such deemed exercises resulting in cash-out payments, no named
executive officer exercised any stock options during the year ended September
30, 1998.

IXnet Stock Option Plan. We have adopted the IXnet 1999 Stock Option Plan
for our employees, officers, directors and consultants and for the employees,
officers, directors and consultants of our parent and subsidiary companies. We
have reserved 7,053,409 authorized but unissued shares of our common stock for
issuance on exercise of stock options granted under this plan. As of July 1,
1999, we had granted options to purchase 6,530,184 shares of our common stock
to the following individuals and groups:

<TABLE>
<CAPTION>
Name Number of Shares
<S> <C>
David A. Walsh................................................. 1,763,352
Brian L. Reach................................................. 60,836
Anthony M. Servidio............................................ 103,450
Robert D. Woog................................................. 103,450
William E. Walsh............................................... 243,343
Charles F. Auster.............................................. 290,953
All executive officers as group (13 persons)................... 4,195,605
All non-employee directors (6 persons)......................... 476,106
All others (252 persons)....................................... 1,858,473
</TABLE>

All of these options are incentive stock options for federal income tax
purposes up to applicable limits, have a term of 10 years and are subject to
earlier expiration upon the option holder's termination of employment. The
options have an exercise price of $13.96 per share. Mr. David A. Walsh's
options were 100% vested when granted. All other options vest at the rate of
25% on the first anniversary of the grant date and an additional 2 1/12% per
month for the next 36 months. However, in the event of a change in control, 50%
of those options not yet vested shall become vested immediately. Options may
not be exercised until November 4, 2001, unless, prior to that date, we stop
filing consolidated income tax returns with IPC or our board of directors
allows the exercise.

70
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table shows certain information with respect to the beneficial
ownership, as of May 1, 1999, of:

. our common stock by each person who we know beneficially owns more than
5% of our outstanding common stock;

. the common stock of IPC Communications, by each of our directors and our
named executive officers; and

. the common stock of IPC Communications, by all of our directors and
executive officers as a group.

Except as otherwise noted, the persons named in the table have sole voting
and investment power with respect to all shares of common stock shown as
beneficially owned by them, subject to community property laws where
applicable. Share ownership includes shares issuable upon exercise of
outstanding options that are exercisable within 60 days after May 1, 1999 as
described in the footnotes below. Percentage of ownership is calculated under
SEC Rule 13d-3(d)(1). The calculation of the percentage of beneficial ownership
of our common stock does not include shares to be issued if the underwriter's
over-allotment option is exercised. Unless otherwise indicated, the address for
each stockholder listed below is c/o IXnet, Inc., 88 Pine Street, New York, New
York 10005.

<TABLE>
<CAPTION>
Percentage of Class
Number of Beneficially Owned(1)
Shares -------------------------
Beneficially Before After
Beneficial Owner Securities Owned Owned Offering Offering
- ------------------------ ------------------------------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Five Percent
Stockholder:
IPC Information Systems,
Inc. (2)............... IXnet common stock 43,100,000 100.0% 85.2%
Directors and Executive
Officers:
Richard W. Smith........ IPC Communications common stock 381,904(3) 4.7 4.7
David A. Walsh.......... IPC Communications common stock 446,798(4) 5.4 5.4
Gerald E. Starr......... IPC Communications common stock 92,352(5) 1.1 1.1
Charles F. Auster....... IPC Communications common stock 115,968(6) 1.4 1.4
Brian L. Reach.......... IPC Communications common stock 96,352(7) 1.2 1.2
James M. Demitrieus..... IPC Communications common stock -- -- --
Anthony M. Servidio..... IPC Communications common stock 174,730 2.2 2.2
William E. Walsh........ IPC Communications common stock 46,376(8) * *
Robert D. Woog.......... IPC Communications common stock 46,176(9) * *
Richard M. Cashin, Jr... IPC Communications common stock -- -- --
Douglas T. Hickey....... IPC Communications common stock -- -- --
Douglas J. Mello........ IPC Communications common stock 500 * *
John T. Sharkey......... IPC Communications common stock -- -- --
Peter A. Woog........... IPC Communications common stock 4,000(10) * *
All executive officers
and directors
as a group (19 per-
sons).................. IPC Communications common stock 1,443,156 16.7 16.7
</TABLE>
- ---------------------
* Indicates beneficial ownership of less than one percent of the outstanding
shares of common stock of IPC Communications.

(1) For IPC Communications common stock, based on 8,076,188 shares of IPC
Communications common stock outstanding as reported in the proxy statement
for the annual meeting of stockholders of IPC Communications as filed with
the SEC on June 4, 1999, plus, in the case of each individual, the number
of shares issuable upon exercise of options that are exercisable by the
individual within 60 days after May 1, 1999.

(2) Based on amendment No. 4 to its Schedule 13D, filed April 15, 1999, Cable
Systems Holding, LLC beneficially owns 4,829,584 shares of common stock of
IPC Communications, the parent company of IPC

71
<PAGE>

Information Systems. Based on amendment No. 2 to their jointly filed
Schedule 13G, filed on July 2, 1999, Chesapeake Partners Management Co.,
Inc., Chesapeake Partners Limited Partnership and Chesapeake Partners
Institutional Fund Limited Partnership own 535,300, 498,000 and 18,300
shares, respectively. As a result of their beneficial ownership of IPC
Communications common stock, these persons may be deemed to beneficially
own more than 5% of our common stock. Cable Systems Holding, LLC, Cable
Systems International, Inc., Allegra Capital Partners III, L.P., Richard
Kleinknecht, David A. Walsh, Anthony Servidio and Charles F. Auster are
parties to the Investors Agreement, which contains provisions concerning
the voting and transfer of shares of common stock of IPC Communications.
Under applicable SEC rules, this group of investors may be deemed to
beneficially own more than 5% of our common stock as a result of the
group's deemed beneficial ownership of more than 50% of the common stock
of IPC Communications. Citicorp Venture Capital, Ltd, David Kirby and John
O'Mara, members of Cable Systems Holding, LLC, are entitled to exercise
joint decision making authority over the shares of common stock of IPC
Communications held by Cable Systems Holding, and thus may also be deemed
to beneficially own more than 5% of our common stock.

(3) Consists of 381,904 shares beneficially owned by Allegra Capital Partners
III, L.P. Does not include 6,051,628 shares of common stock of IPC
Communications owned by other signatories of the Investors Agreement.

(4) Includes 184,704 shares issuable upon exercise of options that are
exercisable within 60 days after May 1, 1999. Does not include 6,171,438
shares owned by other signatories of the Investors Agreement.

(5) Represents shares issuable upon exercise of options that are exercisable
within 60 days after May 1, 1999.

(6) Includes 3,000 shares jointly owned by Mr. Charles F. Auster and his
spouse and 300 shares owned by his minor children. Also includes 92,352
shares issuable upon exercise of options that are exercisable within 60
days after May 1, 1999. Does not include 6,413,216 shares owned by other
signatories of the Investors Agreement.

(7) Includes 92,354 shares issuable upon exercise of options that are
exercisable within 60 days after May 1, 1999.

(8) Includes 46,176 shares issuable upon exercise of options that are
exercisable within 60 days after May 1, 1999.

(9) Represents shares issuable upon exercise of options that are exercisable
within 60 days after May 1, 1999.

(10) Does not include 4,829,584 shares beneficially owned by Cable Systems
Holding, LLC, of which Mr. Peter A. Woog is a member.

72
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Agreements with IPC

Effective upon the closing of this offering, we will be subject to an inter-
company agreement, a registration rights agreement, a tax-sharing agreement, a
maintenance agreement and a services agreement with IPC. The inter-company
agreement contains provisions relating to the separation of our business
operations from IPC, as well as provisions governing the various interim and
ongoing relationships between us and IPC. The registration rights agreement
provides IPC with certain registration rights relating to the shares of our
common stock which it holds. The tax-sharing agreement contains provisions
relating to the allocation of tax liability and tax benefits between us and our
domestic subsidiaries and IPC and its other domestic subsidiaries. The
maintenance agreement provides for the continuation by IPC of its performance
of installation, maintenance and staging and integration services. Under the
services agreement, we will continue to provide IPC with dedicated voice
service and its frame relay network.

We have set forth below a summary description of the agreements between us
and IPC. The descriptions of these agreements do not purport to be complete and
are qualified in their entirety by reference to the full text of the
agreements, which, except for the services agreement, have been filed as
exhibits to the registration statement of which this prospectus is a part.

Inter-Company Agreement

Corporate support services. The inter-company agreement describes certain
corporate support services that IPC will provide to us. These include cash
management, accounting, executive management, legal, administrative, human
resources (including medical insurance, 401(k) plan and other employee
benefits), information systems and insurance. To the extent assets are used by
IPC in providing these services, the services are directly or solely
attributable to us or are allocatable based on an objective measure (e.g.
square feet, revenue, etc.), such costs shall be directly allocated to us by
IPC. We shall reimburse IPC for all other cost, other than insurance, incurred
by IPC in providing these services on a quarterly basis, based on the number of
employees employed by us in relation to the number of employees employed by
both IPC and us. Based on a similar per person allocation, $534,000, $853,000
and $1.5 million, for the years ended September 30, 1996, 1997 and 1998,
respectively, were allocated to us as general and administrative expenses by
IPC. With respect to insurance, we will reimburse IPC for the insurance
premiums paid or incurred by IPC and covering risks applicable to us and our
subsidiaries, and, if such cost cannot be determined by IPC, as determined by
the underwriter of the relevant insurance policy.

Financing arrangements. Subject to the terms and conditions of the inter-
company agreement, IPC has agreed to continue to provide us with ongoing
financing and to obtain letters of credit on our behalf. The amount available
under the inter-company agreement will start at $6.25 million and increase by
that amount quarterly thereafter, up to an aggregate of $50 million during the
period beginning July 1, 1999 through June 30, 2001. On June 30, 2001, all
amounts loaned and outstanding under the inter-company agreement will become
immediately due and payable. For a detailed description of the financing
arrangements see "Management Discussion and Analysis--Liquidity and Capital
Resources--Financing Arrangements."

Indenture obligations. In connection with its recapitalization transaction
on April 30, 1998, IPC issued and sold $247.4 million in principal amount of 10
7/8% senior discount notes due 2008 under an indenture. The indenture contains
certain restrictive financial and operating covenants that limit the discretion
of the management of IPC and its restricted subsidiaries, which include all of
IPC's material subsidiaries, including IXnet. Under the inter-company
agreement, we will be bound by the covenants and other restrictions,
limitations and other obligations of the indenture. A copy of the indenture is
filed as an exhibit to the registration statement of which this prospectus is a
part. The following summary of certain provisions of the indenture does not
purport to be complete and is qualified in its entirety by reference to the
full text of the indenture, which has been filed as an exhibit to the
registration statement of which this prospectus is a part:

The notes are general unsecured senior obligations of IPC and rank on parity
with all other senior unsecured indebtedness of IPC.

73
<PAGE>

The financial and operating covenants include the following:

. a limitation on incurring any indebtedness unless IPC and its restricted
subsidiaries, as a group, would not exceed a specified ratio of
indebtedness to earnings;

. a limitation on making any restricted payment, as defined in the
indenture, including payment of dividends, prepayment of subordinated
indebtedness and the repurchase of capital stock;

. a limitation on the ability of IPC to sell or to permit any subsidiary
to issue or sell capital stock of a subsidiary, unless the proceeds are
used for permitted capital expenditures;

. a limitation on entering into agreements or arrangements that could
limit any restricted subsidiary's ability to pay dividends or make other
payments or transfers to IPC;

. a limitation on making guarantees or entering into transactions with
affiliates;

. a limitation on incurring certain indebtedness secured by liens without
equally and ratably securing the notes;

. a limitation on entering into sale-leaseback transactions; and

. a limitation on selling non-current assets.

In addition, the indenture limits the ability of IPC to merge with, or to
transfer all or substantially all of its assets to, another person. The notes
provide for acceleration upon events of default.

Credit agreement obligations. In connection with its recapitalization
transaction, entered into April 30, 1998, IPC entered into a five-year credit
agreement with a syndicate of lenders (with General Electric Capital
Corporation as administrative agent and collateral agent to such lenders). The
credit agreement, as amended on June 21, 1999, provides IPC with access to a
working capital facility of up to $45 million, based on borrowing base
availability, and a $20 million term loan. The obligations under the credit
agreement are secured senior obligations of IPC and its material subsidiaries.
We are a guarantor under the credit agreement and have agreed to be bound by
its covenants and other restrictions, limitations and obligations. A copy of
the credit agreement is filed as an exhibit to the registration statement of
which this prospectus is a part. The following summary of certain provisions of
the credit agreement does not purport to be complete and is qualified in its
entirety by reference to the full text of the credit agreement, which has been
filed as an exhibit to the registration statement of which this prospectus is a
part:

The credit agreement contains certain restrictive financial and operating
covenants that limit the discretion of the management of IPC and its
subsidiaries, including the following:

. a limitation on incurring indebtedness;

. a limitation on paying dividends, prepaying subordinated indebtedness,
repurchasing capital stock or making other restricted payments, as
defined in the agreement;

. a limitation on selling or issuing capital stock of a subsidiary, other
than the issuance of common stock in this offering and under the 1999
Stock Option Plan;

. a limitation on transactions with affiliates;

. a limitation on investing in non-subsidiary companies or entities;

. a limitation on selling or otherwise disposing of assets, other than in
the ordinary course of business; and

. a limitation on merging or consolidating with any other entity or making
large capital expenditures.

In addition, the credit agreement requires IPC and its subsidiaries to
provide financial information to the lenders, maintain specified financial
ratios relating to earnings, interest coverage, total leverage and fixed charge
coverage and to maintain a first priority security interest, in favor of the
lenders, over all of its pledged collateral.

74
<PAGE>

Accordingly, all of our and our subsidiaries' capital stock and real and
personal property are pledged as collateral under IPC's credit agreement to
support the borrowings of IPC.

The lenders under the credit agreement have the right to demand that we
register those shares of our common stock for public sale that are held by IPC,
if we or IPC default under the terms of the agreement and they foreclose on
those shares. The credit agreement provides for acceleration upon events of
default.

Real Estate. Under the inter-company agreement, we have agreed with IPC
regarding assignments or subleases of certain leases and the allocation of
costs incurred for our occupancy of portions of IPC-leased office facilities.

With respect to our largest occupied space, 88 Pine Street, New York, NY,
where our executive and sales offices are located, IPC has agreed, subject to
the consent of its landlord, to use reasonable efforts to assign the lease,
currently in the name of an IPC subsidiary and covering the 6th floor and
certain other space in that building that we occupy, to us.

Our London, England, executive, sales and network operations center occupies
two floors of a building under long-term lease to IPC. We will, in the future,
explore a formal sub-lease arrangement. Until such time, and also with respect
to our occupancy of portions of IPC-leased branch office facilities, all costs
incurred by IPC for such space, for its maintenance and electric and other
utility costs, telephone system usage, etc., will be charged to us as incurred
for actual discernable costs and otherwise allocated between the companies
based upon the square footage occupied by each of us.

Transfer of Internet Address. We use the Internet for both our internal
needs and to provide service to our customers. Currently, we use IP address
space previously assigned to IPC. Under the inter-company agreement, we and IPC
will request that the American Registry for Internet Numbers, the entity which
assigns IP address space to end-users, transfer to us the block of IP
addresses, previously assigned to IPC. This will allow us to more fully utilize
these resources. ARIN's guidelines provide for the transfer of IP address space
as a result of mergers, acquisitions, reorganizations and other corporate
organizational changes.

Product Distribution. IPC has granted to us distribution rights for sales by
us of some of its products in connection with sales of our services.

Deconsolidation. Under the inter-company agreement, we have agreed that,
prior to the later to occur of (1) November, 2001 and (2) the termination of
IPC's credit agreement, we would not take any action or permit our subsidiaries
to take any action, including the issuance of our common stock, that would
result in the deconsolidation for United States federal income tax purposes of
us and IPC.

Services Agreement

We will continue to provide IPC with the IXPrime dedicated voice service and
its frame relay network at rates specified in the services agreement. We
provide domestic and international long distance telecommunications services to
IPC as well as private line services between IPC's domestic locations. Amounts
charged to IPC were $18,000, $165,000 and $170,000 for the years ended
September 30, 1996, 1997 and 1998, respectively.

Maintenance Agreement

Under the maintenance agreement, IPC will continue to provide us with
installation services, which include circuit testing and acceptance, line
installations and DLIC installations at the rates specified therein. IPC will
also continue to provide us with maintenance services, which include circuit
transmission testing, equipment replacement and DLIC support, at the response
times and at the rates specified in the maintenance

75
<PAGE>

agreement. IPC will also continue to provide us with staging and integration
services, which are utilized for large scale projects requiring customer
premises equipment, and include, staging facilities, engineers and technicians
to order, accept and assemble customer configurations at the rates specified in
the maintenance agreement. The maintenance agreement also provides for our
purchase from IPC of new, used and refurbished turret systems at the purchase
prices specified therein.

Registration Rights Agreement

After the closing of this offering, IPC will own 85.2% of our outstanding
shares of common stock or 83.3% if the underwriters exercise their over-
allotment option in full. IPC may not freely sell such shares to the public
without registration under the Securities Act. See "Shares Eligible for Future
Sale--General." The registration rights agreement with IPC will provide it with
certain registration rights relating to the shares of our common stock which it
holds. These registration rights become effective after 180 days following the
closing of this offering.

IPC may request up to two registrations, each a demand registration, under
the Securities Act of all or any portion of our shares covered by the
registration rights agreement, and we will be obligated to register such shares
as requested by IPC.

IPC will designate certain terms of each offering effected pursuant to a
demand registration, which may take any form, including an underwritten public
offering or a shelf registration. If a demand registration will be an
underwritten offering, IPC may select the investment banker(s) and manager(s),
subject to our reasonable objection, as well as any financial printer,
solicitation and/or exchange agent and counsel for the offering. We may select
our own outside counsel and independent auditors.

We would only be obligated to register shares as a result of a demand
registration if the reasonably anticipated aggregate public offering price was
at least $25 million.

We are not required to undertake a demand registration within 120 days of
the effective date of a previous demand registration, other than a demand
registration that was effected as a shelf registration. Also, we have the right
to postpone the filing or effectiveness of any demand registration for up to
120 days if, in the reasonable judgment of our board of directors, such
registration would reasonably be expected to have a material adverse effect on
any existing proposal or plans by our company to engage in certain material
transactions; provided, however, that we may exercise this right to delay only
once in any 12-month period.

The registration rights agreement also provides for certain piggyback
registration rights for IPC. Whenever we propose to register any of our
securities under the Securities Act for ourselves or others, we shall provide
prompt notice to IPC and include in such registration all shares of our stock
which IPC requests to be included, subject to customary cutback and holdback
provisions.

The registration rights agreement contains indemnification and contribution
provisions by us for the benefit of IPC and by IPC for the benefit of us and
any underwriters with respect to information provided by IPC.

IPC may transfer shares covered by the registration rights agreement, and
the holders with a minimum amount of such transferred shares will be entitled
to the benefits of, and the obligations under, the registration rights
agreement. Such transferees will be entitled to the rights available to IPC
described above; provided, however, that the holder or holders of a majority of
the shares covered by the registration rights agreement will be entitled to
exercise certain of such rights.

The registration rights will remain in effect with respect to any shares of
our common stock for a period of five years from the closing of this offering,
or until:

. such shares have been sold under an effective registration statement
under the Securities Act;

76
<PAGE>

. such shares have been sold to the public under Rule 144 under the
Securities Act, or any successor provision;

. such shares have been otherwise transferred and the new certificates
replacing them do not bear a legend restricting further transfer without
registration under the Securities Act or any similar state law;

. such shares have ceased to be outstanding; or

. in the case of shares held by a transferee of IPC that is not our
affiliate, when such shares become eligible for sale under Rule 144(k)
under the Securities Act, or any successor provision.

In addition, under the terms of IPC's credit agreement, the lenders have a
right to cause us to register our common stock for public sale. See "--Credit
Agreement Obligations."

Compensation for Use of Tax Losses and Tax-Sharing Agreement

We and IPC Communications and our respective United States subsidiaries
will continue to be members of an affiliated group of corporations that file
United States federal income tax returns on a consolidated basis.

We and our domestic subsidiaries and IPC Communications and its other domestic
subsidiaries have entered into a tax-sharing agreement under which the tax
liability will be allocated between us and IPC Communications in accordance
with our respective tax liability computed as though we and our domestic
subsidiaries, on the one hand, and IPC Communications and its other domestic
subsidiaries, on the other hand, filed separate returns. Under the tax-sharing
agreement, we or IPC Communications may be required to pay compensation to the
other for our or IPC Communication's tax losses which reduced the combined tax
liability. The tax-sharing agreement will provide for similar arrangements
with respect to state, local and foreign taxation.

IPC's Acquisition of IXnet

In June 1995, IPC invested $5.5 million in return for shares of our common
stock, which, following such issuance of shares, was equal to 80% of our
outstanding stock. Following IPC's investment, David A. Walsh, our Chief
Executive Officer, and Anthony M. Servidio, our Senior Vice President, Sales,
retained ownership of the remaining 20% of our outstanding stock. In
connection with IPC's acquisition of our stock, we purchased all of the common
stock held by our three remaining stockholders, including Charles Auster's
spouse, for cash and other deferred consideration under installment share
purchase agreements. The deferred consideration may be due upon a change of
control or, if none occurs prior to the year 2000, in the year 2000. Payment
is based upon a valuation formula. On April 30, 1998, under the terms of a
stock transfer agreement, Mr. Auster and his spouse released us and IPC from
any obligation to make a future payment to them under our installment share
purchase agreement with them, in exchange for 20,316 shares of IPC common
stock, transferred to them by Messrs. Walsh and Servidio. Based upon data as
of March 31, 1999, we believe that any obligation under the one installment
share purchase agreement that is currently outstanding is not material.

In connection with IPC's recapitalization transaction, we, IPC and Messrs.
Walsh and Servidio entered into a share exchange and termination agreement,
dated as of December 18, 1997, whereby Messrs. Walsh and Servidio agreed to
exchange their shares of IXnet common stock for 304,762 and 203,174 shares of
IPC common stock, respectively. Ten percent of the shares were to be paid upon
receipt by IPC of a release of any obligation it may have had under the
installment share purchase agreements. The retained shares were forfeited to
IPC on June 18, 1998.

Employment Agreements and Compensation

We are party to employment agreements with a number of our executive
officers that provide for, among other terms, specified salaries and severance
arrangements. See "Management--Employment Agreements."

77
<PAGE>

As part of the general support services provided by IPC, IPC compensated Mr.
Reach, who served as our Chief Financial Officer until July 15, 1999, and
allocated a portion of this total compensation to us for services he performed
as our Chief Financial Officer. For the years ended September 30, 1998 and
1997, 20% and 12%, respectively, of Mr. Reach's compensation was allocated to
us as indirect general and administrative expenses by IPC. On a going forward
basis, a certain percentage of Messrs. Reach's and Starr's compensation will be
paid by each of IXnet and IPC, as determined from time to time; however, both
historically, for Mr. Reach, and in the future, the allocation of compensation
obligations between us and IPC may not reflect the actual portion of Messrs.
Reach's and Starr's time spent acting as an officer of IXnet or IPC. Each of
our other executive officers is compensated directly by IXnet, however, some of
our executive officers have received options under the IPC Communications, Inc.
1999 Stock Incentive Plan, See "--Ownership of IPC Stock by Our Directors and
Some of Our Executive Officers."

Ownership of IPC Stock by Our Directors and Some of Our Executive Officers

Our directors and some of our executive officers own substantial amounts of
IPC stock and options to purchase IPC stock. The stock options were granted to
certain executive officers as compensation under the IPC 1998 Stock Incentive
Plan or the IPC Communications 1999 Stock Incentive Plan. See "Principal
Stockholders." Such ownership could create, or appear to create, potential
conflicts of interest when directors and officers are faced with decisions that
could have different implications for us and IPC.

Payments under the IPC Information Systems, Inc. 1994 Stock Option Plan.

Some of our directors and officers were granted options under the IPC
Information Systems, Inc. 1994 Stock Option Plan prior to the cancellation of
those options on April 30, 1998. In connection with the cancellation of those
options, Mr. David A. Walsh received $195,000, Mr. Anthony M. Servidio received
$130,000, Mr. Robert D. Woog received $62,000 and Mr. William E. Walsh received
$62,000.

Guarantees

IPC provides various forms of credit enhancement to us. These include
letters of credit, unconditional guarantees of equipment acquisitions and
financings and trade payables. We have guaranteed IPC borrowings under its
credit agreement and we have pledged our assets to secure such guarantee.

IPC's Contribution of Capital to IXnet

Since 1995, IPC has provided us with approximately $100 million to fund our
operations. Following the $73 million capital contribution from IPC in March
1999, we remained indebted to IPC in the amount of approximately $25 million.

IPC's Contribution of MXNet to IXnet

On February 13, 1998, IPC acquired all of the issued and outstanding common
stock of MXNet and paid $6.7 million in the form of a promissory note. IPC
contributed the shares of MXNet to us on May 4, 1999.

DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 100,000,000 shares of common stock,
$0.01 par value per share. There were 43,100,000 shares of our common stock
outstanding immediately prior to this offering, held of record by one
stockholder. We have reserved for issuance 7,053,409 shares under the 1999
Stock Option Plan.

The following summary of our capital stock and certain provisions of our
certificate of incorporation and bylaws is qualified in its entirety by the
provisions of the certificate of incorporation and bylaws, which are included
as exhibits to the registration statement of which this prospectus is a part.

78
<PAGE>

Common Stock

Holders of our common stock are entitled to one vote per share on all
matters submitted to a vote of stockholders, including the election of
directors. They are also entitled to receive any dividends that are declared by
our board of directors out of funds legally available. See "Dividend Policy."
In the event of our liquidation, dissolution or winding up, holders of our
common stock are entitled to share ratably in all assets remaining after we pay
our liabilities. Holders of our common stock have no preemptive or other
subscription rights and no rights to convert their common stock into any other
securities, and there are no redemption or sinking fund provisions with respect
to such shares.

Registration Rights

We have entered into an agreement with IPC to provide it with registration
rights relating to the shares of our common stock which it holds. We granted
the lenders under IPC's credit agreement registration rights which they may
exercise if we or IPC default under the terms of IPC's credit agreement, and
the lenders foreclose on the shares of our stock owned by IPC. See "Certain
Relationships and Related Transactions--Agreements with IPC--Registration
Rights Agreement," and for more information regarding IPC's credit agreement
see "Certain Relationships and Related Transactions--Agreements with IPC--
Inter-Company Agreement--Credit Agreement Obligations."

Delaware Anti-Takeover Law and Certain Charter Provisions

We elected not to be subject to Section 203 of the General Corporation Law
of the State of Delaware. Section 203 prohibits a publicly held Delaware
corporation from engaging in a business combination transaction with any
interested stockholder for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. For purposes of this
section, a business combination includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder, and
an interested stockholder is a person who, together with affiliates and
associates, owns, or within three years, did own, 15% or more of a
corporation's voting stock. If we were governed by Section 203, the statute
could prohibit or delay the accomplishment of mergers or other takeover or
change in control attempts with respect to us and, accordingly, could
discourage attempts to acquire us.

Transfer Agent and Registrar

ChaseMellon Shareholder Services, L.L.C., New York, New York has agreed to
be the transfer agent and registrar for our common stock.

SHARES ELIGIBLE FOR FUTURE SALE

General

After this offering, we will have 50,600,000 shares of common stock
outstanding. If the underwriters exercise the over-allotment option in full, we
will have 51,725,000 shares of common stock outstanding. All of the shares of
our common stock sold in this offering will be freely tradable without
restriction under the Securities Act unless such shares are acquired by an
affiliate of IXnet as that term is defined in Rule 144 promulgated under the
Securities Act, which shares will remain subject to the resale limitations of
Rule 144.

The 43,100,000 shares of our common stock that IPC will continue to hold
after this offering constitute restricted securities within the meaning of Rule
144. IPC may sell these shares in the open market after this offering, subject
to the applicable requirements of Rule 144 and certain contractual lockup
provisions, both of which are described below.

79
<PAGE>

Rule 144

Generally, Rule 144 provides that a person who has beneficially owned
restricted shares for at least one year will be entitled to sell on the open
market in brokers' transactions within any three month period a number of
shares that does not exceed the greater of:

. 1% of the then outstanding shares of common stock; and

. the average weekly trading volume in the common stock on the open market
during the four calendar weeks preceding such sale.

Sales under Rule 144 are also subject to certain post-sale notice
requirements and the availability of current public information about us.

Under Rule 144(k), a stockholder who is not currently, and who has not been
for at least three months before the sale, an affiliate of ours who owns
restricted shares that have been outstanding for at least two years may resell
those restricted shares without compliance with the above requirements. The
one- and two-year holding periods described above do not begin to run until the
full purchase price is paid by the person acquiring the restricted shares from
us or an affiliate of ours.

If an affiliate currently owns shares of our common stock or otherwise
acquires shares of our common stock, the shares held by such person may only be
sold under Rule 144 in brokers' transactions and subject to the volume
limitations described above without regard to duration held. Shares properly
sold in reliance upon Rule 144 to persons who are not affiliates are thereafter
freely tradable without restriction unless subsequently acquired by an
affiliate.

Sales of substantial amounts of our common stock in the open market, or the
availability of such shares for sale, could adversely affect the price of our
common stock. Any shares distributed by IPC will be eligible for immediate
resale in the public market without restrictions by persons other than our
affiliates.

Rule 701

In general, under Rule 701 as promulgated under the Securities Act, any of
our employees, consultants or advisors who purchase shares from us in
connection with a compensatory stock or option plan or other written agreement
outstanding prior to the date of this prospectus, is eligible to resell such
shares 90 days after the effective date of the registration statement of which
this prospectus forms a part in reliance on Rule 144, but without compliance
with certain restrictions, including the holding period, contained in Rule 144.
As of July 1, 1999, we had granted options to purchase 6,530,184 shares of our
common stock. These options may not be exercised for 2 1/2 years after the date
of grant, subject to certain exceptions. See "Management--Stock Option Grants--
IXnet Stock Option Plan."

Registration Rights

Under the registration rights agreement, IPC and its transferees will be
entitled to certain registration rights with respect to the shares our of
common stock that IPC owns. See "Certain Relationships and Related
Transactions--Agreements with IPC--Registration Rights Agreement." The lenders
under IPC's credit agreement are also entitled to certain registration rights.
See "Certain Relationships and Related Transactions--Agreements with IPC--
Inter-Company Agreements--Credit Agreement Obligations." After a sale of these
shares under any such registration, the registered shares will become freely
tradable without restriction under the Securities Act subject to restrictions
imposed by lock-up agreements described below. Any such sale of our common
stock could have a material adverse effect on the trading price of our common
stock.

Lock-Up Agreements

IPC, the executive officers and directors of IXnet and IPC, and certain
stockholders of IPC Communications have signed lock-up agreements under which
they agree to be restricted from the transfer or sale of any IXnet or IPC
common stock for a period of 180 days from the date of this prospectus, without
prior

80
<PAGE>

written consent of Donaldson, Lufkin & Jenrette Securities Corporation, which
consent may be granted at any time, or from time to time, without notice. See
"Underwriting."

Prior to the offering, there has been no market for our common stock. No
predictions can be made of the effect, if any, that market sales of shares of
common stock or the availability of such shares for sale will have on the
market price prevailing from time to time. Nevertheless, sales of significant
amounts of our common stock could adversely affect the prevailing market price
of the common stock, as well as impair our ability to raise capital through the
issuance of additional equity securities.

81
<PAGE>

UNDERWRITING

Subject to the terms and conditions contained in an underwriting agreement
dated 1999, the underwriters named below, who are represented by Donaldson,
Lufkin & Jenrette Securities Corporation, or DLJ, Salomon Smith Barney Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, First Union Capital Markets
Corp. and DLJdirect Inc., have severally agreed to purchase the number of
shares of our common stock shown opposite their names below.

<TABLE>
<CAPTION>
Number of
Underwriters: Shares
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation..................
Salomon Smith Barney Inc.............................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................................
First Union Capital Markets Corp.....................................
DLJdirect Inc........................................................
---------
Total.............................................................. 7,500,000
=========
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares included in this
offering are subject to approval of certain legal matters by their counsel and
to certain other conditions. The underwriters are obligated to purchase and
accept delivery of all the shares (other than those covered by the over-
allotment option described below) if they purchase any of the shares.

The underwriters initially propose to offer some of our shares directly to
the public at the public offering price shown on the cover page of this
prospectus and some of the shares to dealers at the public offering price less
a concession not in excess of $ per share. The underwriters may allow, and
such dealers may re-allow, a concession not in excess of $ per share on
sales to other dealers. After the initial offering of the shares to the public,
the representatives may change the public offering price and such concessions.
The underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.

The following table shows the underwriting fees we will pay to the
underwriters in connection with this offering. These amounts are shown assuming
both no exercise and full exercise of the underwriters' option to purchase
additional shares of common stock.

<TABLE>
<CAPTION>
No Exercise Full Exercise
<S> <C> <C>
Per Share........................................
Total............................................
</TABLE>

We will pay the offering expenses, estimated to be $2.1 million.

We have granted to the underwriters an option, exercisable for 30 days from
the date of the underwriting agreement, to purchase up to 1,125,000 additional
shares at the public offering price less the underwriting fees. The underwriter
may exercise such option solely to cover over-allotments, if any, made in
connection with this offering. To the extent that the underwriters exercise
such option, each underwriter will become obligated, subject to certain
conditions, to purchase a number of additional shares approximately
proportionate to such underwriter's initial purchase commitment.

IXnet and IPC have agreed to indemnify the underwriters against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments that the underwriters may be required to
make in respect of any of those liabilities.

IXnet, IPC, the executive officers and directors of IXnet and IPC, and
certain stockholders of IPC Communications have agreed that, for a period of
180 days from the date of this prospectus, they will not, without the prior
written consent of DLJ:

. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of,

82
<PAGE>

directly or indirectly, any shares of IXnet or IPC Communications common
stock or any securities convertible into or exercisable or exchangeable
for such common stock or

. enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any such
common stock

(regardless of whether any of the transactions described in clause (1) or (2)
is to be settled by the delivery of IXnet or IPC Communications common stock,
or such securities, in cash or otherwise). In addition, during such period,
IXnet and IPC have agreed not to file any registration statement with respect
to, and each of its executive officers, directors and certain stockholders
have agreed not to make any demand for, or exercise any right with respect to,
the registration of any shares of IXnet or IPC Communications common stock or
any securities convertible into or exercisable or exchangeable for IXnet or
IPC Communications common stock without the prior written consent of DLJ.

The representatives may, from time to time, engage in transactions with and
perform services for IXnet in the ordinary course of this business.

Prior to the offering, there has been no established trading market for our
common stock. The initial public offering price for the common stock offered
here will be determined by negotiation among IXnet and the representatives.
The factors to be considered in determining the initial public offering price
include the history of and the prospects for the industry in which IXnet
competes, past and present operations, historical results of operations, and
prospects for future earnings, the recent market prices of securities of
generally comparable companies and the general condition of the securities
markets at the time of the offering.

Application has been made to list the common stock on the Nasdaq National
Market.

Other than in the United States, no action has been taken by IXnet or the
underwriters that would permit a public offering of the shares of common stock
included in this offering in any jurisdiction where action for that purpose is
required. The shares included in this offering may not be offered or sold,
directly or indirectly, nor may this prospectus or any other offering material
or advertisement in connection with the offer and sale of any such shares be
distributed or published in any jurisdiction, except under circumstances that
will result in compliance with the applicable rule and regulations of such
jurisdiction. Persons who receive this prospectus are advised to inform
themselves about and to observe any restrictions relating to the offering of
the common stock and the distribution of this prospectus. This prospectus is
not an offer to sell or solicitation of an offer to buy any shares of common
stock included in this offering in any jurisdiction where that would not be
permitted or legal.

In connection with this offering, certain underwriters may engage in
transaction that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may overallot this offering,
creating a syndicate short position. In addition, the underwriters may bid for
and purchase shares of common stock in the open market to cover syndicate
short positions or to stabilize the price of the common stock. These
activities may stabilize or maintain the market price of the common stock
above independent market levels. The underwriters are not required to engage
in these activities and may end any of these activities at any time.

Under Rule 2720 of the Conduct Rules of the NASD, Salomon Smith Barney may
be deemed to have a conflict of interest with us by virtue of the fact that
its affiliates may be deemed to beneficially own greater than 10% of our
outstanding common stock by virtue of their ownership of common stock of IPC
Communications. In such a situation, the NASD requires that, among other
things, the price can be no higher than that recommended by a "qualified
independent underwriter" meeting certain standards. In accordance with this
requirement, DLJ has agreed to act as a qualified independent underwriter in
the offering and will recommend a maximum offering price for the shares of our
common stock in compliance with the requirements of Rule 2720. In connection
with its role as a qualified independent underwriter, DLJ is performing due
diligence investigations and is reviewing and participating in the preparation
of this prospectus and the registration statement of which this prospectus
forms a part. We have agreed to pay $5,000 to DLJ as a fee for its services as
a qualified independent underwriter.

83
<PAGE>

LEGAL MATTERS

Our counsel, Thacher Proffitt & Wood, New York, New York, will pass upon the
validity of the common stock offered by this prospectus. Our special counsel,
Vinson & Elkins L.L.P., Washington, D.C., will pass upon certain regulatory
matters. Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts, will pass upon
certain legal matters related to this offering for the underwriters.

EXPERTS

The combined and consolidated financial statements of IXnet as of September
30, 1997 and 1998 and for the years ended September 30, 1996, 1997 and 1998 and
the financial statements of MXNet as of and for the year ended May 31, 1997,
included in this prospectus, have been so included in reliance on the reports
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.

The consolidated financial statements of Saturn as of April 30, 1997 and
1998 and for the years ended April 30, 1996, 1997 and 1998, included in this
Prospectus, have been so included in reliance on the report of
PricewaterhouseCoopers, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

We filed with the SEC a registration statement on Form S-1 under the
Securities Act of 1933, as amended, with respect to the shares of common stock
offered hereby. This prospectus does not contain all of the information set
forth in the registration statement and the exhibits and schedule filed
therewith. For further information with respect to IXnet and the common stock
offered hereby, reference is made to the registration statement and the
exhibits and schedules filed therewith. Statements contained in this prospectus
regarding the contents of any contract or any other document to which reference
is made are not necessarily complete, and, in each instance, reference is made
to a copy of such contract or other document filed as an exhibit to the
registration statement, each such statement being qualified in all respects by
such reference.

You may inspect a copy of the registration statement and exhibits and
schedule filed therewith without charge:

. At the Public Reference Room of the Commission, Room 1024--Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;

. At the public reference facilities as the Commission's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York
10048 or Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661;

. By writing to the Commission, Public Reference Section, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549;

. At the offices of The Nasdaq Stock Market, Reports Section, 1735 K
Street, N.W., Washington, D.C. 20006; or

. From the Internet site maintained by the Commission at
http://www.sec.gov, which contains reports, proxy and information
statements and other information regarding issuers that file
electronically with the Commission.

Some locations may charge prescribed or other fees for copies.

84
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Combined and Consolidated Financial Statements for IXnet, Inc.

Report of Independent Accountants...................................... F-2

Combined and Consolidated Balance Sheets at September 30, 1997 and 1998
and March 31, 1999 (unaudited)........................................ F-3

Combined and Consolidated Statements of Operations for the Years Ended
September 30, 1996, 1997 and 1998 and for the Six Months Ended March
31, 1998 and 1999 (unaudited)......................................... F-4

Combined and Consolidated Statements of Cash Flows for the Years Ended
September 30, 1996, 1997 and 1998 and for the Six Months Ended March
31, 1998 and 1999 (unaudited)......................................... F-5

Combined and Consolidated Statements of Changes in Stockholder's
(Deficit) Equity for the Years Ended September 30, 1996, 1997 and 1998
and for the Six Months Ended March 31, 1999 (unaudited)............... F-6

Notes to Combined and Consolidated Financial Statements................ F-7

Consolidated Financial Statements for Saturn Global Network Services
Holdings Limited

Condensed Consolidated Balance Sheets at April 30, 1998 and October 31,
1998 (unaudited)...................................................... F-22

Condensed Consolidated Statements of Operations for the Six Months
Ended October 31, 1997 and 1998 (unaudited)........................... F-23

Condensed Consolidated Statements of Cash Flows for the Six Months
Ended October 31, 1997 and 1998 (unaudited)........................... F-24

Notes to Condensed Consolidated Financial Statements (unaudited)....... F-25

Report of Independent Accountants...................................... F-28

Consolidated Statements of Operations for the Years Ended April 30,
1996, 1997, and 1998.................................................. F-29

Consolidated Balance Sheets at April 30, 1997 and 1998................. F-30

Consolidated Statements of Cash Flows for the Years Ended April 30,
1996, 1997 and 1998................................................... F-31

Notes to Consolidated Financial Statements............................. F-32

Financial Statements for MXNet Inc.

Report of Independent Accountants...................................... F-45

Balance Sheets as of May 31, 1997 and November 30, 1997 (unaudited).... F-46

Statements of Operations for the Year Ended May 31, 1997 and for the
Six Months Ended November 30, 1996 and 1997 (unaudited)............... F-47

Statements of Cash Flows for the Year Ended May 31, 1997 and for the
Six Months Ended November 30, 1996 and 1997 (unaudited)............... F-48

Statement of Stockholder's Deficit for the Year Ended May 31, 1997..... F-49

Notes to Financial Statements.......................................... F-50
</TABLE>

F-1
<PAGE>

Report of Independent Accountants

To the Stockholder of
IXnet, Inc.:

In our opinion, the accompanying combined and consolidated balance sheets and
the related combined and consolidated statements of operations, cash flows and
changes in stockholder's (deficit) equity present fairly, in all material
respects, the financial position of IXnet, Inc. (the "Company") at September
30, 1997 and 1998, and the results of its operations and cash flows for the
years ended September 30, 1996, 1997, and 1998, in conformity with generally
accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards, which 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, assessing
the accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits provides a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

New York, New York
May 14, 1999, except as to the second paragraph of Note 1 which is as of July
1, 1999

F-2
<PAGE>

IXNET, INC.

COMBINED AND CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except per share amount)

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

<TABLE>
<CAPTION>
September 30,
------------------ March 31,
1997 1998 1999
-------- -------- ----------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 525 $ 1,255 $ 4,061
Trade receivables, less allowance for
doubtful accounts of $325, $621 and $1,046,
respectively................................ 4,997 9,844 14,814
Prepaid expenses and other current assets.... 2,581 2,707 2,966
-------- -------- --------
Total current assets....................... 8,103 13,806 21,841
Property, plant and equipment, net............. 18,581 36,351 47,595
Goodwill, net.................................. 860 9,023 54,761
Other assets................................... 102 1,152 1,247
-------- -------- --------
Total assets............................... $ 27,646 $ 60,332 $125,444
======== ======== ========
LIABILITIES AND STOCKHOLDER'S (DEFICIT) EQUITY
Current liabilities:
Accounts payable............................. $ 512 $7,028 $ 8,010
Accrued liabilities.......................... 3,344 9,007 18,893
Current portion of capital leases............ 2,723 4,057 4,885
Current portion of notes payable............. -- -- 4,941
-------- -------- --------
Total current liabilities.................. 6,579 20,092 36,729
Note payable to parent......................... 20,072 43,629 25,522
Lease obligations, net of current portion...... 9,576 11,570 13,907
Notes payable, net of current portion.......... -- -- 7,031
-------- -------- --------
Total liabilities.......................... 36,227 75,291 83,189
-------- -------- --------
Commitments and contingencies
Stockholder's (deficit) equity:
Common stock--$0.01 par value, authorized
100,000,000 shares; 43,100,000 shares issued
and outstanding............................. 431 431 431
Paid-in capital.............................. 12,892 33,830 112,084
Accumulated deficit.......................... (22,070) (49,709) (69,826)
Cumulative translation adjustment............ 166 489 (434)
-------- -------- --------
Total stockholder's (deficit) equity....... (8,581) (14,959) 42,255
-------- -------- --------
Total liabilities and stockholder's
(deficit) equity.......................... $ 27,646 $ 60,332 $125,444
======== ======== ========
</TABLE>

See Notes to Combined and Consolidated Financial Statements.

F-3
<PAGE>

IXNET, INC.

COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

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

<TABLE>
<CAPTION>
Six months ended
Year ended September 30, March 31,
--------------------------- ------------------
1996 1997 1998 1998 1999
------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenue....................... $ 3,459 $ 17,838 $ 35,853 $ 15,318 $ 32,611
Cost of revenue (exclusive of
depreciation and amortization
shown separately below)...... 4,406 19,823 35,652 15,413 30,934
Sales and marketing expense... 1,057 4,172 8,455 3,213 4,878
General and administrative
expense...................... 2,868 3,439 5,001 2,331 2,815
Depreciation and
amortization................. 998 3,460 9,060 2,924 9,508
Special charge................ -- -- 1,350 -- --
------- -------- -------- -------- --------
Loss from operations...... (5,870) (13,056) (23,665) (8,563) (15,524)
Interest expense, net......... (247) (2,040) (3,527) (1,521) (4,318)
Other income (expense), net... -- 117 26 3 (18)
------- -------- -------- -------- --------
Loss before provision for
income taxes............. (6,117) (14,979) (27,166) (10,081) (19,860)
Provision for income taxes.... 62 229 473 171 257
------- -------- -------- -------- --------
Net loss.................. $(6,179) $(15,208) $(27,639) $(10,252) $(20,117)
======= ======== ======== ======== ========
Basic and diluted loss per
share........................ $ (0.14) $ (0.35) $ (0.64) $ (0.24) $ (0.47)
======= ======== ======== ======== ========
Basic and diluted weighted
average number of shares
outstanding.................. 43,100 43,100 43,100 43,100 43,100
======= ======== ======== ======== ========
</TABLE>

See Notes to Combined and Consolidated Financial Statements.

F-4
<PAGE>

IXNET, INC.

COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

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

<TABLE>
<CAPTION>
Year ended Six months ended
September 30, March 31,
--------------------------- ------------------
1996 1997 1998 1998 1999
------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss..................... $(6,179) $(15,208) $(27,639) $(10,252) $(20,117)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization.............. 817 3,279 6,865 2,508 6,226
Amortization of goodwill... 181 181 2,195 416 3,282
Provision for doubtful
accounts.................. -- 325 1,674 378 529
Changes in operating assets
and liabilities:
Trade receivables........ (2,162) (3,178) (5,957) (2,370) (2,016)
Prepaid expenses and
other current assets.... (188) (2,435) 38 432 616
Other assets............. (16) (36) (173) (139) 85
Accounts payable......... 584 (108) 2,217 172 (1,653)
Accrued liabilities...... 723 2,511 5,687 2,689 1,441
------- -------- -------- -------- --------
Net cash used in
operating activities.... (6,240) (14,669) (15,093) (6,166) (11,607)
------- -------- -------- -------- --------
Cash flows from investing
activities:
Capital expenditures......... (4,858) (3,495) (12,930) (5,680) (7,683)
Acquisition of Saturn Global
Network Holdings Services
Limited, net of cash
acquired.................... -- -- -- -- (34,713)
Other........................ -- -- (842) -- --
------- -------- -------- -------- --------
Net cash used in investing
activities................ (4,858) (3,495) (13,772) (5,680) (42,396)
------- -------- -------- -------- --------
Cash flows from financing
activities:
Financings from parent,
net......................... 5,552 12,887 23,476 9,333 54,893
Paid-in capital.............. 2,260 5,535 9,478 3,977 5,254
Principal payments on
capital leases.............. (221) (1,818) (3,125) (1,376) (2,152)
Repayment of notes payable... -- -- -- -- (555)
------- -------- -------- -------- --------
Net cash provided by
financing activities...... 7,591 16,604 29,829 11,934 57,440
------- -------- -------- -------- --------
Effect of exchange rate
changes on cash.............. (36) 469 (234) (156) (631)
------- -------- -------- -------- --------
Net (decrease) increase in
cash......................... (3,543) (1,091) 730 (68) 2,806
Cash and cash equivalents,
beginning of period.......... 5,159 1,616 525 525 1,255
------- -------- -------- -------- --------
Cash and cash equivalents, end
of period.................... $ 1,616 $ 525 $ 1,255 $ 457 $ 4,061
======= ======== ======== ======== ========
Cash paid during the period
for-
Interest..................... $ 352 $ 2,040 $ 3,527 $ 1,521 $ 4,318
Non-cash investing and
financing activities-
Capital contributed by
parent:
Acquisition of remaining
20% of International
Exchange Networks, Ltd.... $ -- $ -- $ 4,800 $ -- $ --
Acquisition of MXNet Inc.,
net of cash acquired...... -- -- 6,660 6,660 --
Capitalization of note
payable to parent......... -- -- -- -- 73,000
Installment purchase of
indefeasible rights of
use......................... -- -- 3,600 -- --
Capital lease obligations
entered into during the
period...................... 4,633 9,685 6,414 3,489 5,345
Acquisition of Saturn-
Fair value of assets
acquired.................... $ -- $ -- $ -- $ -- $ 58,456
Less: Fair value of
liabilities assumed and
note issued................. -- -- -- -- 23,743
------- -------- -------- -------- --------
Acquisition of Saturn, net
of cash acquired............ $ -- $ -- $ -- $ -- $ 34,713
======= ======== ======== ======== ========
</TABLE>

See Notes to Combined and Consolidated Financial Statements.

F-5
<PAGE>

IXNET, INC.

COMBINED AND CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S (DEFICIT)
EQUITY

(In thousands)

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

<TABLE>
<CAPTION>
Common Stock Cumulative
------------- Paid-in Accumulated translation Comprehensive
Shares Amount capital deficit adjustment Total loss
------ ------ -------- ----------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30,
1995................... 43,100 $431 $ 5,097 $ (683) $ -- $ 4,845
Paid-in capital........ -- -- 2,260 -- -- 2,260
Net loss............... -- -- -- (6,179) -- (6,179) $ (6,179)
Translation
adjustment............ -- -- -- -- (36) (36) (36)
------ ---- -------- -------- ----- ------- --------
Total comprehensive
loss................ $ (6,215)
========
Balance, September 30,
1996................... 43,100 431 7,357 (6,862) (36) 890
Paid-in capital........ -- -- 5,535 -- -- 5,535
Net loss............... -- -- -- (15,208) -- (15,208) $(15,208)
Translation
adjustment............ -- -- -- -- 202 202 202
------ ---- -------- -------- ----- ------- --------
Total comprehensive
loss................ $(15,006)
========
Balance, September 30,
1997................... 43,100 431 12,892 (22,070) 166 (8,581)
Paid-in capital........ -- -- 20,938 -- -- 20,938
Net loss............... -- -- -- (27,639) -- (27,639) $(27,639)
Translation
adjustment............ -- -- -- -- 323 323 323
------ ---- -------- -------- ----- ------- --------
Total comprehensive
loss................ $(27,316)
========
Balance, September 30,
1998................... 43,100 431 33,830 (49,709) 489 (14,959)
Paid-in capital
(unaudited)........... -- -- 78,254 -- -- 78,254
Net loss (unaudited)... -- -- -- (20,117) -- (20,117) $(20,117)
Translation adjustment
(unaudited)........... -- -- -- -- (923) (923) (923)
------ ---- -------- -------- ----- ------- --------
Total comprehensive
loss (unaudited).... $(21,040)
========
Balance, March 31, 1999
(unaudited)............ 43,100 $431 $112,084 $(69,826) $(434) $42,255
====== ==== ======== ======== ===== =======
</TABLE>

See Notes to Combined and Consolidated Financial Statements.

F-6
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS

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

1. Background and Basis of Presentation:

IXnet, Inc. ("IXnet" or the "Company") provides communications services
tailored to the specialized needs of the worldwide financial services
community. The Company established and operates an extranet, a global network
connecting members of the financial services community as well as multiple
offices within the same firm. The Company's services include globally available
services including managed voice and data services, switched voice
communications and content hosting and distribution of news, research,
analytics and market data.

In connection with an anticipated public offering of the businesses
comprising IXnet, the Company was incorporated in Delaware on May 4, 1999, as a
wholly owned subsidiary of IPC Information Systems, Inc. ("IPC") with 2,000
shares of common stock (par value $0.01) authorized, and 1,000 shares issued
and outstanding. Effective July 1, 1999 the Company amended its charter to
increase its authorized shares to 100,000,000. On June 30, 1999, the Company
declared a 43,100 for one stock split effective July 1, 1999, resulting in
43,100,000 shares issued and outstanding. Historical share and per share data
reflects the stock split for all periods presented.

On May 4, 1999, IPC contributed 100% of the outstanding common stock of
International Exchange Networks, Ltd. ("IEXN") to the Company.

IEXN was incorporated in Delaware on March 8, 1993, with 10,000 shares of
common stock (par value $0.01) authorized. On June 23, 1995, IPC acquired 2,280
shares of IEXN (80% of the outstanding common stock after the acquisition) and
acquired the remaining 560 shares outstanding on April 30, 1998. On March 31,
1999, IEXN capitalized to paid-in capital $73.0 million of its then outstanding
note payable to IPC.

MXNet Inc. ("MXNet") was incorporated in Delaware on May 24, 1996, as a
wholly owned subsidiary of National Discount Brokers Group, Inc. with 3,000
shares of common stock (par value $0.01) authorized and 100 shares issued and
outstanding. On February 13, 1998, IPC acquired the outstanding common stock of
MXNet which was contributed to IEXN on May 12, 1999.

The financial statements present the consolidated financial position,
results of operations, changes in stockholder's (deficit) equity and cash flows
of IEXN and its subsidiaries combined with the financial position, results of
operations, changes in stockholder's deficit and cash flows of MXNet as of and
for the periods that they were under common control. Additionally, the
financial statements present the issued and outstanding shares of IXnet as if
they had been in place for all periods presented. The financial statements
include certain corporate expenses (see Note 11) incurred by IPC that have been
charged to the Company on a direct or allocated basis. Management believes
these allocations are reasonable.

The Company is currently incurring operating losses, which are expected to
continue into the foreseeable future. In addition, as the business grows,
additional working capital may be required along with the funding of the
Company's capital requirements. IPC has committed to fund such

F-7
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

requirements from its cash flows and its Revolving Credit Facility (see Note 9)
through June 30, 2001 in the form of additional notes.

The combined and consolidated financial statements may not be representative
of the financial position, results of operations, changes in stockholder's
(deficit) equity and cash flows of the Company under future operating
agreements with IPC.

2. Summary of Significant Accounting Policies:

Principles of Combination and Consolidation

The financial statements as of September 30, 1997 and for the years ended
September 30, 1996 and 1997, include the historical financial information of
IEXN and its consolidated subsidiaries. The financial statements as of
September 30, 1998 and March 31, 1999, and for the year ended September 30,
1998 and for the six months ended March 31, 1998 and 1999, combine the
historical financial information of IEXN and its consolidated subsidiaries with
the historical financial information of MXNet from the date of its acquisition.
Intercompany balances and transactions within and between IEXN and MXNet have
been eliminated.

Cash and Cash Equivalents

The Company places cash with high-credit quality financial institutions.
Temporary cash investments with original maturities of three months or less are
considered cash equivalents. Temporary cash investments are stated at cost,
which approximates fair value. These investments are not subject to significant
market risk.

Revenue Recognition

Revenue is recognized as services are provided. Installation revenue is
deferred and recognized ratably over the average contract term.

Property, Plant and Equipment

Property, plant and equipment are stated at cost and depreciated or
amortized on a straight-line basis over their estimated useful lives or related
contract terms, beginning in the year the asset is placed into service. Direct
costs related to the installation of network equipment are capitalized and
depreciated over the life of the asset, while on-going maintenance is expensed
as incurred.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of
the identifiable net assets acquired in acquisitions accounted for as purchase
acquisitions. Goodwill is amortized on a straight-line basis over the periods
benefited. The Company reviews for the impairment of goodwill when events and
circumstances indicate the carrying amount of an asset may not be recoverable,

F-8
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

based on estimated undiscounted future cash flows compared with the carrying
value of goodwill. Goodwill includes the push down of amounts recorded in
connection with IPC's acquisitions of IEXN and MXNet.

Income Taxes

The Company recognizes deferred income taxes for the tax consequences in
future years of differences between the tax bases of assets and liabilities and
the financial reporting amounts at each year end, based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount that is "more likely than
not" to be realized. The provision for income taxes is the tax payable for the
period and the change during the period in deferred tax assets and liabilities.

The Company is included in the consolidated federal income tax return of IPC
and computes its federal income tax provision on a separate return basis. Under
the tax sharing arrangement with its parent, the Company has been reimbursed
currently for the benefit derived from inclusion of its tax losses in the
consolidated federal income tax return. Any difference between the amount of
the federal income tax provision or benefit determined on a separate return
basis and the amount received under the tax sharing arrangement is treated as a
contribution to paid-in capital.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the amounts of revenues and expenses during the period reported.
Actual results could differ from those estimates.

Foreign Currency Translation Adjustment

The balance sheets and statements of operations of the Company's foreign
operations are recorded using the local currency as the functional currency.
Assets and liabilities of these foreign operations are translated at the year-
end exchange rates and revenue and expense amounts are translated at the
average rates of exchange prevailing during the periods reported. Translation
adjustments arising from the use of differing exchange rates from period to
period are included in the cumulative translation adjustment account in
stockholder's (deficit) equity.

Unaudited Interim Financial Statements

In the opinion of management, the accompanying unaudited interim financial
statements include all necessary adjustments for a fair presentation of the
financial position of the Company as of March 31, 1999, and the results of its
operations and its cash flows for the six months ended March 31, 1998 and 1999,
in conformity with generally accepted accounting principles applied on a
consistent

F-9
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

basis. The results of operations for the six months ended March 31, 1998 and
1999 are not necessarily indicative of the results to be expected for the full
year.

Earnings Per Share

Basic and diluted loss per share is computed by dividing net loss by the
weighted average number of common shares outstanding during each period.

Effects of Recently Issued Accounting Standards

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement establishes standards for
the way companies report information about operating segments in annual
financial statements. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. The
disclosures prescribed by SFAS No. 131 will be effective for the Company's year
ending September 30, 1999. Financial statement disclosures for prior periods
are required to be restated. The Company is in the process of evaluating the
disclosure requirements. The adoption of SFAS No. 131 will have no impact on
the Company's financial position, results of operations or cash flows.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives and
Hedging Activities," which establishes accounting and reporting standards for
derivative instruments and hedging activities. This standard is effective for
all fiscal quarters of fiscal years beginning after June 15, 1999. The Company
does not currently use derivative financial instruments.

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Cost of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 is effective for financial
statements for fiscal years beginning after December 15, 1998. The Company does
not anticipate the adoption of this standard to have a material effect on its
financial position, results of operations or cash flows.

3. Comprehensive Loss:

Effective October 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement requires the Company to include within
its financial statements information on comprehensive income, which is defined
as all activity impacting equity from non-owner sources. For the Company,
comprehensive loss includes net loss and foreign currency translation
adjustments.

F-10
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

The Company's total comprehensive loss for the six months ended March 31,
1998 and 1999 was as follows (in thousands):

<TABLE>
<CAPTION>
Six months ended
March 31,
------------------
1998 1999
-------- --------
(unaudited)
<S> <C> <C>
Net loss................................................ $(10,252) $(20,117)
Translation adjustment.................................. 163 (923)
-------- --------
Total comprehensive loss................................ $(10,089) $(21,040)
======== ========
</TABLE>

4. Acquisitions:

IEXN

During June 1995, IPC acquired an 80% interest in IEXN for $5.5 million in
cash. The acquisition was accounted for using the purchase method of accounting
and resulted in $1.3 million of goodwill of which $860,000 and $679,000 remains
at September 30, 1997 and 1998, respectively. Under the initial acquisition
agreement, the Company is obligated to pay additional consideration to former
shareholders using a formula based upon operating results of IPC and IXnet and
IPC's market capitalization through the second, third or fourth quarters of
fiscal 2000. Based upon data as of March 31, 1999, the Company's obligation
calculated under this agreement is not material. On April 30, 1998, IPC
acquired the remaining 20% interest in IEXN held by two management shareholders
in exchange for 457,140 shares of IPC common stock, valued at $4.8 million
based upon the IPC closing share price on that date. The acquisition of the
remaining interest was accounted for using the purchase method of accounting
and resulted in $4.8 million of goodwill of which $4.4 million remains at
September 30, 1998. IEXN goodwill is being amortized over seven years from the
date of the original acquisition.

MXNet

In February 1998, IPC acquired, by the issuance of a promissory note in the
amount of $6.7 million, all of the issued and outstanding common stock of
MXNet, a wholly-owned subsidiary of National Discount Brokers Group, Inc. The
promissory note plus accrued interest was paid on April 8, 1998. This
acquisition was accounted for using the purchase method of accounting and
resulted in $5.5 million of goodwill of which $4.0 million remains at September
30, 1998.

In conjunction with the MXNet acquisition, the fair value of MXNet's assets,
net of cash acquired, of $1.8 million and liabilities assumed of $731,000 were
excluded from the 1998 combined and consolidated statement of cash flows.

F-11
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

The following unaudited pro forma statement of operations data for the years
ended September 30, 1997 and 1998, gives effect to the acquisition of MXNet as
if it had occurred on October 1, 1996 and 1997, respectively (in thousands):

<TABLE>
<CAPTION>
Year ended
September 30,
------------------
1997 1998
-------- --------
<S> <C> <C>
Revenue................................................. $ 18,663 $ 36,386
Loss before provision for income taxes.................. $(18,804) $(28,669)
</TABLE>

Pro forma adjustments include: (i) financial results of MXNet for the year
ended September 30, 1997; (ii) financial results of MXNet from October 1, 1997
to the date of acquisition; and (iii) amortization of goodwill over 2.25 years.
The pro forma financial information presented above is not necessarily
indicative of the operating results which would have been achieved had the
acquisition occurred at October 1, 1996 or 1997, or of the results to be
achieved thereafter.

Saturn Global Network Services Holdings Ltd.

On December 18, 1998, the Company acquired all of the issued and outstanding
common shares of Saturn Global Network Services Holdings Limited ("Saturn")
from Marshalls 106 Limited ("Marshalls"). The purchase price included the
payment of cash in the amount of $35.7 million (paid by the Company through
borrowings from IPC) and the issuance by the Company of a promissory note,
guaranteed by IPC, in the amount of $7.5 million bearing interest at the UK
Sterling Base Rate, as defined, plus three percent and payable over three years
(the "Marshalls Note"). In addition, the Company assumed indebtedness of Saturn
due to Marshalls in the amount of $5.0 million payable over 24 months with
interest at 9.25% (the "Saturn Note").

Saturn, a UK holding company, owns telecommunication network operating
subsidiaries in the United Kingdom, USA, Hong Kong, Australia, Japan and
Singapore. It had an established business of selling managed premium grade
voice and data communication services to the financial community, similar to
IXnet, but focused in Europe and the Asia/Pacific region. The acquisition was
accounted for using the purchase method of accounting and resulted in $49.2
million of goodwill.

The following unaudited pro forma statement of operations data for the six
months ended March 31, 1998 and 1999 gives effect to the Saturn acquisition as
if it had occurred on October 1, 1997 and 1998, respectively (in thousands):

<TABLE>
<CAPTION>
Six months ended
March 31,
------------------
1998 1999
-------- --------
(unaudited)
<S> <C> <C>
Revenue................................................. $ 27,977 $ 37,370
Loss before provision for income taxes.................. $(15,414) $(22,547)
</TABLE>

F-12
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

Pro forma adjustments include (i) amortization of goodwill over 10 years;
(ii) interest expense on the Saturn Note and the Marshalls Note; and (iii)
interest expense on borrowings from IPC at a U.S. bank prime rate plus one
quarter of one percent. The pro forma financial information presented above is
not necessarily indicative of the operating results which would have been
achieved had the Saturn acquisition occurred on October 1, 1997 or 1998, or of
the results to be achieved thereafter.

5. IPC Merger and Special Charge:

On April 30, 1998, Arizona Acquisition Corp. was merged into IPC (the
"Merger"). In connection with the Merger, IPC issued $247.4 million aggregate
principal amount at maturity of 10 7/8% Senior Discount Notes due 2008 (the
"Notes"). The Notes were issued under an indenture between IPC, as issuer, and
United States Trust Company of New York, as trustee. The indenture contains
various covenants and conditions which impose limitations on IPC and its
subsidiaries (including IXnet), including, (i) indebtedness, (ii) restricted
payments, (iii) dividends, (iv) issuance and sale of capital stock of
subsidiaries, (v) issuance of guarantees by subsidiaries, (vi) certain
transactions with shareholders and affiliates, (vii) liens, (viii) sale-
leaseback transactions, (ix) asset sales, and (x) maintaining various financial
ratios.

In connection with the Merger, IEXN incurred a special charge for bonuses
($475,000) and the cancellation of IPC stock options ($875,000) related to its
employees.

6. Property, Plant and Equipment:

Property, plant and equipment is comprised of the following (in thousands):

<TABLE>
<CAPTION>
September 30, March 31,
--------------- -----------
Useful Lives 1997 1998 1999
------------ ------- ------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Network equipment..................... 2 to 5 years $ 3,871 $15,893 $25,150
Network equipment under capital
leases............................... 5 years 14,303 20,717 26,062
Indefeasible rights of use............ IRU term 434 4,448 4,658
Machinery and equipment............... 5 years 1,331 3,321 4,627
Furniture and fixtures................ 5 years 389 550 760
Leasehold improvements................ Lease term 1,592 2,127 2,349
------- ------- -------
Total depreciable property, plant
and equipment...................... 21,920 47,056 63,606
Less accumulated depreciation and
amortization....................... 3,864 10,719 16,567
------- ------- -------
18,056 36,337 47,039
Construction in progress............ 525 14 556
------- ------- -------
$18,581 $36,351 $47,595
======= ======= =======
</TABLE>

Included in accumulated depreciation and amortization at September 30, 1997
and 1998, and March 31, 1999 was $2.4 million, $5.8 million, and $8.2 million,
respectively, representing accumulated depreciation of network equipment under
capital leases.

F-13
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

7. Benefit Plans:

Pension Plans

The Company participates in IPC's defined contribution plan covering all
eligible US employees. According to plan provisions, IPC contributions are
discretionary and are subject to approval by IPC's board of directors. Eligible
employees may contribute up to 15% of their annual compensation. The Company
was charged $16,000, $48,000 and $103,000 in connection with IPC's
contributions to the plan on behalf of the Company's employees for the years
ended September 30, 1996, 1997 and 1998, respectively.

IPC's Stock Option and Incentive Plans

Under IPC's 1994 Stock Option and Incentive Plan and 1998 Stock Option Plan,
certain employees of the Company received grants of stock options.

A summary of IPC's stock option plan and changes related to employees of the
Company as of September 30, 1996, 1997 and 1998 and for the years then ended is
presented below.

<TABLE>
<CAPTION>
Weighted
Average
Option Exercise
Shares Price
-------- --------
<S> <C> <C>
Beginning balance (1994 Option Plan)...................... 133,000 $ 7.14
Options granted......................................... 102,000 $ 9.02
Options forfeited....................................... (4,000) $ 9.50
-------- ------
Outstanding at September 30, 1996......................... 231,000 $ 7.93
Options granted......................................... 186,000 $ 7.25
Options forfeited....................................... (53,334) $ 7.53
Options exercised....................................... (26,666) $ 6.83
-------- ------
Outstanding at September 30, 1997......................... 337,000 $ 7.71
Options forfeited....................................... (4,002) $ 7.63
Options exercised....................................... (4,998) $ 8.00
Options exercised and retired at merger................. (328,000) $ 7.70
Options granted (1998 Option Plan)...................... 401,734 $10.50
-------- ------
Outstanding at September 30, 1998......................... 401,734 $10.50
======== ======
</TABLE>

There were 77,000 and 53,445 options exercisable at September 30, 1996 and
1997, respectively. No options were exercisable at September 30, 1998.

The weighted average fair value per share of options granted was $4.28,
$3.31 and $4.10 for the years ended September 30, 1996, 1997 and 1998,
respectively.

F-14
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

The weighted average contractual life of stock options outstanding at
September 30, 1998 was 9.7 years.

In connection with the Merger, IPC terminated the 1994 Option Plan and
replaced it with the 1998 Option Plan. Under the 1998 Option Plan, employees
generally vest in stock options over a five-year period, subject to certain
accelerated vesting provisions based on IPC common stock achieving specified
fair market levels for specified periods.

Stock-Based Compensation

IXnet applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations in accounting for its
stock based compensation plans. Accordingly, no compensation expense has been
recognized for either stock option plan. The Company has adopted the
disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation". However, in connection with the Merger, the Company recognized
compensation expense in the amount of $875,000 in the year ended September 30,
1998, representing payments to IXnet option holders upon cancellation of their
IPC stock options. Had compensation expense for employees of the Company
receiving stock options under IPC's 1994 and 1998 Option Plans been determined
based on the fair value at the grant date for awards in the years ended
September 30, 1996, 1997, and 1998, consistent with the provisions of SFAS No.
123, the Company's net loss would have been increased to the pro forma amounts
indicated below (in thousands):

<TABLE>
<CAPTION>
Year ended September 30,
---------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
Net loss--as reported.......................... $(6,179) $(15,208) $(27,639)
Net loss--pro forma............................ $(6,250) $(15,859) $(28,114)
</TABLE>

The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes Option-Pricing Model with the following weighted
average assumptions used for grants: zero dividend yield and expected
volatility of 50% for the years ended September 30, 1996, 1997 and 1998;
weighted average risk-free interest rate of 6.45%, 6.01% and 5.61% for the
years ended September 30, 1996, 1997 and 1998, respectively; and expected lives
of 4 years for the years ended September 30, 1996 and 1997 and 3 years for the
year ended September 30, 1998.

IXnet 1999 Stock Option Plan

During May 1999, IXnet's Board of Directors and IXnet's sole shareholder,
IPC, approved the IXnet, Inc. 1999 Stock Option Plan, authorizing the grant of
options to purchase up to 7,053,409 shares of the Company's common stock. At
that time, options to purchase 6,530,184 shares were granted to employees,
directors and others at an exercise price of $13.96 per share. Except for
1,763,352 options granted to the Chief Executive Officer which vested
immediately, such options vest over four years. All such options become
exercisable, to the extent then vested, 30 months from the date of grant.

F-15
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

8. Supplemental Financial Data:

Prepaid expenses and other current assets include the following (in
thousands):

<TABLE>
<CAPTION>
September 30,
-------------
1997 1998
------ ------
<S> <C> <C>
Value added tax recoverable................................... $1,802 $1,211
Prepaid telecommunication transport lines and circuits........ 598 376
Deposits...................................................... -- 750
Other......................................................... 181 370
------ ------
$2,581 $2,707
====== ======
</TABLE>

Accounts payable include the following (in thousands):

<TABLE>
<CAPTION>
September
30,
-----------
1997 1998
---- ------
<S> <C> <C>
Installment purchase of IRU..................................... $-- $3,600
Trade accounts payable.......................................... 512 3,428
---- ------
$512 $7,028
==== ======
</TABLE>

Accrued liabilities include the following (in thousands):

<TABLE>
<CAPTION>
September 30, March 31,
------------- -----------
1997 1998 1999
------ ------ -----------
(unaudited)
<S> <C> <C> <C>
Carrier costs...................................... $1,323 $3,815 $10,849
Compensation and benefits.......................... 591 2,206 2,178
Deferred revenue................................... 535 615 935
Other.............................................. 895 2,371 4,931
------ ------ -------
$3,344 $9,007 $18,893
====== ====== =======
</TABLE>

9. IPC's Revolving Credit Facility:

All of the Company's capital stock and real and personal property (including
tangible and intangible property), are pledged as collateral under IPC's
revolving credit agreement and the Company and its subsidiaries are guarantors.

In April 1998, IPC entered into a five-year $55.0 million senior
collateralized revolving credit agreement, as amended, the Revolving Credit
Facility, with Morgan Stanley Senior Funding, Inc., as syndication agent,
General Electric Capital Corporation, as Administration Agent, and other lender
parties, to be used for working capital and other general corporate purposes.
The Revolving Credit Facility is subject to borrowing base limitations based
upon eligible accounts receivable and inventory. At September 30, 1998, the
borrowing base under the Revolving Credit Facility

F-16
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

approximated $33.6 million of which $29.6 million was available to be borrowed.
The Revolving Credit Facility provides a $10.0 million sublimit for the
issuance of letters of credit, of which $4.0 million was outstanding as of
September 30, 1998. As of March 31, 1999, the borrowing base was $26.6 million
of which $1.7 million was available to be borrowed.

The Revolving Credit Facility contains various covenants and conditions,
including restrictions on (i) asset dispositions, (ii) mergers and
acquisitions, (iii) capital expenditures, (iv) restricted payments, (v) the
incurrence of indebtedness, (vi) loans and investments, (vii) liens, (viii)
certain transactions with affiliates, and (ix) issuance of equity, and (x)
requires maintenance of various financial ratios.

10. Commitments and Contingencies:

Operating Leases

The Company has entered into various operating leases for real estate,
equipment, and telecommunication transport lines and circuits.

Future minimum lease payments required under noncancellable operating leases
at September 30, 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
Fiscal
------
<S> <C>
1999................................................................. $ 8,344
2000................................................................. 6,510
2001................................................................. 4,904
2002................................................................. 2,294
2003................................................................. 1,858
Thereafter........................................................... 2,511
-------
$26,421
=======
</TABLE>

Expenses under operating leases were $756,000, $8.3 million and $13.3
million for the years ended September 30, 1996, 1997 and 1998, respectively.

Indefeasible Rights of Use

In June 1998, IEXN entered into a 25 year IRU agreement for participation in
an international submarine cable system. The purchase price of this IRU was
$4.0 million with $400,000 paid during the year ended September 30, 1998, and
the remainder due in equal monthly installments of $300,000 commencing in
October 1998. As of September 30, 1998, $3.6 million was outstanding. In
addition, the agreement provides for the payment of annual operation and
maintenance charges.

Capital Leases

The Company has entered into capital lease agreements for certain network
equipment.

F-17
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

Future minimum lease payments required under noncancellable capital leases
at September 30, 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
Fiscal
------
<S> <C>
1999................................................................ $ 5,258
2000................................................................ 4,892
2001................................................................ 4,678
2002................................................................ 2,670
2003................................................................ 1,126
-------
18,624
Less, amounts representing interest................................. 2,997
-------
Net present value of minimum lease payments under capital leases.... $15,627
=======
</TABLE>

Employment Agreements

The Company has executed employment contracts with certain senior executives
for future services that vary in length up to 5 years, for which the Company
has a minimum commitment aggregating $3.6 million at September 30, 1998.

11. Transactions with IPC:

IPC provided certain corporate functions on behalf of IXnet (relating to
accounting, executive management, legal, administrative, human resources,
information systems, insurance and other corporate functions). These expenses
have been allocated to IXnet based on its direct and indirect utilization of
specific services. Indirect expenses were allocated based on IXnet's headcount
in proportion to combined IXnet and IPC headcount. Included in general and
administrative expenses were $534,000, $853,000 and $1.5 million for the years
ended September 30, 1996, 1997 and 1998, respectively. Management believes
these allocations are reasonable. Amounts due to IPC for these expenses are
included in note payable to parent.

Note payable to parent includes net cash advances, payments of third-party
liabilities on behalf of IXnet and amounts due for direct and indirect services
performed by IPC, offset in part by tax benefits related to IXnet which were
utilized by IPC in its consolidated tax return. Interest expense in the amounts
of $91,000, $1.1 million and $2.2 million for the years ended September 30,
1996, 1997 and 1998, was charged based on a U.S. bank prime rate plus one
quarter of one percent on the average net amount outstanding each month. In
addition, the Company uses IPC technicians to install certain network
equipment. Costs incurred for these technicians for the years ended September
30, 1996, 1997 and 1998 were $29,000, $250,000 and $325,000, respectively.

IXnet provides domestic and international long distance telecommunications
services to IPC as well as private line services between IPC's domestic
locations. Amounts charged to IPC were $18,000, $165,000, and $170,000 for the
years ended September 30, 1996, 1997, and 1998, respectively.

F-18
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

12. Income Taxes:

Pre tax earnings consisted of the following (in thousands):

<TABLE>
<CAPTION>
Year ended September 30,
---------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
United States................................... $(6,263) $(15,425) $(28,218)
Foreign......................................... 146 446 1,052
------- -------- --------
Total pretax earnings........................... $(6,117) $(14,979) $(27,166)
======= ======== ========

The provision for income taxes consisted of the following (in thousands):

<CAPTION>
Year ended September 30,
---------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
Current:
Federal....................................... $ -- $ -- $ --
State and local............................... -- -- --
Foreign....................................... -- -- 358
------- -------- --------
$ -- $ -- $ 358
======= ======== ========
Deferred:
Federal....................................... $ -- $ -- $ --
State and local............................... -- -- --
Foreign....................................... 62 229 115
------- -------- --------
62 229 115
------- -------- --------
Income tax provision............................ $ 62 $ 229 $ 473
======= ======== ========
</TABLE>

The components of net deferred tax liabilities are as follows (in
thousands):

<TABLE>
<CAPTION>
September 30,
----------------------------------------------------------------------
1997 1998
--------------------------------- -----------------------------------
United States United States
---------------- -----------------
Federal State Foreign Total Federal State Foreign Total
------- ------- ------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Deferred tax assets:
Amortization of
intangibles........... $ -- $ -- $ -- $ -- $ 481 $ 80 $ -- $ 561
Accounts receivable.... 114 19 -- 133 217 36 -- 253
Accrued expenses....... 30 5 -- 35 477 80 -- 557
Net operating loss..... 8,034 1,344 58 9,436 17,512 2,927 -- 20,439
------- ------- ----- ------- -------- ------- ----- --------
Total deferred tax
assets.............. 8,178 1,368 58 9,604 18,687 3,123 -- 21,810
Deferred tax
liabilities:
Amortization of
intangibles........... 23 4 -- 27 -- -- -- --
Excess book over tax
depreciation.......... 473 79 349 901 1,402 234 406 2,042
------- ------- ----- ------- -------- ------- ----- --------
Net deferred tax
(liability) asset..... 7,682 1,285 (291) 8,676 17,285 2,889 (406) 19,768
Less valuation
allowance........... (7,682) (1,285) -- (8,967) (17,285) (2,889) -- (20,174)
------- ------- ----- ------- -------- ------- ----- --------
Net deferred tax
liability........... $ -- $ -- $(291) $ (291) $ -- $ -- $(406) $ (406)
======= ======= ===== ======= ======== ======= ===== ========
</TABLE>

F-19
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

IEXN and MXNet are included in the IPC consolidated federal income tax
return and the benefits of their net operating losses have been realized on
such return. Amounts received from IPC in respect of these benefits have been
recorded as capital contributions. Such income tax benefits will be recognized
in the future to the extent they would be realized on a separate return basis.

The following table summarizes the significant differences between the U.S.
federal statutory income tax rate and the Company's effective tax rate for
financial statement purposes.

<TABLE>
<CAPTION>
Year ended
September 30,
---------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
U.S. federal statutory income tax rate............. (35.0)% (35.0)% (35.0)%
State and local taxes, net of federal income tax
effect............................................ (5.9) (5.9) (5.9)
Change in valuation allowance...................... 40.9 41.3 41.2
Other.............................................. 1.0 1.1 1.4
----- ----- -----
1.0 % 1.5 % 1.7 %
===== ===== =====
</TABLE>

13. Geographic Information:

The Company operates principally in one industry which involves the
operation of an international voice and data network providing a variety of
dedicated private line, managed data and switched voice services, which has
been specifically designed to meet the specialized telecommunications
requirements of the financial trading community.

Information about the Company's operations by geographic area is as follows
(in thousands):

<TABLE>
<CAPTION>
Year ended September 30,
---------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
Revenue:
United States................................. $ 683 $ 7,733 $ 21,261
United Kingdom................................ 2,776 9,736 12,632
Other......................................... -- 369 1,960
------- -------- --------
$ 3,459 $ 17,838 $ 35,853
======= ======== ========
Operating loss:
United States................................. $(6,040) $(13,648) $(25,272)
Foreign....................................... 170 592 1,607
------- -------- --------
$(5,870) $(13,056) $(23,665)
======= ======== ========
</TABLE>

F-20
<PAGE>

IXNET, INC.

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

<TABLE>
<CAPTION>
September 30,
---------------
1997 1998
------- -------
<S> <C> <C>
Assets:
United States.............................................. $16,488 $45,362
United Kingdom............................................. 8,737 8,339
Other...................................................... 2,421 6,631
------- -------
$27,646 $60,332
======= =======
</TABLE>

For the years ended September 30, 1996 and 1997, 68% and 45%, respectively,
of total revenue was from one customer. For the year ended September 30, 1998,
two customers accounted for 37% (23% and 14%, respectively) of total revenue.
For the six months ended March 31, 1999, two customers accounted for 25% (14%
and 11%, respectively) of total revenue.

14. Subsequent Events (unaudited)

On June 21, 1999, IPC amended and restated its $55.0 million Revolving
Credit Facility to provide for a Working Capital Facility of $45.0 million and
a $20.0 million Term Loan. In addition, certain terms relating to eligibility
of receivables used in determining the amount available under the Working
Capital Facility were changed to increase the availability. The amendment and
restatement also provided for a pledge by IPC Communications of IPC common
stock and a pledge by IPC of IXnet common stock and certain additional
financial covenants including a leverage ratio and fixed charge ratio. All of
the Company's real and personal property will continue to be pledged as
collateral and the Company and its subsidiaries will continue to be guarantors
under IPC's revolving credit agreement. The $20.0 million Term Loan is
repayable in quarterly installments of $1.3 million, commencing September 30,
1999 and bears interest at LIBOR plus 2.75% or at the Base Rate plus 1.75% at
IPC's option. IPC's credit agreement, which provides for both the Working
Capital Facility and the Term Loan, matures on April 30, 2003.

As of July 1, 1999, the Company, IPC and IEXN entered into an inter-company
agreement which provides, among other matters, for IPC to furnish up to $50.0
million of credit, including the provision of letters of credit, guarantees and
other forms of credit enhancements. Such amount would be limited to $6.25
million per quarter, commencing July 1, 1999 and continuing through the quarter
ending June 30, 2001. Outstanding notes payable on July 1, 1999 and additional
amounts borrowed under the agreement bear interest at the Base Rate plus 2%.
Any and all amounts advanced by IPC to IXnet and/or its subsidiaries which are
outstanding on June 30, 2001 shall be immediately due and payable.

In connection with the issuance of stock options under the IXnet 1999 Stock
Option Plan, the Company will record deferred compensation in the aggregate
amount of approximately $26.0 million, based upon the deemed fair market value
for accounting purposes of IXnet's common stock at the date of grant.
Approximately $8.0 million of the deferred compensation will be expensed in
IXnet's June 30, 1999 quarter, with the balance being amortized over the
remaining vesting period of the options. In addition, certain of these options
will be treated as variable options for accounting purposes and may result in
additional deferred compensation expense in future periods.

F-21
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(U.S. dollars in thousands)

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

<TABLE>
<CAPTION>
April 30, October 31,
1998 1998
--------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 323 $ 1,136
Accounts receivable.................................... 3,688 3,581
Prepayment............................................. 248 116
Sales taxes recoverable................................ 72 30
------ -------
Total current assets................................. 4,331 4,863
------ -------
Non-current assets:
Property and equipment, net............................ 4,936 5,226
Other assets........................................... 20 --
------ -------
Total non-current assets............................. 4,956 5,226
------ -------
Total Assets............................................. $9,287 $10,089
====== =======
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Related party payables................................. $5,261 $ 5,651
Current portion of long term debt...................... 88 177
Accounts payable....................................... 4,912 3,016
Accrued liabilities.................................... 3,120 6,636
Taxation liabilities................................... 86 36
------ -------
Total current liabilities............................ 13,467 15,516
------ -------
Non-current liabilities:
Long term debt......................................... 190 325
Deferred taxation...................................... 44 25
------ -------
Total non-current liabilities........................ 234 350
------ -------
Commitments and contingencies
Shareholder's deficit
Common shares (par value Pound Sterling 1; authorized
500,000 shares; issued and outstanding 483,100
shares)............................................... 784 784
Accumulated deficit.................................... (6,618) (8,165)
Contributed capital.................................... 1,041 1,236
Cumulative foreign currency translation adjustments.... 379 368
------ -------
Total shareholder's deficit.......................... (4,414) (5,777)
------ -------
Total Liabilities and Shareholder's Deficit.............. $9,287 $10,089
====== =======
</TABLE>

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

F-22
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(U.S. dollars in thousands)

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

<TABLE>
<CAPTION>
Six Months
Ended
October 31,
----------------
1997 1998
------- -------
<S> <C> <C>
Revenue...................................................... $12,457 $13,966
Cost of products and services................................ 10,564 12,074
------- -------
Gross profit................................................. 1,893 1,892
Selling, general and administrative.......................... 2,936 3,492
------- -------
Operating loss............................................... (1,043) (1,600)
Interest income.............................................. 11 7
Interest expense............................................. -- (19)
------- -------
Loss before income taxes..................................... (1,032) (1,612)
Income tax provision (benefit)............................... 91 (65)
------- -------
Net loss..................................................... $(1,123) $(1,547)
======= =======
</TABLE>

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

F-23
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(U.S. dollars in thousands)

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

<TABLE>
<CAPTION>
Six Months
Ended
October 31,
----------------
1997 1998
------- -------
<S> <C> <C>
Cash flows provided by operating activities:
Net loss..................................................... $(1,123) $(1,547)
Adjustments to reconcile net loss to operating cash flow:
Depreciation and amortization.............................. 610 792
Changes in other assets and liabilities:
Accounts receivable...................................... (13) 107
Prepayment and other current assets...................... 74 175
Accounts payable......................................... (1,366) (1,896)
Accrued liabilities and other liabilities................ 2,828 3,467
------- -------
Net cash flows provided by operating activities........ 1,010 1,098
------- -------
Cash flows used in investing activities:
Purchase of property and equipment......................... (1,002) (1,082)
------- -------
Net cash flows used in investing activities............ (1,002) (1,082)
------- -------
Cash flows provided by financing activities:
(Repayment of) proceeds from Marshalls funding............. (158) 389
Contributed capital........................................ 186 195
Net long term borrowing.................................... -- 224
------- -------
Net cash flows provided by financing activities........ 28 808
------- -------
Effect of exchange rate changes.............................. 423 (11)
------- -------
Increase in cash and cash equivalents........................ 459 813
Cash and cash equivalents at beginning of period............. 309 323
------- -------
Cash and cash equivalents at end of period................... $ 768 $ 1,136
======= =======
</TABLE>

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

F-24
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

1. Basis of Presentation

In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all necessary adjustments (consisting
of normal recurring accruals and appropriate intercompany elimination
adjustments) for a fair presentation of the financial position of Saturn Global
Network Services Holdings Limited ("Saturn") as of October 31, 1998, and the
results of its operations and its cash flows for the six months ended October
31, 1998 and 1997, in conformity with United States generally accepted
accounting principles for interim financial information applied on a consistent
basis. The results of operations for the six months ended October 31, 1998 and
1997 are not necessarily indicative of the results to be expected for the full
year. These financial statements should be read in conjunction with Saturn's
audited financial statements for the fiscal year ended April 30, 1998.

2. Effect of Recently Issued Accounting Standards

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives and
Hedging Activities," which establishes accounting and reporting standards for
derivative instruments and hedging activities. This standard is effective for
all fiscal quarters of fiscal years beginning after June 15, 1999. Saturn does
not currently use derivative financial instruments.

In March 1998, the American Institute of Certified Public Accountants issued
SOP 98-1, "Accounting for the Cost of Computer Software Developed or Obtained
for Internal Use." SOP98-1 is effective for financial statements for years
beginning after December 15, 1998. Saturn does not anticipate the adoption of
this standard to have a material effect on its financial position, results of
operations or cash flows.

3. Comprehensive Income

Effective October 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement requires the Company to include within
its financial statements information on comprehensive income, which is defined
as all activity impacting equity from non-owner sources. For Saturn,
comprehensive income includes net income and foreign currency translation
adjustments.

Total comprehensive loss, net of taxes, was $801,000 and $1.6 million for
the six months ended October 31, 1997 and 1998, respectively.

4. Major Suppliers and Customers

Saturn is dependent on a limited number of suppliers of equipment for its
telecommunication network. Certain key items of equipment, including routers
and data switches are purchased from a single source due to technology,
availability, price, quality and other considerations. In the event that a
supply of key single-sourced equipment was suddenly delayed or curtailed
Saturn's ability to develop the common network could be adversely affected in
the short term. Saturn attempts to mitigate this risk by working closely with
key suppliers.

F-25
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

5. Segmental Information

Saturn has adopted SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related Information" which affects the way Saturn reports certain
information about its operating segments.

Factors management use to identify the Group reportable segments

The Group is managed on a regional basis. Management considers each region
to be a separate reportable segment. The regions are managed separately because
each segment requires different product and marketing strategies and operates
under different regulatory environments.

Measurement of segment profit (loss) and segment assets

The accounting policies adopted by each segment are the same as those
described in the summary of significant accounting policies. Saturn's
management evaluates performance based on profit (loss) from operations before
interest, exchange differences and income taxes.

Segmental analysis

Summarized financial information concerning the Group's reportable segments
is shown in the following table. The Corporate column includes corporate
related items and income and expense not allocated to reportable segments and
is included to reconcile segmental data to total company data.

The following table presents revenue by geographical region based on billing
location and long-lived assets by geographical region based on the location of
the assets.

Segmental analysis for the six months ended October 31, 1997 and 1998:

<TABLE>
<CAPTION>
Europe Australia USA Asia Corporate Total
------ --------- ------ ------ --------- -------
(U.S. Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
1997
- ----
Revenues from customers.. $2,127 $7,690 $1,266 $1,374 $ -- $12,457
Depreciation and
amortization............ 140 458 54 44 -- 696
Operating profit (loss).. (28) 171 32 (89) (1,129) (1,043)
Total segment assets..... 2,677 3,882 1,032 767 -- 8,358
Capital expenditures..... 1,796 462 431 226 -- 2,915
<CAPTION>
Europe Australia USA Asia Corporate Total
------ --------- ------ ------ --------- -------
(U.S. Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
1998
- ----
Revenues from customers.. $5,013 $4,840 $1,510 $2,603 $ -- $13,966
Depreciation and
amortization............ 338 363 72 95 -- 868
Operating profit (loss).. (203) 55 (496) (278) (678) (1,600)
Total segment assets..... 4,105 2,965 1,409 1,610 -- 10,089
Capital expenditures..... 427 440 24 232 -- 1,123
</TABLE>

F-26
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

6. Subsequent Events

(a) Sale of Saturn

On December 18, 1998, Marshalls Finance Limited ("Marshalls"), the parent
company, completed the sale of the Company to International Exchange Networks
Limited, a subsidiary of IPC Information Systems, Inc.

(b) Commercial Disputes

Since the sale of Saturn by Marshalls, certain claims have been made by
suppliers of telecommunications circuits in relation to alleged payables under
commercial arrangements. These claims are being vigorously contested and are in
the process of negotiation; costs relating to these claims will be recorded on
an actual or estimated basis in Saturn's financial statements for the current
financial year. The directors believe that the maximum payment that could arise
as a result of claims currently in negotiation is approximately $220,000. Had
this amount been recorded as an expense in the year in which the related
services were allegedly received, cost of sales would have increased for the
six month periods ended October 31, 1997 and 1998 by $88,000 and $75,000,
respectively.

At April 30, 1998, Saturn owed Marshalls $5.3 million which had increased to
$5.7 million at the date of disposal of Saturn by Marshalls.

Since the disposal of Saturn by Marshalls:

(1) An amount of $730,000 was paid on Saturn's behalf by IEXN in
consideration for the agreement by Saturn to reassign this payable amount
to IEXN.

(2) An amount of approximately $5 million was converted into a loan note
repayable by Saturn to Marshalls in 24 equal monthly installments of
$222,000, an effective rate of interest of 9.25%.

F-27
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

Report of Independent Accountants

To the Shareholders of Saturn Global Network Services Holdings Limited:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and of cash flows present fairly, in all
material respects, the financial position of Saturn Global Network Services
Holdings Limited and its subsidiaries at April 30, 1997 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended April 30, 1998, in conformity with generally accepted
accounting principles in the United States of America. 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 of these statements in accordance with
generally accepted auditing standards in the United Kingdom, which are
substantially consistent with those of 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers

London, United Kingdom
May 11, 1999

F-28
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

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

<TABLE>
<CAPTION>
Years Ended April 30,
-------------------------
1996 1997 1998
------- ------- -------
(U.S. Dollars in
thousands)
<S> <C> <C> <C>
Revenue:
Revenue--Marshalls................................ $10,706 $ 9,347 $ 7,648
Revenue--Other.................................... 7,598 13,039 17,468
------- ------- -------
18,304 22,386 25,116
Cost of products and services....................... 17,302 20,322 22,063
------- ------- -------
Gross profit........................................ 1,002 2,064 3,053
Selling and marketing............................... 504 858 982
General and administrative.......................... 782 2,474 4,177
------- ------- -------
Operating loss...................................... (284) (1,268) (2,106)
Interest income..................................... 32 34 22
Interest expense.................................... -- -- (2)
------- ------- -------
Loss before income taxes............................ (252) (1,234) (2,086)
Income taxes........................................ 56 (32) (110)
------- ------- -------
Net loss............................................ $ (196) $(1,266) $(2,196)
======= ======= =======
</TABLE>

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

F-29
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

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

<TABLE>
<CAPTION>
April 30,
----------------------------
1997 1998
------------- -------------
(U.S. Dollars in thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents....................... $ 309 $ 323
Accounts receivable--British Telecommunications
plc............................................ -- 282
- --Marshalls...................................... 1,466 1,709
- --Others......................................... 1,307 1,697
Prepayment--British Telecommunications plc...... 124 --
- --Others......................................... 364 248
Sales and other taxes recoverable............... 10 72
------------- -------------
Total current assets........................ 3,580 4,331
------------- -------------
Non-current assets
Property and equipment net...................... 3,989 4,936
Deferred taxation............................... -- 20
------------- -------------
Total non-current assets.................... 3,989 4,956
------------- -------------
Total assets................................ $ 7,569 $ 9,287
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Related party payables (refer Note 11).......... $ 6,558 $ 5,261
Current portion of long term debt............... -- 88
Accounts payable--British Telecommunications
plc............................................ 92 815
- --Others......................................... 2,055 4,097
Accrued liabilities--British Telecommunications
plc............................................ -- 97
- --Others......................................... 1,259 1,427
Deferred revenue................................ 1,209 1,337
Employee liabilities............................ 223 243
Taxation liabilities............................ 27 86
Other liabilities............................... 24 16
------------- -------------
Total current liabilities................... 11,447 13,467
------------- -------------
Non-current liabilities
Long term debt.................................. -- 190
Deferred taxation............................... -- 44
------------- -------------
Total non-current liabilities............... -- 234
------------- -------------
Commitments and Contingencies (refer Note 10)
Shareholder's Deficit
Common shares (par value (Pounds)1; authorized
500,000 shares; issued and outstanding 100 at
April 30, 1997, and 483,100 at April 30,
1998).......................................... -- 784
Accumulated deficit............................. (4,422) (6,618)
Contributed Capital............................. 657 1,041
Cumulative foreign currency translation
adjustments.................................... (113) 379
Divisional deficit.............................. -- --
------------- -------------
Total shareholder's deficit................. (3,878) (4,414)
------------- -------------
Total Liabilities and Shareholder's
Deficit.................................... $ 7,569 $ 9,287
============= =============
</TABLE>

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

F-30
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

<TABLE>
<CAPTION>
Years Ended April 30,
-------------------------
1996 1997 1998
------- ------- -------
(U.S. Dollars in
thousands)
<S> <C> <C> <C>
Cash flows used in operating activities:
Net loss.......................................... $ (196) $(1,266) $(2,196)
Adjustments to reconcile net loss to operating
cash flow:
Loss on sale of equipment....................... -- -- 6
Depreciation and amortisation................... 678 1,059 1,392
Deferred Taxation............................... -- -- 24
Changes in other assets and liabilities
Accounts receivable--Marshalls................ -- 1,742 (2,791)
--British Telecommunications plc.............. -- -- (292)
--Others...................................... 914 (742) (961)
Prepayment--British Telecommunications plc.... 174 141 92
--Others...................................... (113) (128) 61
Sales and other taxes recoverable............. 4 37 (67)
Accounts payable--British Telecommunications
plc.......................................... -- 93 735
--Others...................................... (3,716) 1,897 2,344
Accrued liabilities--British
Telecommunications plc....................... -- -- 95
--Others...................................... 2,150 (1,026) 256
Deferred revenue.............................. -- 1,216 274
Employee liabilities.......................... 88 133 44
Taxation liabilities.......................... (11) 27 54
Other liabilities............................. -- 27 (8)
------- ------- -------
Net cash flows (used)/provided by operating
activities.................................. (28) 3,210 (938)
------- ------- -------
Cash flows used in investing activities:
Purchase of property and equipment................ (1,236) (2,119) (2,456)
Proceeds from disposal and retirement of
equipment........................................ -- 4 6
------- ------- -------
Net cash flows used in investing activities.. (1,236) (2,115) (2,450)
------- ------- -------
Cash flows provided by financing activities:
Proceeds from Marshalls funding................... 1,521 (645) 2,925
Repayment of long term borrowing.................. -- -- (14)
------- ------- -------
Net cash provided/(used) by financing
activities.................................. 1,521 (645) 2,911
------- ------- -------
Effect of exchange rate changes.................... 42 (745) 491
Increase/(decrease) in cash and cash equivalents... 299 (295) 14
Cash and cash equivalents at beginning of year..... 305 604 309
------- ------- -------
Cash and cash equivalents at end of year........... $ 604 $ 309 $ 323
======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes.................................... $ 6 $ 1 $ 26
Interest........................................ $ -- $ -- $ 2
Non-cash investing and financing activities:
Property acquired under capital leases.......... $ -- $ -- $ 292
Intercompany balance settled by issuance of
common stock................................... $ -- $ -- $ 784
</TABLE>

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

F-31
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1. Principal Activities

Saturn Global Network Services Holdings Limited ("SGNS Limited") was
restructured in 1997 as the holding company for the Saturn Global Network
Services ("SGN") group of companies. Prior to the formation of SGNS Limited,
the SGN group of companies were wholly owned subsidiaries of the Marshalls
Finance Limited Group ("Marshalls" or "parent company"). SGN is a provider of
international managed services for end to end non switched voice, data and
video telecommunications. The extensive international network currently
comprises points of presence in over 30 countries, with a worldwide network
management center in the United Kingdom.

2. Significant Accounting Policies

The financial statements of the Company have been prepared under generally
accepted accounting principles in the United States. The accounting policies
are stated below.

Basis of Presentation

The origins of the Company began in Australia in August 1992 with the first
SGN company, SGN Pty Limited, a subsidiary of M W Marshall Pty ("MWM") to
leverage MWM's experience in addressing complex telecommunication networking
needs within the financial services sector. In order to separately identify its
telecommunication line of business from its finance activities, in May 1997
Marshalls established a fully recognizable group structure for SGN under the
holding company, SGNS Limited in a transaction which represented a
reorganization of companies under common control.

Marshalls provides the Company with general and administrative services
including legal, finance and other services. These expenses are allocated to
the Company based on incremental costs. Management believe these costs
allocations were made on a reasonable basis.

The consolidated financial statements for the 1996 and 1997 fiscal years
include the accounts of the SGN group of companies. The consolidated financial
statements for the 1998 fiscal year include the accounts of the company and its
wholly-owned subsidiaries (the "Group") and reflect the results of operations
for the Group from May 1, 1997. All significant inter-company accounts and
transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
balance sheet date and the reported amounts of revenues and expenses in the
reporting period. Actual results may differ from the estimates used in the
financial statements.

F-32
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

Translation of Foreign Currencies

The functional currency is the currency of the country in which the
operations are conducted. Assets and liabilities are translated at the exchange
rate in effect at the balance sheet date. Revenues and expenses are translated
at the average rates that prevailed during the period. The resultant net
translation gains and losses are reported as foreign currency translation
adjustments in shareholder's deficit.

Other transactions denominated in foreign currency are translated at the
rate prevailing at the time of the transaction. Monetary assets and liabilities
denominated in foreign currencies have been translated at rates in effect at
the balance sheet date. Gains and losses resulting from transactions in other
than the functional currency are reflected in the net loss.

Income taxes

The provision for income taxes has been prepared on a separate return basis
as Saturn and its subsidiaries are separately taxed entities. Income taxes are
accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax
credit carry forwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in future 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 enactment date. A valuation allowance
is recorded to reduce the deferred tax asset if it is more likely than not that
some portion of the asset will not be realised.

Cash and cash equivalents

Cash and cash equivalents are defined as highly liquid investments with
original maturities of 90 days or less.

Property and Equipment

Property and equipment are stated at historical cost less depreciation
calculated on a straight-line basis over the expected useful lives of the
relevant assets. Major renewals and improvements are capitalised while
maintenance and repairs are expensed when incurred. The cost and related
accumulated depreciation applicable to assets retired are removed from the
accounts and the gain or loss on disposition is recognized in income.

F-33
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

Depreciation is calculated with reference to expected useful lives, which
are generally as follows:

<TABLE>
<S> <C>
Leased buildings............................................... 2 to 10 years
Network assets................................................. 3 to 5 years
Office equipment and furniture................................. 3 to 5 years
Computer equipment and software applications................... 3 to 5 years
</TABLE>

SGNS Limited evaluates the carrying value of fixed assets not held for sale
by considering the future undiscounted cash flow expected to arise from the use
of that asset. At the time such evaluations indicate that future cash flows are
insufficient to recover the carrying value of such assets the assets are
adjusted to their fair value.

Revenue Recognition

Communications revenues are recognized when services are rendered in
accordance with usage of SGNS Limited's network. Certain network services are
billed in advance in accordance with the contractual agreement and related
revenues are initially deferred and recognized as services are provided.

Employee Benefits

The Group operates defined contribution pension plans. Such plans vary
according to the customary plan prevailing in the country concerned and the
contributions to the schemes are charged in results of operations.

Financial Instruments

SGNS Limited does not use derivative financial instruments for the purpose
of hedging currency risk and managing interest rate exposures which exist as
part of ongoing business operations. As a policy, SGNS Limited does not engage
in speculative or leveraged transactions, nor does SGNS Limited hold or issue
financial instruments for trading purposes.

Dividends

Dividends paid are recognized when declared by the Supervisory Board.
Dividends are payable in Pounds Sterling. No dividends have been paid to date.

Recent Pronouncements

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income", which requires that all elements of changes in equity arising from
events and transactions with non-owner

F-34
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

sources are reported with equal prominence within the financial statements. The
Company will adopt SFAS No. 130 in the financial year ending April 30, 1999, as
it is effective for years beginning after December 15, 1997.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives and
Hedging Activities," which establishes accounting and reporting standards for
derivative instruments and hedging activities. This standard is effective for
all fiscal quarters of fiscal years beginning after June 15, 1999. SGNS Limited
does not currently use derivative financial instruments.

In March 1998, the American Institute of Certified Public Accountants issued
SOP 98-1, "Accounting for the Cost of Computer Software Developed or Obtained
for Internal Use." SOP 98-1 is effective for financial statements for years
beginning after December 15, 1998. The Company does not anticipate the adoption
of this standard to have a material effect on its financial position, results
of operations or cash flows.

3. Income taxes

Income tax expense consists of:

<TABLE>
<CAPTION>
Years Ended
April 30,
----------------
1996 1997 1998
---- ---- -----
(U.S. Dollars
in thousands)
<S> <C> <C> <C>
Currently payable
United Kingdom............................................ $51 $(31) $ (23)
International............................................. 5 (1) (63)
--- ---- -----
Total currently receivable/(payable)...................... 56 (32) (86)
--- ---- -----
Deferred
United Kingdom............................................ -- -- (24)
International............................................. -- -- --
--- ---- -----
Total deferred............................................ -- -- (24)
--- ---- -----
Total Benefit/(Provision) for Income Taxes................ $56 $(32) $(110)
=== ==== =====
</TABLE>

A reconciliation between income tax credit/(expense) at the mainstream
corporation tax rate of 33% for the years ended April 30, 1996 and 1997, and
31% for the year ended April 30, 1998 to the Group's effective tax rate is as
follows:

<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
% % %
<S> <C> <C> <C>
UK Statutory tax rate...................................... 33 33 31
Differences in tax rates................................... 9 4 5
Deferred tax valuation allowance adjustments............... 21 (42) (20)
Permanent differences...................................... (35) 5 (14)
Other Differences.......................................... (6) (3) (7)
--- --- ---
Effective tax credit/(expense)............................. 22 (3) (5)
=== === ===
</TABLE>

F-35
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

The tax effects of the temporary differences and carry forwards that give
rise to significant portions of deferred tax assets and liabilities at April
30, 1997 and 1998 are as follows:

<TABLE>
<CAPTION>
April 30,
--------------
1997 1998
----- -------
(U.S. Dollars
in thousands)
<S> <C> <C>
Deferred tax assets:
Operating losses carried forward............................ $ 747 $ 960
Other temporary differences................................. 121 345
----- -------
Total deferred tax asset.................................. 868 1,305
Less: valuation allowances.................................. (868) (1,285)
----- -------
-- 20
===== =======
Deferred tax liabilities:
Temporary differences on property and equipment............. -- (24)
Other temporary differences................................. -- (20)
----- -------
Total deferred tax liability.............................. -- (44)
----- -------
Net deferred tax liability.................................. $ -- $ (24)
===== =======
</TABLE>

Estimated net operating loss carry forwards at April 30, 1997 and 1998 and
their expiration dates are shown below.

<TABLE>
<CAPTION>
1997 1998
----------------------- -----------------------
Net Net
Expiration Operating Expiration Operating
Country of tax jurisdiction Dates loss Dates loss
- --------------------------- ------------- --------- ------------- ---------
(U.S. Dollars in thousands)
<S> <C> <C> <C> <C>
Australia...................... No expiration $1,570 No expiration $2,140
Hong Kong...................... No expiration 166 No expiration 166
30 April 2002
to 30 April
Japan.......................... 30 April 2002 293 2003 300
Singapore...................... No expiration 14 No expiration 29
------ ------
$2,043 $2,635
====== ======
</TABLE>

F-36
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

4. Accounts Receivable--Others

Accounts receivable--others consist of the following:

<TABLE>
<CAPTION>
At April 30,
--------------
1997 1998
------ ------
(U.S. Dollars
in thousands)
<S> <C> <C>
Accounts receivable--others.................................. $1,309 $1,630
Less: allowance for doubtful accounts........................ (16) (50)
------ ------
1,293 1,580
Other receivables............................................ 14 117
------ ------
$1,307 $1,697
====== ======
</TABLE>

5. Property and Equipment

Property and equipment, which is stated at cost, consists of the following:

<TABLE>
<CAPTION>
At April 30,
----------------
1997 1998
------- -------
(U.S. Dollars
in thousands)
<S> <C> <C>
Leased land and buildings.................................. $ 65 $ 132
Network assets............................................. 5,777 7,067
Computer equipment and software applications............... 241 217
Office equipment and furniture............................. 112 199
------- -------
6,195 7,615
Less: accumulated depreciation............................. (2,206) (2,679)
------- -------
Property and equipment, net................................ $ 3,989 $ 4,936
======= =======
</TABLE>

Total depreciation and amortisation expense for the years ended April 30,
1997 and 1998 amounted to $1.1 million and $1.4 million, respectively.
Accumulated depreciation pertaining to leased assets for the years ended April
30, 1997 and 1998 amounted to $nil and $14,000, respectively.

F-37
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

6. Capital Lease Commitments

SGNS Limited leases certain telecommunications equipment under long-term
capital leases.

Future minimum lease payments for assets held under capital lease
arrangements at April 30, 1998 are as follows:

<TABLE>
<CAPTION>
(U.S. Dollars in thousands)
---------------------------
<S> <C>
1999.................................................................. $113
2000.................................................................. 113
2001.................................................................. 98
----
Total minimum lease payments.......................................... 324
Less: amount representing interest.................................... (46)
----
Present value of minimum lease payments............................... 278
Less capital lease obligations included in current portion of long-
term debt............................................................ (88)
----
Long term capital lease obligations................................... $190
====
</TABLE>

7. Financial Instruments

Fair Value of Financial Instruments

The carrying amount of accounts receivable and accounts payable,
approximates fair value due to the short-term maturity of these instruments.

SGNS Limited invests its excess cash in deposits with major banks throughout
the world. SGNS Limited has a policy of making investments only with commercial
banks that have at least an A (or equivalent) credit rating.

Concentration of Credit Risk

Concentration of credit risk with respect to trade receivables is limited
due to the large number of customers comprising SGN Limited's customer base.
Ongoing credit evaluations of customers' financial conditions are performed and
generally, no collateral is required. The company maintains reserves for
potential credit losses and such losses in the aggregate have not exceeded
management's expectations.

F-38
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

8. Statement of Shareholder's Equity

<TABLE>
<CAPTION>
Common Stock Cumulative
-------------- foreign
Number currency Total
of Contributed Accumulated translation Divisional shareholder's
Shares Amount Capital deficit adjustment deficit deficit
------- ------ ----------- ----------- ----------- ---------- -------------
(U.S. Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at May 1, 1995.. -- $ -- $ -- $ -- $ -- $(2,210) $(2,210)
Net loss................ -- -- -- -- -- (196) (196)
Foreign currency
translation
adjustment............. -- -- -- -- -- (153) (153)
Shareholder
contribution........... -- -- -- -- -- 284 284
------- ----- ------ ------- ----- ------- -------
Balance at April 30,
1996................... -- -- -- -- -- (2,275) (2,275)
Net loss................ -- -- -- (1,266) -- -- (1,266)
Foreign currency
translation
adjustment............. -- -- -- -- 25 -- 25
Effect of reorganization
(i).................... 100 -- 284 (3,156) (138) 2,275 (735)
Shareholder
contribution........... -- -- 373 -- -- -- 373
------- ----- ------ ------- ----- ------- -------
Balance at April 30,
1997................... 100 -- 657 (4,422) (113) -- (3,878)
New issue............... 483,000 784 -- -- -- -- 784
Net loss................ -- -- (2,196) -- -- (2,196)
Foreign currency
translation
adjustment............. -- -- -- -- 492 -- 492
Shareholder
contribution........... -- -- 384 -- -- -- 384
------- ----- ------ ------- ----- ------- -------
Balance at April
30,1998................ 483,100 $ 784 $1,041 $(6,618) $ 379 -- $(4,414)
======= ===== ====== ======= ===== ======= =======
</TABLE>
- ---------------------
(i) Refer to Note 2: Basis of Presentation

Authorised Share Capital

There is only one class of share--Ordinary Shares of (Pounds)1 each. The
rights attaching to these shares are set out in the Articles of Association and
The Companies (Tables A to F) Regulations 1985.

There are no unusual or special rights conferred upon the shares. The only
rights ascribed to the shares are those exercisable under UK Company Law.

Foreign Currency Translation Adjustment

The equity account includes the results of translating all balance sheet
assets and liabilities at current exchange rates. Income statement items are
translated at the average exchange rate for the

F-39
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

period. The foreign currency translation adjustment is $(153,000), $25,000 and
$492,000 for the years ended April 30, 1996, 1997 and 1998, respectively.

Net currency transaction loss/(gain) included in net loss for the years
ended April 30, 1996, 1997 and 1998 were $(682,000), $447,000 and $1.0 million
respectively.

9. Employee Benefits

Defined contribution plans

The Group sponsors various defined contribution schemes that cover the
majority of world-wide employees. The percentage contribution rate varies
according to seniority, age, length of service and local country standards.
Total Group contributions charged to income for defined contribution plans for
the years ended April 30, 1996, 1997 and 1998 were $15,000, $34,000 and
$68,000, respectively.

10. Commitments and Contingent Liabilities

Rentals for office space and commitments under supplier contracts amounted
to approximately $15.9 million, $18.2 million and $19.9 million in the years
ended April 30, 1996, 1997 and 1998 respectively.

At April 30, 1998 the approximate future minimum lease payments under non-
cancellable operating leases that have initial or remaining non-cancellable
lease terms in excess of one year were as follows:

<TABLE>
<CAPTION>
(U.S. Dollars in thousands)
---------------------------
<S> <C>
1999................................................................. $4,224
2000................................................................. 431
------
$4,655
======
</TABLE>

There are no material contingent liabilities that have not been provided for
in these financial statements.

11. Related Party Transactions

In the normal course of business, SGNS Limited engaged in several
transactions with Marshalls. SGNS Limited received revenues of $10.7 million,
$9.3 million and $7.7 million from Marshalls for providing network services for
the years ended April 30, 1996, 1997 and 1998. Trade receivables from Marshalls
in respect of these services at April 30, 1996, 1997 and 1998 were $1.4
million, $1.5 million and $1.7 million, respectively.

F-40
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

SGNS Limited occupies certain office space where the lessee is Marshalls.
SGNS Limited reimbursed Marshalls rent expense of $39,000, $126,000 and
$151,000 for the years ended April 30, 1996, 1997 and 1998, respectively. Had
SGNS Limited sub-leased the office space as an unaffiliated entity, management
estimates that additional rent expense would have been $210,000, $227,000 and
$229,000 for the years ended April 30, 1996, 1997 and 1998, respectively, which
has been reflected in these accounts. In respect of office space under a non-
cancellable sub-lease with a Marshalls Group related entity, SGNS Limited
reimbursed charges of $102,000 for the year ended April 30, 1998 and under the
terms of the lease there is no renewal option.

As disclosed in Note 2, Marshalls provides SGNS Limited with general and
administrative services including legal, finance and other services. These
expenses are allocated to the Company based on incremental costs. Management
believes these cost allocations were made on a reasonable basis. For the years
ended April 30, 1996, 1997 and 1998 the costs amounted to $74,000, $146,000 and
$225,000, respectively.

In 1995, SGNS Limited received an advance from Marshalls in the form of a
non-interest bearing loan. The loan has no formal repayment term.

Details of amounts outstanding under the loan, and the net trading balance
with Marshalls are shown below:

<TABLE>
<CAPTION>
Non interest Net trading
bearing loan balance Total
------------ ----------- ------
(U.S. dollars in thousands)
<S> <C> <C> <C>
Balance at April 30, 1996..................... $5,157 $ 780 $5,937
Repayment of funds advanced................. (645) -- (645)
Amounts invoiced to Marshalls companies..... -- (9,347) (9,347)
Settlements/other transactions.............. -- 10,245 10,245
Effect of exchange rate changes............. 368 -- 368
------ ------- ------
Balance at April 30, 1997..................... 4,880 1,678 6,558
Additional funds advanced................... 2,925 -- 2,925
Capitalisation of new issue of common
stock...................................... (784) -- (784)
Amounts invoiced to Marshalls companies..... -- (7,648) (7,648)
Settlements/other transactions.............. -- 4,473 4,473
Effect of exchange rate changes............. 49 (312) (263)
------ ------- ------
Balance at April 30, 1998..................... $7,070 $(1,809) $5,261
====== ======= ======
Average quarterly inter-company balance
during year April 30, 1998................. $6,217 $ (416) $5,801
====== ======= ======
</TABLE>

During the period covered by these financial statements, substantially all
of SGNS Limited's assets were pledged as collateral under certain financing
agreements entered into by Marshalls. These

F-41
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

financing agreements limited SGNS Limited from incurring additional
indebtedness and liens on assets. SGNS Limited was released from these
obligations on December 18, 1998.

British Telecommunications, plc ("BT") had until December 18,1998, an
indirect interest in SGNS Limited through its 30.7% shareholding interest in
Marshalls. In 1996, 1997 and 1998, SGNS Limited received revenues of $nil, $nil
and $645,000, respectively, from BT for providing network management services
to its customers. In addition the cost of services provided by BT for network
services to the company was $2.9 million, $2.8 million and $2.6 million for the
years ended April 30, 1996, 1997 and 1998, respectively. In the normal course
of business, SGNS Limited leases circuits under non-cancellable operating
leases from BT. The future rental payments of approximately $729,000 under the
leases are included in the table of future minimum lease payments (see Note
10).

12. Segmental Information

SGNS Limited has adopted SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information", which affects the way SGNS Limited reports
certain information about its operating segments.

Factors management use to identify the Group reportable segments

Measurement of segment profit (loss) and segment assets

Segmental analysis

Summarised financial information concerning the Group's reportable segments
is shown in the following table. The Corporate column includes corporate
related items and income and expense not allocated to reportable segments and
is included to reconcile segmental data to total company data.

F-42
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

The following table presents revenue by geographical region based on billing
location and long-lived assets by geographical region based on the location of
the assets.

Segmental analysis for the year ended April 30, 1996

<TABLE>
<CAPTION>
Europe Australia USA Asia Corporate Total
------ --------- ------ ------ --------- -------
(U.S. Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues from customers.. $ -- $17,546 $ 758 $ -- $ -- $18,304
Depreciation and
amortization............ 17 625 36 -- -- 678
Operating profit (loss).. (89) 43 (206) (52) 20 (284)
Total segment assets..... 114 6,180 257 60 -- 6,611
Capital expenditures..... 40 995 184 17 -- 1,236

Segmental analysis for the year ended April 30, 1997

<CAPTION>
Europe Australia USA Asia Corporate Total
------ --------- ------ ------ --------- -------
(U.S. Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues from customers.. $ -- $20,972 $1,706 $ (292) $ -- $22,386
Depreciation and
amortization............ 34 923 86 16 -- 1,059
Operating profit (loss).. 57 363 (76) (409) (1,203) (1,268)
Total segment assets..... 116 6,279 632 542 -- 7,569
Capital expenditures..... 51 1,743 117 208 -- 2,119

Segmental analysis for the year ended April 30, 1998

<CAPTION>
Europe Australia USA Asia Corporate Total
------ --------- ------ ------ --------- -------
(U.S. Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues from customers.. $9,309 $10,026 $2,717 $3,064 $ -- $25,116
Depreciation and
amortization............ 332 806 123 117 14 1,392
Operating profit (loss).. 296 167 26 (162) (2,433) (2,106)
Total segment assets..... 3,452 3,269 1,113 1,413 40 9,287
Capital expenditures..... 726 707 537 483 3 2,456
</TABLE>

13. Major Suppliers and Customers

SGNS Limited is substantially dependent on a limited number of suppliers of
equipment for its telecommunication network. Certain key items of equipment,
including routers and data switches are purchased from a single source due to
technology, availability, price, quality and other considerations. In the event
that a supply of key single-sourced equipment was suddenly delayed or curtailed
SGNS Limited's ability to develop its common network could be adversely
affected in the short term. SGNS Limited attempts to mitigate this risk by
working closely with key suppliers.

The Company is also substantially dependent on sales to Marshalls, in the
years ended April 30, 1996, 1997 and 1998, approximately 58%, 42% and 30%,
respectively, of total revenues were generated from sales to Marshalls.

F-43
<PAGE>

SATURN GLOBAL NETWORK SERVICES HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

14. Subsequent events

(a) Sale of SGNS Limited

On December 18, 1998 Marshalls Finance Limited, the parent company,
completed the sale of SGNS Limited to International Exchange Networks Limited,
a subsidiary of IPC Information Systems Inc.

(b) Commercial disputes

Since the sale of the company by Marshalls certain claims have been made by
suppliers of telecommunications circuits in relation to amounts allegedly
payable under commercial arrangements. These claims are being vigorously
contested and are in the process of negotiation; costs relating to these claims
will be recorded on an actual or estimated basis in SGNS Limited's financial
statements for the current financial year. The directors believe that the
maximum payment that could arise as a result of claims currently in negotiation
is approximately $220,000. Had this amount been recorded as an expense in the
year in which the related services were allegedly received, cost of sales would
have increased in the year ended April 30, 1997 by $45,000 and in the year
ended April 30, 1998 by $175,000.

At April 30, 1998, the company owed Marshalls $5.3 million, and this amount
increased to $5.7 million at the date of disposal of the company by Marshalls.

Since the disposal of the company by Marshalls;

(1) An amount of $730,000 was paid on the company's behalf by iXnet in
consideration for the agreement by the company to reassign this payable
amount to iXnet.

(2) An amount of $5.0 million was converted into a Loan Note repayable
by SGNS Limited to Marshalls in 24 equal monthly instalments of $222,000,
an effective rate of interest of 9.25%.

F-44
<PAGE>

Report of Independent Accountants

To the Stockholder of
MXNet Inc.:

In our opinion, the accompanying balance sheet and the related statements of
operations, cash flows and stockholder's deficit present fairly, in all
material respects, the financial position of MXNet Inc. (the "Company") at May
31, 1997, and the results of its operations and cash flows for the year then
ended, in conformity with generally accepted accounting principles. 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 audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards, which 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, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

New York, New York
April 15, 1999

F-45
<PAGE>

MXNET INC.

BALANCE SHEETS
(Dollar amounts in thousands, except per share amounts)

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

<TABLE>
<CAPTION>
May 31, 1997 November 30, 1997
------------ -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash.......................................... $ 275 $ 137
Accounts receivable........................... -- 180
Rebilled expenses............................. 35 147
Prepaid expenses.............................. 55 50
Officer loan receivable....................... -- 60
------- -------
Total current assets........................ 365 574
Fixed assets, net............................... 1,323 1,604
Other assets.................................... 10 10
------- -------
Total assets................................ $ 1,698 $ 2,188
======= =======
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Accounts payable and accrued expenses......... $ 106 $ 185
Due to affiliates, net........................ 2,380 3,200
------- -------
Total current liabilities................... 2,486 3,385
------- -------
Commitments and contingencies
Stockholder's deficit:
Common stock, par value $.01, 3,000 shares
authorized, 100 shares issued and
outstanding.................................. -- --
Contributed capital........................... 450 685
Accumulated deficit........................... (1,238) (1,882)
------- -------
Total stockholder's deficit................. (788) (1,197)
------- -------
Total liabilities and stockholder's
deficit.................................... $ 1,698 $ 2,188
======= =======
</TABLE>

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

F-46
<PAGE>

MXNET INC.

STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share amounts)

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

<TABLE>
<CAPTION>
Six
Year Ended Months Ended
May 31, November 30,
1997 1996 1997
---------- ------ ------
(unaudited)
<S> <C> <C> <C>
Revenues:
Web site design and consulting.................... $ 347 $ 116 $ 153
Subscription and royalties........................ 8 -- 433
------- ------ ------
Total revenues.................................. 355 116 586
------- ------ ------
Operating expenses:
Payroll and related costs......................... 808 354 534
Selling, general and administrative............... 448 159 390
Depreciation and amortization..................... 318 81 306
------- ------ ------
Total operating expenses........................ 1,574 594 1,230
------- ------ ------
Net loss........................................ $(1,219) $ (478) $ (644)
======= ====== ======
</TABLE>

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

F-47
<PAGE>

MXNET INC.
STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)

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

<TABLE>
<CAPTION>
Six Months
Year Ended Ended
May 31, November 30,
1997 1996 1997
---------- ------- -----
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.......................................... $(1,219) $ (478) $(644)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization................... 318 81 306
Changes in operating assets and liabilities:
Accounts receivable........................... -- -- (180)
Rebilled expenses............................. (35) -- (112)
Prepaid expenses.............................. (54) 1 5
Other assets.................................. (10) (13) --
Accounts payable and accrued expenses......... 102 54 79
------- ------- -----
Net cash used in operating activities...... (898) (355) (546)
------- ------- -----
Cash flows from investing activities:
Purchase of fixed assets.......................... (1,641) (1,099) (587)
------- ------- -----
Net cash used in investing activities...... (1,641) (1,099) (587)
------- ------- -----
Cash flows from financing activities:
Due to affiliates................................. 2,372 1,319 820
Contributed capital............................... 442 167 235
Loan to officer................................... -- -- (60)
------- ------- -----
Net cash provided by financing activities.. 2,814 1,486 995
------- ------- -----
Net increase (decrease) in cash for the
period.................................... 275 32 (138)
Cash, beginning of period........................... -- -- 275
------- ------- -----
Cash, end of period................................. $ 275 $ 32 $ 137
======= ======= =====
</TABLE>

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

F-48
<PAGE>

MXNET INC.

STATEMENT OF STOCKHOLDER'S DEFICIT
(Dollar amounts in thousands, except share amounts)

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

<TABLE>
<CAPTION>
Common Stock
------------- Contributed Accumulated
Shares Amount Capital Deficit Total
------ ------ ----------- ----------- -------
<S> <C> <C> <C> <C> <C>
Balance at June 1, 1996......... 100 $-- $ 8 $ (19) $ (11)
Contributed capital............. -- -- 442 -- 442
Net loss........................ -- -- -- (1,219) (1,219)
--- ---- ---- ------- -------
Balance at May 31, 1997......... 100 $-- $450 $(1,238) $ (788)
=== ==== ==== ======= =======
</TABLE>

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

F-49
<PAGE>

MXNET INC.

NOTES TO FINANCIAL STATEMENTS

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

1. Organization and Basis of Presentation:

MXNet Inc. was incorporated in the State of New Jersey on May 24, 1996, as a
wholly-owned subsidiary of the Sherwood Group, Inc. ("SGI") which is a wholly-
owned subsidiary of National Discount Brokers Group, Inc. ("NDB") under the
name Market Distribution Concepts, Inc., which was subsequently changed to
MXNet Inc. MXNet is engaged in the business of the delivery of certain licensed
information through its network as well as design and consultation work
associated with the development and maintenance of a web site for NDB.

The financial statements include certain corporate expenses (see Note 4)
incurred by SGI that have been charged to MXNet on a direct or allocated basis.
Management believes these allocations are reasonable. The financial statements
may not necessarily reflect the results of operations, financial position,
changes in stockholder's deficit and cash flows of MXNet had it been a
separate, stand-alone entity during the periods presented.

As discussed in Note 8, all of the outstanding shares of MXNet were acquired
by IPC Information Systems, Inc. in February 1998. The accompanying financial
statements do not reflect any adjustments in connection with the sale.

2. Significant Accounting Policies:

Revenue Recognition

MXNet's revenue has been derived primarily from consulting fees earned in
connection with web site design and subscription and royalty fees earned in
connection with the delivery of licensed information on MXNet's network.
Revenue from consulting and design work is recognized as services are provided.
Royalty and subscription revenue are recognized monthly based on contractual
royalty fees per number of subscribers.

Fixed Assets

Computer equipment and furniture and fixtures are depreciated using the
straight-line method over their estimated useful lives ranging from two to
three years. The cost of additions and betterments are capitalized, and repairs
and maintenance costs are charged to selling, general and administrative
expense in the period incurred. Leasehold improvements are amortized over the
shorter of their useful life or the lease term.

Cash

MXNet maintains its cash balance in a high-credit quality financial
institution.

F-50
<PAGE>

MXNET, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

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

Rebilled Expenses

Rebilled expenses represent expenses incurred by MXNet on behalf of its
customers that are subsequently reimbursed by customers. Rebilled expenses are
excluded from the statements of operations.

Concentration of Credit Risk

For the year ended May 31, 1997 and the six months ended November 30, 1996
(unaudited), revenue earned from NDB accounted for all of MXNet's revenue (see
Note 4). For the six months ended November 30, 1997, revenue earned from NDB
accounted for approximately 26% (unaudited) of MXNet's revenue and one
unrelated customer accounted for approximately 74% (unaudited) of MXNet's
revenue.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting periods. Actual results could differ from those estimates.
Significant estimates made by MXNet include the useful lives and recoverability
of fixed assets.

Income Taxes

MXNet recognizes deferred income taxes for the tax consequences in future
years of differences between the tax bases of assets and liabilities and the
financial reporting amounts at each year end, based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount that is more likely than
not to be realized. The provision for income taxes is the tax payable for the
period and the change during the period in deferred tax assets and liabilities.

MXNet is included in the consolidated federal income tax return of NDB and
computes its federal income tax provision on a separate return basis.

Unaudited Interim Financial Statements

In the opinion of management, the accompanying unaudited interim financial
statements include all necessary adjustments for a fair presentation of the
financial position of MXNet as of November 30, 1997, and the results of its
operations and its cash flows for the six months ended November 30,

F-51
<PAGE>

MXNET, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

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

1996 and 1997, in conformity with generally accepted accounting principles
applied on a consistent basis. The results of operations for the six months
ended November 30, 1996 and 1997 are not necessarily indicative of the results
to be expected for the full year.

3. Fixed Assets:

Fixed assets consist of the following (in thousands):

<TABLE>
<CAPTION>
May 31, 1997 November 30, 1997
------------ -----------------
(unaudited)
<S> <C> <C>
Computer equipment.......................... $1,434 $2,007
Furniture, fixtures and leasehold
improvements............................... 207 221
------ ------
1,641 2,228
Less, accumulated depreciation and
amortization............................... 318 624
------ ------
$1,323 $1,604
====== ======
</TABLE>

4. Related-Party Transactions:

In addition to the revenue earned from NDB, discussed in Note 1, SGI has
funded the operations of MXNet through cash advances made to MXNet. Beginning
in September 1996, in connection with certain administrative duties performed
by SGI, including accounting, human resources and other functions, MXNet was
charged approximately $13,000 per month or approximately $120,000 during the
year ended May 31, 1997. For the six months ended November 30, 1996 and 1997,
such charges amounted to approximately $40,000 (unaudited) and $80,000
(unaudited), respectively. These expenses were allocated to MXNet based on its
direct and indirect utilization of specific services. Management believes these
cost allocations were made on a reasonable basis.

5. Commitments:

Leases

MXNet leases office space in Jersey City, New Jersey, under a non-cancelable
operating lease expiring in July 1999. Future minimum lease payments under this
lease at May 31, 1997 are as follows (in thousands):

Rent expense was approximately $64,000 for the year ended May 31, 1997.

F-52
<PAGE>

MXNET, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

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

6. Employee Savings Plan:

MXNet's employees are covered by a savings plan administered by SGI of MXNet
that qualifies as a deferred salary arrangement under Section 401(k) of the
Internal Revenue Code (the Savings Plan). Under the Savings Plan, participating
employees may defer a portion of their pretax earnings up to the Internal
Revenue Service's annual contribution. For the year ended May 31, 1997, the
Company contributed approximately $2,000 to the Savings Plan.

7. Income Taxes:

The components of net deferred tax assets, consist of the following at May
31, 1997 (in thousands):

<TABLE>
<S> <C>
Operating loss carryforwards.......................................... $ 450
Depreciation and amortization......................................... (51)
-----
Net deferred tax asset................................................ 399
Less, valuation allowance............................................. (399)
-----
Net deferred tax asset.............................................. $ --
=====
</TABLE>

The valuation allowance increased $391,000 during the year ended May 31,
1997 in conjunction with the increase in the net deferred tax asset resulting
from MXNet's continuing operating losses.

MXNet is included in NDB's consolidated income tax returns and the benefits
of its net operating losses have been realized on such returns. Amounts
received from NDB in respect of these benefits, $442,000 and $235,000 for the
year ended May 31, 1997 and for the six months ended November 30, 1997,
respectively, have been recorded as a capital contribution. Such income tax
benefits will be recognized in the future to the extent they would be realized
on a separate return basis. As a result, MXNet has no provision/benefit for
income taxes.

8. Subsequent Event:

In February 1998, MXNet was acquired by IPC Information Systems, Inc. for
$6.7 million. In connection with the sale of MXNet, the amounts due to
affiliates were settled.

F-53
<PAGE>

[Graphic: A statement at the top of the diagram reads, "Access to High
Quality Communications Services and Multiple Trading Partners Through a Single
High Speed Connection." Below this statement there is a diagram of a cloud
representing the IXnet Global Extranet. Extending downward from the cloud is a
representation of a high speed customer site connection with associated
individual service type with their commercial names. The connection illustrates
various IXnet services (DigiHoot, MetroLink, IXPrime IXGlobal, IXLink,
Liquidity and IXFrame) that we deliver to the customer site. The diagram of the
customer site includes representations of various customer access nodes, CANs.
These include a bandwidth manager, a router, and a DLIC. In addition, there are
representations of various customer owned equipment in a Data Center including
a turret system and a PBX. Shown from the customer owned equipment are
connections to a customer desktop including a turret, workstation and handset.
Services are shown as they flow from the Extranet, down the high speed
connection and through a CAN or CANs to an end-user device on the customer's
desktop or on his corporate wide area network. These include: DigiHoot--Hoot &
Holler, MetroLink--Dedicated Voice Lines, IXPrime--Switched Voice, IXGlobal--
Voice GVPN, IXLink--Managed Bandwidth, Liquidity--Electronic Trading/Market
Data Delivery and IXFrame--Managed Frame Relay.]

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 1999

[IXnet logo]

7,500,000 Shares of Common Stock

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

PROSPECTUS

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

Donaldson, Lufkin & Jenrette

Salomon Smith Barney

Merrill Lynch & Co.

First Union Capital Markets Corp.

DLJdirect Inc.

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

We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor
any sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of the company
have not changed since the date hereof.

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

Until , 1999 (25 days after the date of this prospectus), all dealers that
effect transactions in these shares of common stock may be required to deliver
a prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as an underwriter in this offering and when selling
previously unsold allotments or subscriptions.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

IXnet will pay all of the expenses incurred in connection with the offering
described in this registration statement. Such expenses, other than
underwriting commissions and discounts, are estimated to be as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee(1)......... $ 41,700
National Association of Securities Dealers filing fee(1)....... 19,044
Nasdaq National Market listing fee(1).......................... 95,000
Legal fees and expenses........................................ 900,000
Blue Sky fees and expenses..................................... 15,000
Accounting fees and expenses................................... 650,000
Transfer agent's fees and expenses............................. 20,000
Printing and engraving fees.................................... 200,000
Miscellaneous.................................................. 159,256
----------
Total........................................................ $2,100,000
==========
</TABLE>
- ---------------------

(1) Actual. All other expenses are estimated.

Item 14. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law ("DGCL"), inter alia,
empowers a Delaware corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interest of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Similar indemnity is authorized for such person against expenses (including
attorneys' fees) actually and reasonably incurred in connection with the
defense or settlement of any such threatened, pending or completed action or
suit if such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and provided
further that (unless a court of competent jurisdiction otherwise provides) such
person shall not have been adjudged liable to the corporation. Any such
indemnification may be made only as authorized in each specific case upon a
determination by the stockholders or disinterested directors or by independent
legal counsel in a written opinion that indemnification is proper because the
indemnitee has met the applicable standard of conduct.

Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise, against any liability asserted against him, and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.

Section 6 of IXnet's Certificate of Incorporation provides that a director
shall not be personally liable to IXnet or its shareholders for damages for
breach of his fiduciary duty as a director, except to the extent such exemption
from liability or limitation thereof is expressly prohibited by the DGCL.
Article IV, Section 1 of IXnet's By-laws requires IXnet, among other things, to
indemnify to the fullest extent permitted by the DGCL,

II-1
<PAGE>

any person who is or was or has agreed to become a director or officer of
IXnet, who was or is made a party to, or is threatened to be made a party to,
or is otherwise involved in, any threatened, pending or completed action, suit
or proceeding, including actions or suits by or in the right of IXnet, by
reason of such agreement or service or the fact that such person is, was or has
agreed to serve as a director, officer, employee or agent of another
corporation or organization at the request of IXnet.

Article IV, Section 5 of IXnet's By-laws also empowers IXnet to purchase and
maintain insurance to protect itself and its directors and officers, and those
who were or have agreed to become directors or officers, against any liability,
regardless of whether or not IXnet would have the power to indemnify those
persons against such liability under the law. IXnet intends to purchase
directors' and officers' liability insurance policies which insure its
directors and officers and the directors and officers of its subsidiaries in
certain instances as soon as practicable.

Item 15. Recent Sales of Unregistered Securities.

Since its date of incorporation, IXnet has had only one transaction in which
it issued or sold its securities. IXnet issued 1,000 shares of its common
stock, par value $.01 per share, in May 1999, to IPC Information Systems, Inc.
in exchange for all of the stock of International Exchange Networks, Ltd. IPC
is currently the sole holder of the outstanding stock of IXnet. The transaction
was intended to be exempt from the registration requirements of the Securities
Act of 1933, as amended, by virtue of Section 4(2) thereunder because the
securities were not offered to the public. No underwriters were involved in
connection with the sale of these securities. International Exchange Networks,
Ltd. has not issued or sold any of its securities within the three years
preceding the filing of this registration statement.

Item 16. Exhibits and Financial Statement Schedules.

The exhibits filed as a part of this Registration Statement are as follows:

(a) List of Exhibits. (Filed herewith unless otherwise noted.)

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
1.1 Form of Underwriting Agreement, by and among IXnet, Inc., IPC
Communications, Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Salomon Smith Barney Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, First Union Capital Markets Corp. and
DLJ Direct Inc.*

2.1 Agreement for the Sale/Purchase of the Issued Share Capital of
Saturn Global Network Services Holdings Limited dated August 7,
1998 (as amended on December 18, 1998) among Marshalls 106
Limited, Marshalls Finance Limited, International Exchanges
Networks, Ltd. and IPC Information Systems, Inc. (1)

2.1.1 Deed constituting unsecured Guaranteed Subordinated Loan Notes
2000/2002, dated December 18, 1998, made between Saturn Global
Network Services Holdings Limited, International Exchange
Networks, Ltd. and IPC Information Systems, Inc.*

2.1.2 Deed constituting unsecured Guaranteed Subordinated Loan Note
2000/2002, dated December 18, 1998, made between International
Exchange Networks Ltd. and IPC Information Systems, Inc.*

2.2 Stock Purchase Agreement, dated February 13, 1998, by and between
IPC, MXNet and National Discount Brokers Group, Inc.*

3.1 Amended and Restated Certificate of Incorporation of IXnet, Inc.*

3.2 Bylaws of IXnet, Inc.*

4.1 Specimen Stock Certificate.*

5.1 Opinion of Thacher Proffitt & Wood regarding legality of shares.*

10.1 Form of Inter-Company Agreement among IXnet, Inc., International
Exchange Networks, Ltd. and IPC Information Systems, Inc.*

</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
10.2 Form of Tax Sharing Agreement by and between IPC Communications,
Inc. and IXnet, Inc.*

10.3 Form of Registration Rights Agreement by and between IPC
Information Systems, Inc. and IXnet, Inc.*

10.4 Form of Maintenance Agreement by and between International
Exchange Networks, Ltd. and IPC Information Systems, Inc.*

10.5 Share Exchange and Termination Agreement, dated as of December 18,
1997, by and among International Exchange Networks, Ltd., IPC
Communications, Inc., David A. Walsh and Anthony M. Servidio. (2)

10.6 Amended and Restated Employment Agreement, dated as of December
18, 1997, by and between David A. Walsh and International Exchange
Networks, Ltd. (2)

10.7 Amendment No. 1, dated as of June 1, 1999, to the Amended and
Restated Employment Agreement by and between David A. Walsh and
International Exchange Networks, Ltd.*

10.8 Waiver letter, dated as of June 9, 1999, from David A. Walsh
regarding provisions in the Amended and Restated Employment
Agreement by and between David A. Walsh and International Exchange
Networks, Ltd.*

10.9 Employment Agreement, dated as of May 1, 1998, by and between
Charles F. Auster and International Exchange Networks, Ltd.*

10.10 Amendment No. 1, dated as of June 1, 1999, to the Employment
Agreement by and between Charles F. Auster and International
Exchange Networks, Ltd.*

10.11 Amended and Restated Employment Agreement, dated as of December
18, 1997, by and between International Exchange Networks, Ltd. and
Anthony M. Servidio. (2)

10.12 Waiver letter, dated as of June 9, 1999, from Anthony Servidio
regarding provisions in the Amended and Restated Employment
Agreement by and between Anthony M. Servidio and International
Exchange Networks, Ltd.*

10.13 Employment Agreement, dated as of June 1, 1999, by and between
William E. Walsh and International Exchange Networks, Ltd.*

10.14 Employment Agreement, dated as of June 1, 1999, by and between
John M. Faccibene and International Exchange Networks, Ltd.*

10.15 Employment Agreement, dated as of June 1, 1999, by and between
Paul Pluschkell and International Exchange Networks, Ltd.*

10.16 Employment Agreement, dated as of August 6, 1998, by and between
Peter Hase and Saturn Global Network Services (UK) Limited.*

10.17 Employment Agreement, dated as of August 6, 1998, by and between
Drew Kelton and Saturn Global Network Services Pty Ltd.*

10.18 Employment Agreement, dated as of July 1, 1999, by and between
James M. Demitrieus and International Exchange Networks, Ltd.*

10.19 IXnet, Inc. 1999 Stock Option Plan.**

10.20 IPC Information Systems, Inc. 1998 Stock Incentive Plan. (3)

10.21 Indenture, dated as of April 30, 1998, between IPC Information
Systems, Inc. and the United States Trust Company of New York, as
indenture trustee. (4)

10.22 Amended and Restated Credit Agreement, dated as of June 21, 1999,
by and among IPC Information Systems, Inc., IPC Funding Corp., IPC
Communications, Inc., General Electric Capital Corporation, as
collateral agent and administrative agent, Morgan Stanley Senior
Funding, Inc., as syndication agent, and the lenders and the
issuing bank named therein. (5)
10.22.1 Amendment No. 1 dated as of July 1, 1999 to the Amended and
Restated Credit Agreement, dated as of June 21, 1999, by and among
IPC Information Systems, Inc., IPC Funding Corp., IPC
Communications, Inc., General Electric Capital Corporation, as
collateral agent and administrative agent, Morgan Stanley Senior
Funding, Inc., as syndication agent, and the lenders and the
issuing bank named therein. (6)

</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------

<C> <S>
10.23 International Purchase and Sale Agreement, date as of July 23,
1996, by and between International Exchange Networks, Ltd. and
Newbridge Networks Inc.*

21.1 Subsidiaries of IXnet, Inc.*

23.1 Consent of PricewaterhouseCoopers LLP.

23.2 Consent of PricewaterhouseCoopers.

23.3 Consent of Thacher Proffitt & Wood (included in Exhibit 5.1).

24.1 Power of Attorney. (7)

27.1 Financial Data Schedule for year ended September 30, 1996.*

27.2 Financial Data Schedule for year ended September 30, 1997.*

27.3 Financial Data Schedule for year ended September 30, 1998.*

27.4 Financial Data Schedule for six months ended March 31, 1999.*
</TABLE>
- ---------------------

* Previously filed.

** To be filed by amendment.

(1) Previously filed as an exhibit to IPC Information Systems' Report on Form
8-K, filed January 4, 1999, and incorporated herein by reference.
(2) Previously filed as an exhibit to IPC Information Systems' Report on Form
8-K, filed December 24, 1997, and incorporated herein by reference.
(3) Previously filed as an exhibit to IPC Information Systems' Registration
Statement on Form S-4, filed February 13, 1998, and incorporated herein by
reference.
(4) Previously filed as an exhibit to IPC Information Systems' Report on Form
8-K, filed May 15, 1998, and incorporated herein by reference.

(5) Previously filed as an exhibit to IPC Communications' Report on Form 8-K,
filed July 1, 1999, and incorporated herein by reference.

(6) Previously filed as an exhibit to IPC Communications' Report on Form 8-K,
filed July 2, 1999, and incorporated herein by reference.

(7) Executed powers of attorney for Messrs. Walsh, Starr, Auster, Sharkey,
Mello and Smith were previously filed on May 21, 1999 as part of the
signature page. Executed powers of attorney for Messrs. Cashin, Hickey and
Woog were previously filed on July 2, 1999 as Exhibit 24.1.

(b) Financial Statement Schedules.

All schedules have been omitted as not applicable or not required under the
rules of Regulation S-X or the information has been provided in the Combined
and Consolidated Financial Statements or the Notes thereto.

Item 17. Undertakings.

IXnet hereby undertakes:

(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by IXnet pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.

II-4
<PAGE>

(3) To provide to the underwriters at the closing specified in the
underwriting agreement, certificates in such denominations and
registered in such names as required by the underwriters to permit
prompt delivery to each purchaser.

Insofar as indemnification by IXnet for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of IXnet pursuant to the foregoing provisions, or otherwise, IXnet has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by IXnet of expenses incurred
or paid by a director, officer or controlling person of IXnet in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, IXnet will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, IXnet has duly
caused this Amendment No. 2 to Registration Statement No. 333-79079 to be
signed on its behalf by the undersigned, thereunto duly authorized, in New
York, New York, on July 22, 1999.

IXnet, Inc.

/s/ David A. Walsh
By:
----------------------------------
David A. Walsh
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to Registration Statement No. 333-79079 has been signed by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Name Title Date
---- ----- ----

<S> <C> <C>
/s/ David A. Walsh Chief Executive Officer July 22, 1999
______________________________________ and Director (Principal
David A. Walsh executive officer)

* President and Director July 22, 1999
______________________________________
Gerald E. Starr

* Executive Vice President, July 22, 1999
______________________________________ Chief Operating Officer
Charles F. Auster and Director

/s/ James M. Demitrieus Chief Financial Officer July 22, 1999
______________________________________ (Principal accounting
James M. Demitrieus officer)

* Director July 22, 1999
______________________________________
Richard M. Cashin, Jr.

* Director July 22, 1999
______________________________________
Douglas T. Hickey

* Director July 22, 1999
______________________________________
John T. Sharkey

* Director July 22, 1999
______________________________________
Douglas J. Mello

* Director July 22, 1999
______________________________________
Richard W. Smith

* Director July 22, 1999
______________________________________
Peter A. Woog

</TABLE>

* By /s/ David A. Walsh (David A. Walsh) as attorney-in-fact pursuant to
powers of attorney filed on May 21, 1999 and July 2, 1999.

II-6
<PAGE>

INDEX TO EXHIBITS

2.1.2 Deed constituting unsecured Guaranteed Subordinated Loan Note
2000/2002, dated December 18, 1998, made between International
Exchange Networks Ltd. and IPC Information Systems, Inc.*

2.2 Stock Purchase Agreement, dated February 13, 1998, by and between
IPC, MXNet and National Discount Brokers Group, Inc.*

3.1 Amended and Restated Certificate of Incorporation of IXnet, Inc.*

3.2 Bylaws of IXnet, Inc.*

4.1 Specimen Stock Certificate.*

5.1 Opinion of Thacher Proffitt & Wood regarding legality of shares.*

10.1 Form of Inter-Company Agreement among IXnet, Inc., International
Exchange Networks, Ltd. and IPC Information Systems, Inc.*

10.2 Form of Tax Sharing Agreement by and between IPC Communications,
Inc. and IXnet, Inc.*

10.3 Form of Registration Rights Agreement by and between IPC
Information Systems, Inc. and IXnet, Inc.*

10.4 Form of Maintenance Agreement by and between International
Exchange Networks, Ltd. and IPC Information Systems, Inc.*

10.5 Share Exchange and Termination Agreement, dated as of December 18,
1997, by and among International Exchange Networks, Ltd., IPC
Communications, Inc., David A. Walsh and Anthony M. Servidio. (2)

10.6 Amended and Restated Employment Agreement, dated as of December
18, 1997, by and between David A. Walsh and International Exchange
Networks, Ltd. (2)

10.7 Amendment No. 1, dated as of June 1, 1999, to the Amended and
Restated Employment Agreement by and between David A. Walsh and
International Exchange Networks, Ltd.*

10.9 Employment Agreement, dated as of May 1, 1998, by and between
Charles F. Auster and International Exchange Networks, Ltd.*

10.10 Amendment No. 1, dated as of June 1, 1999, to the Employment
Agreement by and between Charles F. Auster and International
Exchange Networks, Ltd.*

10.11 Amended and Restated Employment Agreement, dated as of December
18, 1997, by and between International Exchange Networks, Ltd. and
Anthony M. Servidio. (2)
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------

<C> <S>
10.12 Waiver letter, dated as of June 9, 1999, from Anthony Servidio
regarding provisions in the Amended and Restated Employment
Agreement by and between Anthony M. Servidio and International
Exchange Networks, Ltd.*

10.13 Employment Agreement, dated as of June 1, 1999, by and between
William E. Walsh and International Exchange Networks, Ltd.*

10.14 Employment Agreement, dated as of June 1, 1999, by and between
John M. Faccibene and International Exchange Networks, Ltd.*

10.15 Employment Agreement, dated as of June 1, 1999, by and between
Paul Pluschkell and International Exchange Networks, Ltd.*

10.16 Employment Agreement, dated as of August 6, 1998, by and between
Peter Hase and Saturn Global Network Services (UK) Limited.*

10.17 Employment Agreement, dated as of August 6, 1998, by and between
Drew Kelton and Saturn Global Network Services Pty Ltd.*

10.18 Employment Agreement, dated as of July 1, 1999, by and between
James M. Demitrieus and International Exchange Networks, Ltd.*

10.19 IXnet, Inc. 1999 Stock Option Plan.**

10.20 IPC Information Systems, Inc. 1998 Stock Incentive Plan. (3)

10.21 Indenture, dated as of April 30, 1998, between IPC Information
Systems, Inc. and the United States Trust Company of New York, as
indenture trustee. (4)

10.23 International Purchase and Sale Agreement, date as of July 23,
1996, by and between International Exchange Networks, Ltd. and
Newbridge Networks Inc.*

21.1 Subsidiaries of IXnet, Inc.*

23.1 Consent of PricewaterhouseCoopers LLP.

23.2 Consent of PricewaterhouseCoopers.

23.3 Consent of Thacher Proffitt & Wood (included in Exhibit 5.1).

24.1 Power of Attorney. (7)

27.1 Financial Data Schedule for year ended September 30, 1996.*

27.2 Financial Data Schedule for year ended September 30, 1997.*

27.3 Financial Data Schedule for year ended September 30, 1998.*

27.4 Financial Data Schedule for six months ended March 31, 1999.*
</TABLE>
- ---------------------

* Previously filed.

** To be filed by amendment.

(3) Previously filed as an exhibit to IPC Information Systems' Registration
Statement on Form S-4, filed February 13, 1998, and incorporated herein by
reference.
(4) Previously filed as an exhibit to IPC Information Systems' Report on Form
8-K, filed May 15, 1998, and incorporated herein by reference.

(5) Previously filed as an exhibit to IPC Communications' Report on Form 8-K,
filed July 1, 1999, and incorporated herein by reference.

(6) Previously filed as an exhibit to IPC Communications' Report on Form 8-K,
filed July 2, 1999, and incorporated herein by reference.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of
our reports dated May 14, 1999, except as to the second paragraph of Note 1
which is as of July 1, 1999, relating to the combined and consolidated
financial statements of IXnet, Inc. and April 15, 1999 relating to the
financial statements of MXNet Inc., which appear in such Registration
Statement. We also consent to the references to us under the headings "Experts"
and "Selected Combined and Consolidated Financial Data" in such Registration
Statement.

PricewaterhouseCoopers LLP

New York, New York

July 22, 1999

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated May 11, 1999 relating to the consolidated financial statements
of Saturn Global Network Services Holdings Limited, which appears in such
Registration Statement. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.

PricewaterhouseCoopers

London, United Kingdom

July 22, 1999