EXECUTIVE TELECARD LTD, S-1, 1999-05-12

EXECUTIVE TELECARD LTD
S-1, 1999-05-12
BUSINESS SERVICES, NEC

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As filed with the Securities and Exchange Commission on May ___, 1999
Registration No. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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EXECUTIVE TELECARD, LTD.
(Exact name of registrant as specified in its charter)

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Delaware 7389 13-3486421
(State of Incorporation) (Primary Standard Industria (I.R.S. Employer
Identification No.) Classification Code Number)
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2000 Pennsylvania Avenue, N.W., Suite 4800
Washington, D.C. 20006
(303) 691-2115
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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Christopher J. Vizas
Chairman and Chief Executive Officer
Executive TeleCard, Ltd.
2000 Pennsylvania Avenue, N.W., Suite 4800
Washington, D.C. 20006
(303) 691-2115
(Name, address, including zip code, and telephone number,
including area code, of registrant's agent for service)

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Copies to:
Steven M. Kaufman, Esq.
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-5600

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective and from time to
time as determined by market conditions.

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, 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. [x]

If this Form is a post-effective amendment filed pursuant 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 this Form is a post-effective amendment filed pursuant to Rule 462(d) 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. [ ]

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CALCULATION OF REGISTRATION FEE

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- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Title Of Each Class Of Proposed Maximum Proposed Maximum
Securities To Be Amount To Be Offering Price Per Aggregate Offering Amount Of
Registered Registered(1) Unit Price Registration Fee
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
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Common Stock, par value 19,517,243 $3.53 $68,895,868 $19,153.05
$.001 per share
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
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1. Pursuant to Rule 416 under the Securities Act of 1933, this Registration
Statement covers, in addition to the number of shares of common stock shown
above, an indeterminate number of shares of common stock which, by reason
of certain events specified in each plan, may become subject to such plans.

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 SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE>

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not seeking an offer to buy these securities in
any state where the offer or sale is not permitted.

PROSPECTUS

EXECUTIVE TELECARD, LTD.

19,517,243 SHARES OF COMMON STOCK

o The shares of common stock offered by this prospectus are being sold
by the selling stockholders.

o We will not receive any proceeds from the sale of these shares. We
will receive proceeds from the exercise of warrants and those proceeds
will be used for our general corporate purposes.

o Our common stock is quoted on the Nasdaq National Market under the
symbol "EGLO."

o On May 7, 1999, the last reported sale price of our common stock on
the Nasdaq National Market was $3.5625 per share.

THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING RISK FACTORS
BEGINNING ON PAGE 6 OF THIS PROSPECTUS.

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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______ __, 1999

<PAGE>

If it is against the law in any state to make an offer to sell the shares
(or to solicit an offer from someone to buy the shares), then this prospectus
does not apply to any person in that state, and no offer or solicitation is made
by this prospectus to any such person.

You should rely only on the information provided in this prospectus or any
supplement. Neither we nor any of the selling stockholders have authorized
anyone to provide you with different information. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of such documents.

TABLE OF CONTENTS

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PAGE
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Prospectus Summary........................................................................3
Summary Historical and Pro Forma Consolidated Selected Financial Data of the Company......5
Risk Factors..............................................................................6
Cautionary Note Regarding Forward-Looking Statements.....................................13
Price Range for Common Stock.............................................................14
Transfer Agent And Registrar.............................................................14
Use of Proceeds..........................................................................14
Dividend Policy..........................................................................14
Selected Consolidated Financial Data.....................................................15
Management's Discussion and Analysis of Financial Condition and Results of Operations....16
Our Business.............................................................................26
Management...............................................................................41
Security Ownership of Management.........................................................52
Security Ownership Of Certain Beneficial Owners..........................................54
Certain Transactions and Relationships...................................................55
Description of Securities................................................................56
Selling Stockholders.....................................................................65
Plan of Distribution.....................................................................68
Legal Matters............................................................................69
Experts..................................................................................69
Where You Can Find More Information......................................................70
Glossary of Technical Terms.............................................................G-1
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PROSPECTUS SUMMARY

This summary highlights more detailed information and financial statements
contained later in this prospectus. This summary does not contain all of the
information that you should consider before investing in the shares. You should
read the entire prospectus carefully, especially the risks of investing in the
shares discussed under "Risk Factors."

EGLOBE

OUR NAME

We are incorporated in the State of Delaware under the corporate name
Executive TeleCard, Ltd. On August 14, 1998, we began doing business under the
name eGlobe. We believe creating a new corporate identity is an important step
in our continuing development.

WHAT WE DO

eGlobe provides services to large telecommunications companies, primarily
telephone companies that are dominant in their national markets, but also to
specialized telephone companies, Internet Service Providers and issuers of
credit cards. Our services enable our customers to provide global reach for
enhanced or value added telecommunications services that they supply to their
customers. Until 1998, the entire focus of eGlobe was on supporting calling card
services. In 1998, that focus began to change.

By taking advantage of our key assets -- our operating platforms in more
than 40 countries, our ability to originate telephone calls and, in many cases,
to provide data access in more than 90 countries and territories, and our
customer and operating relationships built over the years -- we started working
with customers to extend our line of services. A key part of that extension was
the recognition that Internet Protocol technologies had become a basic element
of our business and a principal need of our customers. Internet Protocol, or IP,
means the method of transmission of electronic data typically utilized across
the Internet. Even our card services business relies on portions of its billing
and operating functions on IP software and services. To support the extension of
services, in 1998 we acquired IDX International, Inc., with its IP voice and fax
capabilities, and made significant investments in, and acquisition of a
technology license for, unified messaging software. Unified messaging allows a
person to access and respond to voice-mail, e-mail, and faxes in a single,
unified mailbox using a telephone or a personal computer. In addition, we began
exploring ways to integrate other services into our operating platforms,
including additional acquisitions that might complement current offerings or
extend our portfolio of services.

We are now implementing our new, broader service strategy and are committed
to a program of growth. That program will demand substantial new resources, in
particular human resources and cash. For those reasons, in the first quarter of
1999 we raised $10.0 million from the sale of equity, arranged a $20.0 million
debt facility from a major stockholder, and entered into a key vendor financing
arrangement. We plan to raise substantial amounts of additional capital during
the next two years. Growth in the international telecommunications business
often results in a disparity between cash outlays and inflows during periods of
growth, with outlays far exceeding inflows. If our growth plans are successful,
we anticipate a period during which our cash expenditures will exceed our cash
inflows.

Already in 1999 we have furthered our strategy through the acquisition of
Telekey, Inc., a provider of card based telecommunications services primarily to
foreign academic travelers visiting the US and Canada. In addition, we are
currently negotiating a joint venture investment with the company that developed
the messaging software that some of our new services will be based upon. We
intend to extend our role in unified messaging and related technologies through
such an investment.

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Our principal executive offices are located at 2000 Pennsylvania Avenue,
N.W., Suite 4800, Washington, D.C. 20006 and our telephone number is (303)
691-2115.

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SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED
SELECTED FINANCIAL DATA OF EGLOBE

The following is a summary of selected historical and pro forma
consolidated financial data of eGlobe for the periods ended and as of the dates
indicated. Effective with the period ended December 31, 1998, we elected to
convert to a December 31 fiscal year end. Therefore, the period ended December
31, 1998 represents a nine-month period as compared to the twelve-month fiscal
years ended March 31, 1998, 1997, 1996 and 1995. The summary pro forma
consolidated twelve month financial data reflect adjustments where appropriate,
to our historical financial data to give effect to the 1998 completed
acquisitions of IDX and UCI and the 1999 acquisition of Telekey. This data
should be read in conjunction with our Consolidated Financial Statements and the
related Notes, our Unaudited Pro Forma Condensed Consolidated Financial
Statements and the related Notes and the "Management's Discussion and Analysis
of Financial Condition" section appearing elsewhere in this document.

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PRO FORMA HISTORICAL
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FOR THE TWELVE FOR THE NINE
MONTH PERIOD MONTH PERIOD
ENDED DECEMBER ENDED DECEMBER FOR THE YEARS ENDED MARCH 31,
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1998 1998(3) 1998 1997 1996 1995
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CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net Revenues $37,409,000 $22,490,642 $33,122,767 $33,994,375 $30,298,228 $22,980,726
Income (Loss) from (13,575,000) (5,939,633) (5,700,424) 2,423,564 3,097,009 (292,307)
Operations
Other Income (Expense) (5,397,000) (1,150,559) (5,949,486) (1,401,612) 69,843 (4,324,193)
Net Income (Loss) (20,493,000) (7,090,192) (13,289,910) 773,952 2,852,852 (4,616,500)
Net Earnings (Loss) per
Common Share: (1)(2)
Basic $(0.95) $(0.40) $(0.78) $0.05 $0.18 $(0.30)
Diluted $(0.95) $(0.40) $(0.78) $0.05 $0.18 $(0.30)

PRO FORMA HISTORICAL
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AS OF AS OF AS OF
DECEMBER 31, DECEMBER 31, MARCH 31,
1998 1998(3)(4) 1998 1997 1996 1995
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CONSOLIDATED BALANCE
SHEET DATA:
Cash and Cash $ 1,607,000 $ 1,407,131 $ 2,391,206 $ 2,172,480 $ 950,483 $ 1,734,232
Equivalents
Total Assets 42,260,000 36,388,161 22,900,456 23,679,686 16,732,074 12,943,044
Long-Term Obligations 1,741,000 1,237,344 7,735,581 9,737,007 2,150,649 671,774
Total Liabilities 33,982,000 31,045,443 15,779,696 15,720,414 9,692,065 9,023,293
Total Stockholders' 8,278,000 5,342,718 7,120,760 7,959,272 7,040,009 3,919,751
Equity
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(1) Based on the weighted average number of shares outstanding during the
period.

(2) The weighted average number of shares outstanding during the periods has
been adjusted to reflect two ten percent (10%) stock splits, effected in
the form of stock dividends and distributed August 25, 1995 and August 5,
1996.

(3) Includes the December 2, 1998 acquisition of IDX International, Inc. for
which we acquired all of the common and preferred stock of IDX. See Note 6
to the Consolidated Financial Statements.

(4) Includes the December 31, 1998 acquisition of UCI Tele Networks, Ltd. See
Note 6 to the Consolidated Financial Statements.

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RISK FACTORS

This offering involves a high degree of risk, including those risks
described below. You should carefully consider these risk factors, together with
all of the other information in this prospectus, before investing in shares of
our common stock.

WE HAVE INCURRED SIGNIFICANT LOSSES AND WE MAY NOT BE ABLE TO BECOME PROFITABLE
IN THE FUTURE

Losses. We incurred a net loss of $13.3 million for the fiscal year ended
March 31, 1998 and a net loss of $7.1 million for the nine month period ended
December 31, 1998. We continue to incur operating losses and are likely to
report net losses for the next year, due in part to large non-cash charges for
goodwill amortization and amortization of the costs of warrants associated with
financings.

Ability to Become Profitable. Our ability to achieve profitability and
positive cash flow depends upon a number of factors, including our ability to
increase revenue while maintaining or reducing costs. A variety of factors,
external and internal, may keep us from succeeding in increasing or maintaining
revenue or achieving or sustaining economies of scale and positive cash flow in
the future, and our failure to do so could prevent or delay us from becoming
profitable. If we do not become profitable in the future, the value of our
shares could fall and we could have difficulty obtaining funds to continue our
operations.

WE COULD BE REQUIRED TO CUT BACK OR STOP OUR OPERATIONS IF WE ARE UNABLE TO
OBTAIN NEEDED FUNDING

We estimate we will need to raise up to $40 million during the current
fiscal year to have sufficient working capital to run our business, acquire
assets and technology, repay indebtedness incurred in connection with
acquisitions, upgrade our facilities and develop new services. In addition, we
will need to repay or refinance our existing $7.5 million term loan, plus
approximately $1.0 million in interest that will be due and payable in full in
August 1999. To the extent that we spend more on acquisitions or service
development, our need for additional financing will increase.

There is no assurance that we will satisfy the conditions or receive
committed but unfunded financing. If such proposed financing is not raised as
expected, we will face a significant and immediate need for additional funds.
There can be no assurance that we will be able to raise the necessary funds in a
timely manner or on favorable terms. Should we be unsuccessful in our efforts to
raise additional capital, we will be required to curtail our expansion plans. If
we do not raise enough additional capital to repay the term loan and interest by
August 1999, we may be required to cut back or stop operations.

OUR BUSINESS WITH A HANDFUL OF SIGNIFICANT, NORTH AMERICAN CARD SERVICE
CUSTOMERS DECLINED IN 1998, RESULTING IN A REVENUE DECLINE IN CARD SERVICES

Several of our largest North American calling card services customers, who
accounted for approximately 40% of our revenues during the fiscal year ended
March 31, 1998, have substantially reduced their use of our services and can be
expected to end their use of our services in the near future. As a result, we
have experienced a decline in card service revenue. Although we have added new
customers for our card services during the third quarter of 1998 and
subsequently, such customers have not yet generated revenues sufficient to
offset losses from existing customers. Our results of operations have been
negatively and significantly affected by this change. Any further such changes
could negatively and materially impact our business, financial condition and
results of operations.

WE HAVE BEEN, AND WILL CONTINUE TO BE, SUBJECT TO LARGE AND ONE-TIME ACCOUNTING
CHARGES

During 1998, we have recorded significant charges resulting from corporate
realignment costs, settlement costs, provision

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for additional income tax, allowance for doubtful accounts and the costs of
warrants associated with debt and equity financings. We anticipate additional
charges during 1999 and thereafter for costs of warrants associated with debt
and equity financings and from goodwill associated with our recent acquisitions.
This goodwill may materially increase when the contingencies are resolved.
Resulting accounting charges (and, in some cases, credits to stockholders'
equity) may make it difficult for investors to understand our financial
statements, potentially affecting the demand for shares of our stock and
increasing the volatility of the market price of our stock price.

RAPID TECHNOLOGICAL AND MARKET CHANGES CREATE SIGNIFICANT RISKS FOR US

Communications technology is changing rapidly. These changes influence the
demand for our services. We need to be able to anticipate these changes and to
develop new and enhanced products and services quickly enough for the changing
market. We, like others in our industry, believe it will be necessary to offer a
suite of enhanced business communications services, and that those companies
which do not offer acceptable services in a timely manner will not be able to
compete successfully. We may not be able to keep up with rapid technological and
market changes and we may not be able to offer acceptable new services in a
timely manner to be able to compete successfully. In addition, others may
develop services or technologies that will render our services or technology
noncompetitive or obsolete.

WE MAY HAVE TO LOWER PRICES OR SPEND MORE MONEY TO COMPETE EFFECTIVELY AGAINST
COMPANIES WITH GREATER RESOURCES THAN US WHICH COULD RESULT IN LOWER REVENUES
AND/OR PROFITS

Our industry is intensely competitive and rapidly evolving. The
communications industry is dominated by companies much larger than us, with much
greater name recognition, larger customer bases and financial, personnel,
marketing, engineering, technical and other resources substantially greater than
ours. To the extent that these companies offer services similar to and priced
competitively with our services, there likely would be a negative effect on our
pricing which would result in lower revenues. In addition, several other
companies have offered or have announced intentions to offer enhanced
communications services similar to certain of the enhanced services we plan to
offer. To the extent that such entities are successful in offering superior
services or introducing credible service offerings before we do, we likely would
be adversely affected and such effects could be material. We expect new types of
products and services not yet announced or available in the marketplace to be
developed and introduced which will compete with the services we offer today and
plan to offer.

OUR BUSINESS DEPENDS ON CREATING AND MAINTAINING STRATEGIC RELATIONSHIPS WITH
INTERNATIONAL CARRIERS

Relations with international carriers enable us to offer additional
services that we cannot offer on our own and to offer our services to a larger
customer base than we could otherwise reach through our direct marketing
efforts. We believe international relationships and alliances are important in
offering calling card services and that such relationships will be even more
important as providers add new services. Our success depends in part on our
ability to maintain and develop such relationships, the quality of these
relationships and the ability of these strategic partners to market services
effectively. Our failure to maintain and develop such relationships or our
strategic partners' failure to market our services successfully could lower our
sales, delay product launches and hinder our growth plans.

WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE ACQUIRED COMPANIES INTO OUR
OPERATIONS, WHICH COULD SLOW OUR GROWTH

As a result of the IDX acquisition, we added 47 employees and two operating
locations. We may have difficulty integrating IDX into our operations,
assimilating the new employees and implementing reporting, monitoring and
forecasting procedures with

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respect to the former IDX businesses. In addition, the continuing integration of
IDX into our operations may divert management attention from our existing
businesses and may result in additional administrative expense. We acquired IDX
subject to a variety of its existing obligations. Moreover, in our due diligence
investigation of IDX, we may not have discovered all matters of a material
nature relating to IDX and its business.

We acquired UCI, a calling card services company, in December 1998, and in
February 1999, we acquired Telekey, a card based provider of enhanced
communications services. We are subject to the same integration issues and other
risks for these acquisitions as described in the prior paragraph.

WE DEPEND ON THE COMPANIES WE ACQUIRE TO EXPAND OUR MARKETS, OPERATIONS,
NETWORKS AND SERVICES

As part of our business strategy, we will continue to evaluate strategic
acquisitions of businesses and to pursue joint ventures principally relating to
our current operations. These transactions commonly involve certain risks,
including, among others, that:

o we may experience difficulty in assimilating acquired operations,
services, products and personnel, which may slow our revenue growth;

o we may not be able to successfully incorporate acquired technology and
rights into our service offerings and maintain uniform standards,
controls, procedures and policies;

o we may not be able to locate or acquire appropriate companies at
attractive prices;

Expected benefits from future acquisitions may not be realized, revenues of
acquired companies may be lower than expected, and operating costs or customer
loss and business disruption may be greater than expected.

Additional acquisitions may require additional capital resources. We cannot
assure you that we will have timely access to additional financing sources on
acceptable terms. If we do not, we may not be able to expand our markets,
operations, facilities, network and services through acquisitions as we intend.

WE RELY ON IP VOICE TELEPHONY, THE REGULATION OF WHICH IS CHANGING AND UNCERTAIN
AND MAY NEGATIVELY AFFECT OUR BUSINESS

Since IP telephony is a recent market development, the regulation of IP
telephony is still evolving. A number of countries currently prohibit IP
telephony. Other countries permit but regulate IP telephony. In the U.S., the
Federal Communications Commission (the "FCC") has stated that some forms of IP
telephony appear to be similar to traditional telephone services, but the FCC
has not decided whether, or how, to regulate providers of IP telephony. In
addition, several efforts have been made to enact U.S. federal legislation that
would either regulate or exempt from regulation services provided over the
Internet. State public utility commissions also may retain intrastate
jurisdiction and could initiate proceedings to regulate the intrastate aspects
of IP telephony.

If governments prohibit or regulate IP telephony we could be subject to a
variety of regulatory requirements or penalties, including without limitation,
orders to cease operations or to limit future operations, loss of licenses or of
license opportunities, fines, seizure of equipment and, in some jurisdictions,
criminal prosecution. The revenue and/or profit generated from IP telephony may
have become a significant portion of our overall revenue and/or profit at the
time IP telephony is regulated and/or curtailed. Any of the developments
described above could have a material adverse effect on our business, operating
results and financial condition.

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DURING THE PAST FEW MONTHS WE HAVE SIGNIFICANTLY INCREASED OUR OUTSTANDING
SHARES OF CAPITAL STOCK AND YOU MAY SUFFER FURTHER DILUTION

As described below under the caption "Certain Recent Developments," we
issued convertible preferred stock in connection with the IDX acquisition, the
Telekey acquisition, the settlement with Mr. Jensen and two financings. We also
granted warrants to providers of bridge loans, the former IDX stockholders and
the investors in the two financings. As a result, the number of shares of common
stock on a fully-diluted basis has increased from 17.8 million shares as of
November 1, 1998 to 40.8 million shares as of April 15, 1999. These figures
exclude employee and director options and assume conversion of all preferred
stock and convertible notes, exercise of all options and warrants and
achievement of all earnout provisions related to acquisitions by companies
acquired as of April 15, 1999. This has resulted in a significant reduction in
the respective percentage interests of eGlobe and voting power held by our
stockholders other than those purchasing additional stock in the recent
financings. We expect to issue additional shares of capital stock in connection
with financing agreements we have entered into and further financings,
acquisitions and joint ventures. Also, we will be required under the terms of
existing agreements to issue additional stock if the market price of our common
stock does not equal $4.00 (subject to Telekey meeting its performance
objectives) by December 1999, $8.00 (subject to IDX meeting its performance
objectives) by December 1999, $8.00 (subject to UCI meeting its performance
objectives) by February 2000 or $10.00 related to the stockholder litigation
settlement by mid 2000.

THE CONVERSION OF OUTSTANDING PREFERRED STOCK MAY HAVE A SIGNIFICANT NEGATIVE
EFFECT ON THE PRICE OF OUR COMMON STOCK AND CAUSE THE SELLING STOCKHOLDERS TO
RECEIVE A GREATER NUMBER OF SHARES UPON SUBSEQUENT CONVERSIONS OF THE PREFERRED
STOCK

Each class of preferred stock we have issued, other than the Series A
Participating Preference Stock associated with our stockholder rights plan, is
convertible into shares of our common stock. The conversion prices at which the
preferred stock converts into common stock may adjust below the market price of
our common stock in some circumstances. The conversion price may adjust if we
sell common stock or securities convertible into common stock for less than the
conversion price. The Series D Preferred Stock conversion price will adjust
based on the market price of our common stock if we do not have positive EBITDA
in the third quarter of 1999. As a result, the lower the conversion price at the
time the holder converts, the more common stock the holder will get upon
conversion. To the extent the selling stockholders convert and then sell their
common stock, the common stock price may decrease due to the additional shares
in the market. This could allow the selling stockholders to convert their
convertible preferred stock into greater amounts of common stock, the sales of
which could further depress the stock price. The significant downward pressure
on the price of the common stock as the selling stockholders convert and sell
material amounts of common stock could encourage short sales by the selling
stockholders and others in which the short-sellers borrow common stock at the
current market price and hope to buy it in the future at a lower price. This
could place further downward pressure on the price of the common stock.

The conversion of the convertible preferred stock may result in substantial
dilution to the interests of other holders of common stock since each holder of
convertible preferred stock may ultimately convert and sell the full amount
issuable on conversion.

WE DEPEND ON TELECOMMUNICATIONS CARRIERS AND OTHERS FOR TRANSMISSION SERVICES

We do not own telecommunications transmission facilities. We generally
procure these long distance telecommunication services via strategic
arrangements with the carriers owning such facilities or more common commercial
arrangements for the supply of transmissions capacity. Our ability to make our
business profitable will depend,

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in part, on our ability to continue to obtain transmission services on favorable
terms. We believe that as providers add new and enhanced communications
services, cost will be a key reason for distinguishing between services.
Accordingly, we will need to keep reducing our transmission costs and pursue low
cost alternative routing technologies. Failure to obtain transmission services
at favorable rates could result in losses on particular services or over
particular routes, and could lead to a loss of customers, which could lower our
sales and reduce our revenue.

WE ARE EXPOSED TO THE ASIAN ECONOMIC CRISIS, AND AS A RESULT WE HAVE LOST
REVENUES AND MAY CONTINUE TO EXPERIENCE LOWER REVENUES FROM ASIA

The continuing economic crisis in Asia has had a negative impact on our
revenues and prospects with Asian customers. Since we expect the IDX acquisition
to contribute significantly to our revenues, and since IDX sells its services in
large part to Asian customers, our financial results will be tied more closely
to the Asian economic situation. While we expect demand in Asia to increase as
the affected economies recover, we do not know when and if this recovery will
occur. The problems in Asia could lower demand for our services, including those
provided by IDX, which could result in a significant loss of revenue and
write-offs if customers cannot pay us for services.

WE HAVE ONLY LIMITED PROTECTION OF PROPRIETARY RIGHTS AND TECHNOLOGY

We rely primarily on a combination of intellectual property laws and
contractual provisions to protect our proprietary rights and technology.
However, these laws and contractual provisions provide only limited protection.
Unauthorized parties may copy our technology, reverse engineer our software or
otherwise obtain and use information we consider proprietary. In addition, the
laws of some foreign countries do not protect our proprietary rights to the same
extent as the laws of the U.S. Our means of protecting our proprietary rights
and technology may not be adequate. In addition, it is likely that our
competitors will independently develop similar technology and that we will not
have any rights under existing laws to prevent the introduction or use of such
technology.

WE ARE EXPOSED TO RISKS OF INFRINGEMENT CLAIMS

Many patents, copyrights and trademarks have been issued in the
telecommunication service area. We believe that in the ordinary course of our
business third parties may claim that our current or future products or services
infringe the patent, copyright or trademark rights of such third parties. We
cannot ensure that actions or claims alleging patent, copyright or trademark
infringement will not be brought against us, or that, if such actions are
brought, we will ultimately prevail. Any such claims, regardless of their merit,
could be time consuming, result in costly litigation, cause delays in
introducing new or improved products or services, require us to enter into
royalty or licensing agreements, or cause us to stop using the challenged
technology, trade name or service mark at potentially significant expense to us.
If our key technology is found to infringe the intellectual property rights of
others, it could have a material adverse effect on our business, financial
condition and results of operations.

OUR OPERATING PLATFORMS AND SYSTEMS MAY FAIL OR BE CHANGED, EXPOSING OUR
BUSINESS TO DOWNTIME

Our operations depend upon protecting and maintaining our operating
platforms and central processing center against damage, technical failures,
unauthorized intrusion, computer viruses, natural disasters, sabotage and
similar events. We cannot ensure that an event would not cause the failure of
one or more of our communications platforms or even our entire network. Such an
interruption could have a material adverse effect on our business, financial
condition and results of operations. In addition, customers or others may assert
claims of liability against us as a result of any such interruption.

10
<PAGE>

THE LOSS OF KEY PERSONNEL COULD WEAKEN OUR TECHNICAL AND OPERATIONAL EXPERTISE,
DELAY OUR INTRODUCTION OF NEW SERVICES OR ENTRY INTO NEW MARKETS AND LOWER THE
QUALITY OF OUR SERVICE

Our success depends upon the continued efforts of our senior management
team and our technical, marketing and sales personnel. We believe our continued
success will depend to a significant extent upon the efforts and abilities of
Christopher J. Vizas, our Chairman and Chief Executive Officer (who joined us in
December 1997), and other key executives. We also believe that to be successful
we must hire and retain highly qualified engineering personnel. In particular,
we rely on key employees to design and develop our proprietary operating
platforms and related software, systems and services.

Competition in the recruitment of highly qualified personnel in the
telecommunications services industry is intense. Hiring employees with the
skills and attributes required to carry out our strategy can be extremely
competitive and time-consuming. We may not be able to retain or successfully
integrate existing personnel or identify and hire additional qualified
personnel. If we lose the services of key personnel or are unable to attract
additional qualified personnel, our business could be materially and adversely
affected. We do not have key-man life insurance.

COMPUTER SYSTEMS MAY MALFUNCTION AND INTERRUPT OUR SERVICES IF WE AND OUR
SUPPLIERS DO NOT ATTAIN YEAR 2000 READINESS

We and our major suppliers of communications services and network elements
rely greatly on computer systems and other technological devices. These computer
systems may not be capable of recognizing January 1, 2000 or subsequent dates.
This problem could cause any or all of our systems or services to malfunction or
fail. We are reviewing our computer systems and programs and other technological
devices to determine which are not capable of recognizing the Year 2000 and to
verify system readiness for the millennium date. This review may not be
sufficient, however, to prevent interruptions to our systems and services. Some
of our critical operations and services depend on other companies. For example,
we depend on the existing local telephone companies, primarily the regional Bell
operating companies, to provide most of our local and some of our long distance
services. To the extent U S WEST or Bell Atlantic fail to address Year 2000
issues which might interfere with their ability to fulfill their obligations to
us, it could interfere with our operations.

A significant portion of our business is conducted outside of the U. S.
Material service providers located outside of the U. S. may face significantly
more severe Year 2000 issues than similar entities located in the U. S. If we,
our major vendors, our material service providers or our customers -- whether
domestic or international -- fail to address Year 2000 issues in a timely
manner, our business, results of operations and financial condition could be
significantly harmed. See "Managements' Discussion and Analysis of Financial
Condition and Results of Operations -- Accounting Pronouncements and Year 2000
Issues -- Year 2000 Issues."

OUR BUSINESS IS EXPOSED TO REGULATORY, POLITICAL AND OTHER RISKS ASSOCIATED WITH
INTERNATIONAL BUSINESS

We conduct a significant portion of our business outside the U. S. and
accordingly, derive a portion of our revenues and accrue expenses in foreign
currencies. Accordingly, our results of operations may be materially affected by
international events and fluctuations in foreign currencies. We do not employ
foreign currency controls or other financial hedging instruments.

Our international operations and business expansion plans are also subject
to a variety of government regulations, currency fluctuations, political
uncertainties and differences in business practices, staffing and managing
foreign operations, longer collection cycles in certain areas, potential changes
in tax laws, and greater difficulty in protecting intellectual property rights.
Governments

11
<PAGE>

may adopt regulations or take other actions, including raising tariffs, that
would have a direct or indirect adverse impact on our business opportunities
within such governments' countries. Furthermore, from time to time, the
political, cultural and economic climate in various national markets and regions
of the world may not be favorable to our operations and growth strategy.

OUR BUSINESS IS SUBJECT TO REGULATORY RISKS WHICH MAY RESULT IN INCREASED COSTS
OR AFFECT OUR ABILITY TO RUN OUR BUSINESS

Though we do not own telecommunications transmission facilities, but
instead use the facilities of other carriers, we are subject to regulation in
many jurisdictions.

U.S. Federal Regulation. Under current FCC policy, telecommunications
carriers reselling the services of other carriers and not owning their own
telecommunications transmission facilities are considered non-dominant and, as a
result, are subject to streamlined regulation. We must have an authorization
from the FCC to provide international services, and must file tariffs at the FCC
setting forth the terms and conditions under which we provide both international
and domestic services. These and other regulatory requirements impose a
relatively minimal burden on us at the present time. However, we cannot ensure
that the current U.S. regulatory environment and the present level of FCC
regulation will continue, or that we will continue to be considered
non-dominant.

Other Government Regulation. In most countries where we operate, equipment
cannot be connected to the telephone network without appropriate approvals, and
therefore, we must obtain such approval to install and operate our operating
platforms or other equipment. In most jurisdictions where we conduct business we
rely on our local partner to obtain the requisite authority. Relying on local
partners causes us to depend entirely upon the cooperation of the telephone
utilities with which we have made arrangements for our authority to conduct
business, as well as operational and some of our administrative requirements.
Any telephone utility could cease to accommodate our requirements at any time.
Depending upon the location of the telephone utility, this action could have a
material adverse effect on our business and prospects. Such relationships may
not continue and governmental authorities may seek to regulate our services or
require us to obtain a license to conduct our business.

OUR STOCK PRICE WILL FLUCTUATE, AND COULD DECLINE SIGNIFICANTLY AS A RESULT OF
VOLATILITY IN TELECOMMUNICATIONS STOCKS

Market prices for securities of telecommunications services companies have
generally been volatile. Since our common stock has been publicly traded, the
market price of our common stock has fluctuated over a wide range and may
continue to do so in the future. The market price of our common stock could be
subject to significant fluctuations in response to various factors and events,
including, among other things:

o the depth and liquidity of the trading market for our common stock;

o quarterly variations in actual or anticipated operating results;

o growth rates;

o changes in estimates by analysts;

o market conditions in the industry;

o announcements by competitors;

o regulatory actions; and

o general economic conditions.

In addition, the stock market has from time to time experienced significant
price and volume fluctuations, which have particularly affected the market
prices of the stocks of high-technology companies and which may be unrelated to
the operating performance of particular companies. Furthermore, our operating
results and prospects from time to time may be below the expectations of public

12
<PAGE>

market analysts and investors. Any such event could result in a decline in the
price of our common stock.

WE HAVE A STOCKHOLDER RIGHTS PLAN WHICH COULD DISCOURAGE, DELAY OR PRESENT A
CHANGE OF CONTROL IN WHICH OUR STOCKHOLDERS MAY WANT TO PARTICIPATE

We have adopted a rights plan and have entered into a stockholder rights
agreement dated February 27, 1997 between ourselves and American Stock Transfer
& Trust Company, as rights agent. The Rights Agreement provides for issuing
rights for each share of common stock outstanding on February 28, 1997. The
rights become exercisable upon the occurrence of change of control triggering
events. The rights will have anti-takeover effects as they will cause
substantial dilution to a person or group that acquires a substantial interest
in us without the prior approval of our Board of Directors. The effect of the
rights may be to inhibit a change in control in our business, including a third
party tender offer at a price which reflects a premium to then prevailing
trading prices, that may be beneficial to our stockholders.

PROVISIONS IN OUR CHARTER AND BYLAWS AND IN DELAWARE LAW COULD DISCOURAGE
TAKEOVER ATTEMPTS WE OPPOSE EVEN IF OUR STOCKHOLDERS MIGHT BENEFIT FROM A CHANGE
IN CONTROL OF EGLOBE

Our restated certificate of incorporation allows our Board of Directors to
issue up to five million shares of preferred stock and to fix the rights,
privileges and preferences of those shares without any further vote or action by
the stockholders. The rights of the holders of the common stock will be subject
to, and may be adversely affected by, the rights of the holders of any shares of
preferred stock that we may issue in the future. Any issuances of preferred
stock in the future could have the effect of making it more difficult for a
third party to acquire a majority of our outstanding voting stock. Further, as a
Delaware corporation, we are subject to section 203 of the Delaware general
corporation law. This section generally prohibits us from engaging in mergers
and other business combinations with stockholders that beneficially own 15% or
more of our voting stock, or with their affiliates, unless our directors or
stockholders approve the business combination in the prescribed manner.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus as well as any prospectus supplement that accompanies it,
includes "forward-looking statements" within the meaning of the federal
securities laws. We intend the forward-looking statements to be covered by the
safe harbor provisions for forward-looking statements in these sections. All
statements regarding our expected financial position and operating results, our
business strategy and our financing plans are forward-looking statements. These
statements can sometimes be identified by our use of forward-looking words such
as "may," "will," "anticipate," "estimate," "expect," or "intend." We cannot
promise that our expectations in such forward-looking statements will turn out
to be correct. Our actual results could be materially different from and worse
than our expectations. Important factors that could cause our actual results to
be materially different from our expectations include those discussed in this
prospectus under the caption "Risk Factors."

13
<PAGE>

PRICE RANGE FOR COMMON STOCK

Our common stock has traded on the Nasdaq National Market under the symbol
"EXTL" from December 1, 1989 through September 18, 1998 and since that date
under the symbol "EGLO."

The following table reflects the high and low prices reported on the Nasdaq
National Market for each quarter of the fiscal year ended March 31, 1998.

High Low
---- ---

Quarter Ended June $ 9 1/4 $ 4 1/2
30, 1997
Quarter Ended 8 3/4 3 1/4
September 30, 1997

Quarter Ended 4 1 19/32
December 31, 1997
Quarter Ended March 4 19/32 2 1/4
31, 1998

The following table reflects the high and low prices reported on the Nasdaq
National Market for each quarter of the nine month period ended December 31,
1998 and the quarter ended March 31, 1999.

High Low
---- ---

Quarter Ended June $ 4 1/4 $ 2 1/32
30, 1998
Quarter Ended 3 9/16 1 9/16
September 30, 1998

Quarter Ended 2 1/2 1 1/4
December 31, 1998
Quarter Ended March 3 5/16 1 1/2
31, 1999

The approximate number of holders of our common stock as of April 15, 1999
was in excess of 4,300 record and beneficial owners.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock is American Stock
Transfer & Trust Company.

USE OF PROCEEDS

The selling stockholders will receive all of the net proceeds from the sale
of their shares. We will not receive any proceeds from the sale of the shares.
We will receive proceeds from the exercise of warrants to purchase common stock
which will be used for our general corporate purposes.

DIVIDEND POLICY

We have not paid or declared any cash dividends on our common stock since
our inception and do not anticipate paying any cash dividends on our common
stock in the near future. In addition, our payment of cash dividends is
currently restricted under the terms of the Series D Preferred Stock, the Series
E Preferred Stock and the recent debt placement. We declared a ten percent (10%)
common stock split, effected in the form of a stock dividend, on June 30, 1995
and distributed it on August 25, 1995 to stockholders of record as of August 10,
1995. On May 21, 1996, we declared another ten percent (10%) stock split,
effected in the form of a stock dividend. Stockholders of record as of June 14,
1996 received the dividend on August 5, 1996.

14
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

HISTORICAL
PRO FORMA -----------------------------------------------------------------------------
AS OF AS OF AS OF
DECEMBER 31, DECEMBER 31, MARCH 31,
1998 1998(3)(4) 1998 1997 1996 1995
----------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Cash and Cash $ 1,607,000 $ 1,407,131 $ 2,391,206 $ 2,172,480 $ 950,483 $ 1,734,232
Equivalents
Total Assets 42,260,000 36,388,161 22,900,456 23,679,686 16,732,074 12,943,044
Long-Term Obligations 1,741,000 1,237,344 7,735,581 9,737,007 2,150,649 671,774
Total Liabilities 33,982,000 31,045,443 15,779,696 15,720,414 9,692,065 9,023,293
Total Stockholders' 8,278,000 5,342,718 7,120,760 7,959,272 7,040,009 3,919,751
Equity
</TABLE>

- ---------
(1) Based on the weighted average number of shares outstanding during the
period.

(3) Includes the December 2, 1998 acquisition of IDX International, Inc. for
which we acquired all of the common and preferred stock of IDX. See Note 6
to the Consolidated Financial Statements.

(4) Includes the December 31, 1998 acquisition of UCI Tele Networks, Ltd. See
Note 6 to the Consolidated Financial Statements.

15
<PAGE>

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

The following discussion contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. Our actual
results may differ significantly from the results discussed in the
forward-looking statements.

General

We provide operating services to large telecommunications companies who
have decided to outsource some of their specialized services to us, rather than
internally develop these services. We sell our services primarily to telephone
companies dominant in their national market, to specialized telephone companies,
to Internet Service Providers and issuers of credit cards. Our first products
and services revolved around calling cards. We have now begun to extend our
technology platforms to include IP voice and fax capabilities and have made
significant investments in unified messaging software. We continue to look for
ways to integrate other services into our operating platforms and networks,
especially those which might complement our current offerings or extend our
portfolio of services. In 1998, we made two principal investments in growth --
the acquisition of IDX and the investment in, and the acquisition of, a
technology license for unified messaging technology.

On December 2, 1998, we acquired IDX International, Inc. which provides IP
voice and fax transmission services, principally to telephone companies and
ISPs. We acquired all of the common and preferred stock of IDX for (a) 500,000
shares of Series B convertible preferred stock valued at $3.5 million which is
convertible into a maximum of 2,500,000 shares (2,000,000 shares until
stockholder approval is obtained) of common stock; (b) warrants to purchase up
to an additional 2,500,000 shares of common stock (subject to stockholder
approval and to IDX meeting "earnout" objectives described below); (c) $5.4
million in 7.75% convertible subordinated promissory notes (subject to
adjustment as described below); (d) $1.5 million in bridge loan advances to IDX
prior to the acquisition which were converted into part of the purchase price
plus accrued interest charges of $0.04 million and (e) direct costs associated
with the acquisition of $0.4 million. We plan to include the requests for the
approval of the warrants and additional stock as matters to be voted upon by the
stockholders at the next annual meeting. The acquisition has been accounted for
under the purchase method of accounting. Our financial statements reflect the
preliminary allocation of the purchase price. The preliminary allocation has
resulted in acquired goodwill of $10.9 million, which is being amortized on a
straight-line basis over seven years. We have not completed the review of the
purchase price allocation and will determine the final allocation based on
appraisals and other information. To the extent that the estimated useful lives
of other intangibles are less than seven years, the related amortization expense
recorded could be higher. The allocation has not been finalized due to several
purchase price elements which are contingent upon working capital levels,
stockholder approvals subsequent to the date of acquisition, IDX's ability to
achieve certain revenue and EBITDA objectives twelve months after the date of
close and the stock price of our common stock during the same twelve month
period. Based on the contingent price elements discussed above, goodwill
associated with the acquisition may materially increase when these contingencies
are resolved. See Note 6 to the Consolidated Financial Statements for further
discussion.

The consolidated revenues and costs for the period ended December 31, 1998
included the IDX results of operations for the month of December which are not
material to the consolidated financial statements. For the fiscal year ending
December 31, 1999, however, we expect the IDX services to become a significant
source of revenue growth.

We made a cash investment of more than $1 million in unified messaging
technology in the nine months ended December 31, 1998. Most of those funds
consisted of advances to a software based

16
<PAGE>

service company in which we are considering forming a joint venture investment.
For the investment, we received a technology license and have participated in
the development and beta testing of the core software. We are preparing to
launch a new service in cooperation with some of our existing customers based on
this technology. While we do not expect significant revenues or returns from
this investment in 1999, we believe that IP and voice services based on this
technology will become a significant portion of our business in 2000 and beyond.
For this reason, we plan to continue our investment in this software in 1999 and
may enter into a joint venture arrangement to influence the further development
of the software.

Revenue. Through December 31, 1998, most of our revenue resulted from
providing services and was generated through contracts for card services, the
sale of international toll free services, and to a limited degree, by use of our
legacy proprietary calling cards. The charge for service is on a per call basis,
determined primarily by minutes of use and the originating and terminating
points of the call. The charging structure for IDX is substantially similar.
Some contracts call for monthly minimums and almost all contracts are multi-year
agreements. As we begin to provide new services, we expect our model for
charging for services to remain basically the same, although in certain new
offerings, such as unified messaging, there are likely to be basic monthly
subscriber charges in addition to per transaction charges. In prior years, we
generated revenue from other sources, generally sales of billing and platform
systems and nonrecurring special projects.

Costs. The principal component of the cost of revenue is transmission
costs. We continue to pursue strategies for reducing costs of transmission.
These strategies include establishing partnering arrangements with various
carriers, negotiating more cost-effective agreements with other carriers and
routing traffic to the lowest-cost, highest quality providers. Also, in fiscal
year 1999 and thereafter, the strategy will include cost effective provisioning
of our own IP trunks.

Other components of operating costs are selling, general and administrative
expenses, which include personnel costs, consulting and legal fees, travel
expenses, bad debt allowances and other administrative expenses. Depreciation
and amortization expense includes the allocation of the cost of transmission
equipment, property and office equipment, and various intangible assets,
principally goodwill arising from several recent acquisitions, over their useful
lives.

Results of Operations

NINE MONTH PERIOD ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED MARCH 31, 1998

Overview. We incurred a net loss of $7.1 million for the nine month period
ended December 31, 1998 compared to a net loss of $13.3 million for the year
ended March 31, 1998. The table below shows a comparative summary of certain
significant charges to income in both periods, some of which are nonrecurring,
which affected net operating results:

(IN MILLIONS)
NINE MONTH
PERIOD ENDED YEAR ENDED
DECEMBER 31, MARCH 31,
1998 1998
---- ----

Corporate realignment costs $ -- $ 3.1
Proxy-related litigation settlement costs 0.1 3.9
Settlement costs 1.0 --
Additional income tax provision -- 1.5
Allowance and write-offs for bad debts 0.8 1.4
Warrants associated with debt 0.6 0.5
Other items 0.4 0.6
--- ---
$ 2.9 $ 11.0
====== ======

After deducting these items, the loss for the nine month period ended
December 31, 1998 totaled $4.2 million compared to $2.3 million for the full
year ended March 31, 1998.

The principal factors in the loss for the nine month period are: (1)
reduction in business arrangements, including the termination of contracts or
business

<PAGE>

arrangements which did not fit with our focus; (2) reduction in prices to
provide more competitive offerings; (3) more aggressive collection efforts,
including demands for timely payments from customers with outstanding delinquent
accounts, which resulted in a substantial decline in revenues from what had
formerly been our largest customer; (4) a continuing decline in revenue from
non-core, but large, North American customers; (5) the inclusion of revenue from
a major card service contract which, in the first phase of this contract in the
fourth calendar quarter of 1998, was billed largely on a cost reimbursable
basis; and (6) continued weakness in our Asian customer base during the entire
nine month period. The negative effect of these factors on gross profit
contribution is estimated to be $2.2 million for the nine month period ended
December 31, 1998.

We have taken steps to reverse this trend through the expansion of our
service offerings to our existing customers, expansion of the customer base
through revamped sales and marketing and through acquisitions. We believes that
these steps will result in significant revenue growth throughout 1999 and an
improvement in margins beginning in the second and third quarters of 1999.

Revenue. Revenue for the nine month period ended December 31, 1998 totaled
$22.5 million compared to $33.1 million for the full year ended March 31, 1998.
Of this total, $18.6 million was derived from the card services customer base
with which we began the period (the "legacy customer base"). For the six months
ended September 30, 1998, revenue from our legacy calling card customer base
averaged $7.2 million per quarter. (For the fiscal year ended March 31, 1998
services revenue averaged approximately $7.7 million per quarter). As discussed
above, revenue from this legacy customer base declined over the period and
represented only $4.2 million in the quarter ended December 31, 1998. These
declines from the legacy customer base are expected to be permanent (with the
exception of the decline in Asia) and are derived largely from North American
customers, including particularly the large customer which had substantial
delinquencies in payment. The legacy customers that represent most of the
decline are not crucial to our network of operating platforms nor to the global
growth strategy and the extension of services upon which management is focusing.

Offsetting this decline somewhat is the inclusion in revenue for the nine
month period ended December 31, 1998 of $2.0 million, mainly in the last three
months, from a significant card services contract with a new North American
customer. However, in the first phase of this contract, we have agreed to bill
this customer on a cost-reimbursable basis for the major portion of this
business. Accordingly, this revenue source has contributed only a minor amount
of margin to our operating results to date. In 1999, we began a second phase of
the contract which is expected to provide higher revenue and margins than the
cost-reimbursable basis experienced in the quarter ended December 31, 1998.

Revenue from our Asian card service base was $5.9 million for the nine
month period ended December 31, 1998 compared to $10.3 million for the year
ended March 31, 1998. Economic activity in most areas of the Asia-Pacific region
remains weak and our near term outlook for card services revenue in this market
is that it will continue at current levels. However, we anticipate that a
significant portion of the expected revenue growth from new services, such as
those acquired with IDX, will come from this region.

Also included in the consolidated revenue for the nine month period ended
December 31, 1998 is $0.6 million, which represents IDX revenues for the month
of December 1998. Based on new contracts executed during late 1998 and the first
quarter of 1999, revenue contribution from IDX is expected to be significant in
calendar 1999.

Gross Profit. Gross profit was 44% of total revenue or $9.9 million for the
nine month period ended December 31, 1998, compared to 43% or $14.3 million for
the full year ended March 31, 1998. Excluding the effects of the low margin
first phase of the large new card services contract described above, gross
profit from our card service

<PAGE>

business was 46% for the nine month period ended December 31, 1998. This margin
improvement over that realized in the previous year (43%) is due primarily to
active efforts to reduce operating costs. Cost of revenue is expected to
continue to fluctuate as new pricing and contractual arrangements are put in
place and as our revenue mix continues to change. Transmission costs, the
principal element of cost of service, should also begin to show the positive
impact in 1999 arising from use of the expanding IP transmission network of IDX.

Selling, General and Administrative Expenses ("SG&A"). SG&A expenses
totaled $12.6 million for the nine month period ended December 31, 1998 compared
to $14.0 million for the full year ended March 31, 1998. Included in the nine
month total is a $0.8 million provision for doubtful accounts compared to $1.4
million for the full year ended March 31, 1998. In the fourth calendar quarter
of 1998, we incurred a non-cash charge of $0.4 million for compensation expense
related to the IDX acquisition for a granting by the IDX stockholders of
acquisition consideration to a number of IDX employees. Excluding this charge,
other SG&A expenses, principally salaries and benefits, travel, legal and
professional fees and other overhead costs averaged $3.8 million per quarter
during the nine month period ended December 31, 1998, compared to $3.2 million
per quarter for the year ended March 31, 1998. The principal factors in this
increase are higher personnel costs resulting from recruitment and upgrading of
management and additions to the marketing and sales staff.

Settlement Costs. As described in Note 7 to the Consolidated Financial
Statements, we entered into a settlement agreement with our then largest
stockholder to resolve all current and future claims. The difference in value
between the convertible preferred stock issued to the stockholder and the common
stock surrendered by the stockholder was $1.0 million, which resulted in a
non-cash charge to the statement of operations in the quarter ended September
30, 1998.

Depreciation and Amortization Expense. This expense for the nine month
period ended December 31, 1998 totaled $2.3 million compared to $2.8 million for
the full year ended March 31, 1998. These charges are expected to increase
significantly in the future as the full effect of amortization of goodwill
arising from recent acquisitions is charged to the statement of operations.

Other Expenses (Income). Interest expense totaled $1.0 million for the nine
month period ended December 31, 1998 compared to $1.6 million for the full year
ended March 31, 1998. This cost will increase in future reporting periods due to
the increase in debt assumed as part of the acquisition program in 1998 and 1999
as well as the $7.0 million in financing finalized in April 1999.

We recorded a foreign currency transaction loss of $0.1 million during the
nine month period ended December 31, 1998 arising from foreign currency cash and
accounts receivable balances we maintained during the period in which the U.S.
dollar strengthened. For the year ended March 31, 1998, this charge was $0.4
million. Our exposure to foreign currency losses is mitigated due to the variety
of customers and markets which comprise our customer base, as well as geographic
diversification of that customer base. In addition, the majority of our largest
customers settle their accounts in U.S. dollars.

During the nine months ended December 31, 1998, we incurred $0.1 million
proxy related litigation expenses as compared to $3.9 million for the year ended
March 31, 1998 related to the class action lawsuit for which a settlement
agreement was reached in April 1998. Of the amount recorded in the year ended
March 31, 1998, $3.5 million related to the escrow of 350,000 shares of our
common stock, which have been valued at $10.00 per share pursuant to the terms
of the settlement agreement. Such value relates to our obligation to issue
additional stock or cash if the market price of our stock is less than $10.00
per share during the defined periods. See Note 8 to the Consolidated Financial
Statements for further discussion.

Taxes on Income. No income tax provision was recorded for the nine month
period ended December 31, 1998 due to the

<PAGE>

operating losses incurred. Taxes on income for the year ended March 31, 1998
were $1.6 million. The tax provision for amounts currently due is primarily the
result of our completion of a study to simplify our tax and corporate structure
wherein we identified potential tax issues arising out of our international
subsidiaries. In connection with this study, we realized we had potential tax
liabilities and recorded an additional tax provision of $1.5 million in the
fourth quarter of the year ended March 31, 1998. Our study was completed in
January 1999 and no additional reserve for taxes was recorded as of December 31,
1998. The eventual outcome cannot be predicted with certainty. No tax claims
have been asserted against us. See Note 12 to the Consolidated Financial
Statements for further discussion regarding taxes on income.

YEAR ENDED MARCH 31, 1998 COMPARED TO YEAR ENDED MARCH 31, 1997

Overview. We incurred a net loss of $13.3 million for the year ended March
31, 1998, of which $11.0 million is attributable to the following charges:

(in millions)
----------------
Corporate realignment costs $ 3.1
Proxy-related litigation settlement costs 3.9
Additional income tax provision 1.5
Additional allowance for doubtful accounts 1.4
Warrants associated with debt 0.5
Other items 0.6
--------
$ 11.0
========

Some of these charges resulted principally from a detailed review of our
activities that new management initiated in the last few months of fiscal year
ended March 31, 1998 and are described in more detail below.

Excluding these items, we incurred a net loss for the year ended March 31,
1998 of $2.3 million compared to net income in fiscal 1997 of $0.8 million. The
difference is principally due to a $1.6 million contribution to net income in
fiscal 1997 of revenues from non-services sources which did not recur in fiscal
1998. Also in the year ended March 31, 1998, gross profit from our services
business remained flat compared to fiscal 1997 while we incurred additional
recurring operating expenses of $1.1 million, principally depreciation and
amortization. Interest expense, excluding a $0.5 million charge related to the
amortization of debt discount associated with warrants (see Note 11 to the
Consolidated Financial Statements for further information), increased by $0.3
million over fiscal 1997. Foreign exchange losses increased by $0.3 million over
fiscal 1997.

New management has taken steps to increase revenues and improve margins.
They have completed a review of our operations and activities and have refocused
our marketing and sales activities with an emphasis on stabilizing and growing
the existing core business and on adding new services. In practical terms, this
means that: (1) we refocused our resources on both expanding our customer base
and extending our line of services to realize the value of our global network of
operating platforms; (2) we established a small staff devoted to improving our
network structure and reducing our marginal transmission costs (and, therefore,
our cost of revenue), and contracts were entered into which will help to reduce
transmission costs in the next fiscal year; (3) we increased our sales and
marketing staff and allocated additional funds for marketing and promotional
activities; and (4) staffing needs were assessed and reductions and realignments
were completed. We instituted a process to add new network and operations staff
as necessary to support new contracts.

New management completed a thorough review of corporate practices and
procedures in 1998. This review resulted in a number of improvements to internal
reporting and review procedures. We also undertook a study to simplify our
organizational and tax structure and identified potential international tax
issues. In connection with this study, we realized we had potential tax
liabilities and recorded an additional tax provision of $1.5 million in the
fiscal year ended March 31, 1998 to reserve against liabilities which might
arise under the

20
<PAGE>

existing structure. Our study was completed in January 1999 and we recorded no
additional reserve for taxes as of December 31, 1998. The eventual outcome
cannot be predicted with certainty. No tax claims have been asserted against us.

Revenue for the year ended March 31, 1998 was $33.1 million. By comparison,
revenue for the year ended March 31, 1997 was $34.0 million, including $2.0
million attributable to non-service revenue (principally billing and platform
equipment sales, revenue from calling card production and contract settlement
charges related to disputes over special projects). Although total revenue
decreased from the year ended March 31, 1997 to the year ended March 31, 1998,
services revenue increased $1.0 million or 3%. The increase was due to increased
customer usage partially offset by a combination of three elements: a decline in
revenue from our long distance resale services; lower per minute revenue due to
new pricing programs which went into effect in the first and second quarters of
the year ended 1998; and a lack of new revenue generating contracts in the
fiscal year ended March 31, 1998.

Gross Profit. Gross profit was 43% or $14.3 million for the year ended
March 31, 1998, compared to 47% or $16.1 million for the year ended March 31,
1997. This decline was due partially to the positive margin contribution of
non-service revenues in the year ended March 31, 1997 which did not reoccur in
the year ended March 31, 1998. Excluding the effects of non-service revenue,
gross profit for services revenue was 43% for the year ended March 31, 1998
compared to 45% for fiscal 1997. This decrease was due to lower pricing related
to various customer contracts which was not offset by corresponding decreases in
transmission costs, the principal component of cost of revenue. Cost of revenue
was expected to fluctuate in the next few periods as new pricing and contractual
arrangements were put in place and as we worked to improve our network structure
and transmission costs.

Selling, General and Administrative expenses ("SG & A"). SG & A expenses
were $14.0 million for the year ended March 31, 1998, compared to $11.9 million
for the year ended March 31, 1997, an increase of $2.1 million or 18%. As a
percentage of revenue, SG & A expenses were 42% and 35% for the years ended
March 31, 1998 and 1997, respectively. A major factor in the increase was the
addition of $1.3 million to the allowance for doubtful accounts. Of this amount,
half was related to one customer who, in our view, unilaterally took
unsubstantiated credits off invoiced amounts and refused to pay a large invoice
for contract settlement charges related to a special project. We had an
allowance as of March 31, 1998 to reflect potential costs of collection. (In the
quarter ending December 31, 1998, we recovered $1.5 million in cash and a $0.4
million usage credit from this customer. This settlement resulted in no
additional write-off for bad debts). The balance of the remaining increase in
the allowance was spread among several accounts, principally in the Asia-Pacific
area, to provide for collection issues that may arise from economic and other
factors. We incurred $0.8 million in other SG & A expenses related to increases
in payroll due to the hiring of new management and other personnel, consulting
and legal fees, travel expenses and for internal communication costs.

Corporate Realignment Expense. We incurred various realignment costs during
the year ended March 31, 1998 resulting from the review of operations and
activities undertaken by new corporate management. These costs, which totaled
$3.1 million, include employee severance, legal and consulting fees and the
write down of certain investments made in our Internet service development
program.

Depreciation and Amortization Expense. Depreciation and amortization
expense for the year ended March 31, 1998 was $2.8 million compared to $1.7
million for the year ended March 31, 1997, an increase of $1.1 million or 59%.
In addition to an increase in the asset base of $2.1 million in the year ended
March 31, 1998, a full year's depreciation was recorded in the year ended March
31, 1998 for fiscal 1997 property additions of $5.0 million, a significant
portion of which occurred in the latter part of fiscal 1997.

Other Expense (Income). Interest expense for the year ended March 31, 1998

<PAGE>

was $1.6 million, compared to $0.8 million for the year ended March 31, 1997, an
increase of $0.8 million or 101%. This increase relates primarily to expenses of
$0.5 million related to additional interest expense associated with warrants to
purchase common stock issued in connection with debt obligations. Also, there
was an increase in average borrowings during the year ended March 31, 1998 and
we incurred additional finance charges relating to the extensions of a term
loan.

We recorded a foreign currency transaction loss of $0.4 million for the
year ended March 31, 1998 arising from foreign currency cash and accounts
receivable balances we maintained during the year. Our exposure to foreign
currency losses is mitigated due to the variety of customers and markets which
comprise our customer base, as well as geographic diversification of that
customer base. In addition, most of our largest customers settle their accounts
in U.S. dollars.

During the year ended March 31, 1998, we incurred proxy related litigation
expense of $3.9 million arising from the class action lawsuit for which a
settlement agreement was reached. Of this amount, $3.5 million related to the
escrow of 350,000 shares of our common stock, which was valued at $10.00 per
share pursuant to the terms of the settlement agreement. Such value related to
our obligation to issue additional stock or cash if the market price of our
common stock is less than $10.00 per share during the defined periods. See Note
8 to the Consolidated Financial Statements for further discussion.

Taxes on Income. Taxes on income for the year ended March 31, 1998 were
$1.6 million, with no comparable tax provision for the year ended March 31,
1997. This tax provision was primarily the result of our study to simplify our
tax structure wherein we identified potential international tax issues and
realized we had potential tax liabilities. Refer to Note 12 to the Consolidated
Financial Statements for further discussion regarding taxes on income.

Liquidity, Capital Resources and Other Financial Data. As discussed above,
we launched an aggressive growth plan toward the end of 1998 and intend to
pursue that plan into the foreseeable future. A result of that plan will be
increasing cash demands and the need for aggressive cash management. To
accomplish all that we seek to do, we will have to acquire significant
financing, some of which we have already achieved in the first quarter of 1999.

Cash and cash equivalents were $1.4 million at December 31, 1998 compared
to $2.4 million at March 31, 1998. Accounts payable totaled $5.8 million at
December 31, 1998 compared to $1.1 million at March 31, 1998, resulting
principally from deferrals of payments to certain vendors and professional
service firms due to our tight cash situation (see discussion below for
financings in the first quarter of 1999 which were used, in part, to bring
amounts due these companies and firms more current). Accrued expenses increased
by $2.0 million to $6.2 million at December 31, 1998 primarily due to accruals
for interest costs on debt payable only at maturity and costs accrued for
acquisitions and transmission for which no bills had been received as of
December 31, 1998. Cash inflows from operating activities for the nine month
period ended December 31, 1998 totaled $3.6 million, compared to outflows of
$2.5 million for the full year ended March 31, 1998. There was a net working
capital deficiency of $21.0 million at December 31, 1998 compared to positive
working capital of $2.4 million at March 31, 1998. In addition to our operating
losses, this large change in working capital resulted principally from the
reclassification of $8.5 million of debt due in August 1999 ($7.5 million) and
December 1999 ($1.0 million) to a current liability as of December 31, 1998 and
to short-term indebtedness totaling $6.3 million incurred primarily during the
fourth calendar quarter of 1998 related to acquisitions (see Note 6 to the
Consolidated Financial Statements). Of this latter amount, up to $5.4 million
(plus accrued interest) may be paid, at our sole discretion, by issuance of
common stock. The first $1.0 million was repaid by the issuance of common stock
in March 1999.

In the nine month period ended December 31, 1998, in addition to the $2.2
million paid in connection with the acquisition of IDX, we acquired property and
equipment

<PAGE>

of approximately $2.0 million and made other investments, principally advances
totaling $1.0 million to the unified messaging company which provides the
software upon which we are basing our new messaging service and in which we are
considering making a joint venture investment. This compares to $2.1 million in
property and equipment additions for the full year ended March 31, 1998. In both
periods, the property and equipment expenditures were principally for upgrades
and additions to the global network of operating platforms. Cash generated from
financing activities totaled $0.7 million during the nine month period ended
December 31, 1998, mainly due to proceeds from a $1.0 million loan from an
existing stockholder received in June 1998, which is payable in December 1999.
For the full year ended March 31, 1998, cash generated from financing activities
totaled $4.8 million, the primary source being the issuance of common stock for
$7.5 million reduced by the net retirement of long-term debt obligations of $3.0
million.

In January and February 1999, we entered into two separate financing
transactions pursuant to which we issued preferred stock and warrants totaling
$10.0 million (see Note 17 to the Consolidated Financial Statements). Proceeds
from these financings to date are $8.0 million with the remaining $2.0 million
to be received upon registering the underlying common stock issuable on
conversion. Substantially all of the proceeds from these financings have been
used during the first quarter of 1999 to reduce accounts payable and to meet the
capital expenditure and working capital requirements of the business.

In February 1999, we acquired Telekey, a communications services company,
with a card based range of services including calling, e-mail, voicemail and
other features which will be incorporated into our expanded service offerings.
We acquired Telekey for cash, short-term notes of $0.3 million and convertible
preferred stock. See Note 17 to the Consolidated Financial Statements.

In April 1999, we obtained a financing commitment in the form of long-term
debt totaling $20.0 million from our largest stockholder. This commitment is
subject to stockholder approval (see Note 18 to the Consolidated Financial
Statements). In addition, the lender provided a loan of $7.0 million with a term
of one year which is intended to serve as a bridge to stockholder approval or
the acquisition of other financing.

Current Funding Requirements. We have the following estimated firm cash
obligations and requirements during calendar 1999:

(in millions)
Repayment of loans due
August and December 1999,
including interest $9.5
Payment of promissory note
issued in connection with
acquisition 0.5
Payment of estimated tax
obligations related to prior
years 1.1
Y2K compliance program (see below) 1.0
---------
$ 12.1
---------

Through April 14, 1999, we acquired new funding and commitments in excess
of $32.0 million: $10.0 million from the sale of convertible stock (of which
$8.0 million has been received and $2.0 million will be advanced upon
registration of the underlying common shares); $20.0 million in committed
long-term debt which is subject to stockholder approval (under the commitment,
the lender has provided a bridge loan of $7.0 million which we have drawn down);
and $2.0 million or more in vendor financing for network equipment purchases.
Assuming that stockholder approval is forthcoming for the long-term debt, these
funds might permit us to meet a modest baseline growth plan. To achieve the
growth, both short and long-term, that we are targeting, however, will require
additional capital. The plan under which we are currently operating requires
cash in the second half of the year which we anticipate will come from (1) a
capital markets financing of debt or equity in the second half of the year of up
to $30.0 million, and (2) secured equipment based financing of up to $10.0
million.

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<PAGE>

Our growth plan contemplates, in addition to the firm cash obligations
noted above, additional capital needs of up to $38.0 million (including
expenditures for the first quarter which, as noted above, used most of the $8.0
million in proceeds from the sale of convertible stock). Most of these funds
will be used for network expansion and upgrade, for the extension of the line of
services, for a few key acquisitions and investments, and, in particular, for
the launch of new services, such as the messaging service. If significantly less
capital is available, plans will need to be curtailed, negatively affecting
growth, particularly the launch of new services.

Of the financing currently committed, $13.0 million is subject to
stockholder approval at our next annual meeting scheduled to occur in the second
quarter of 1999. Our management believes that there is a high probability that
stockholder approval will be obtained. However, if this approval does not occur,
we will be required to find additional sources of capital in the short-term,
principally to repay the indebtedness, including interest, of $8.5 million due
in August 1999. In that event, we cannot guarantee that we can raise additional
capital or generate sufficient funds from operations to meet our obligations.
The lack of funds from these sources would force us to curtail our existing and
planned levels of operations and would therefore have a material adverse effect
on our business.

Taxes. During 1998, we undertook a study to simplify our organizational and
tax structure and identified potential international tax issues. In connection
with this study, we determined that we had potential tax liabilities and
recorded an additional tax provision of $1.5 million in the year ended March 31,
1998 to reserve against liabilities which could have arisen under the existing
structure. We initiated discussions with the Internal Revenue Service ("IRS")
related to the U. S. Federal income tax issues identified by the study and filed
with the IRS returns for eGlobe for the years ended March 31, 1991 through 1998
reflecting these findings. Neither the eventual outcome of these discussions or
of any other issues can be predicted with certainty.

As of December 31, 1998, we have recorded a net deferred tax asset of $8.3
million and have approximately $16.3 million of net operating loss carryforwards
available. We have recorded a valuation allowance equal to the net deferred tax
asset as management has not been able to determine that it is more likely than
not that the deferred tax asset will be realized based in part on the foreign
operations and availability of the operating loss carryforwards to offset only
U.S. tax provisions. In addition, included in the net operating carryforwards
are approximately $6.0 million acquired in the IDX acquisition that are limited
in use to approximately $0.3 million per year and must be offset only by taxable
income generated from IDX. See Note 12 to the Consolidated Financial Statements
regarding further discussion of taxes on income.

Effect of Inflation. We believe that inflation has not had a material
effect on the results of operations to date.

Accounting Pronouncements and Year 2000 Issues

Recent Accounting Pronouncements - The Financial Accounting Standards Board
("FASB") has issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 requires companies to record derivatives on
the balance sheet as assets or liabilities, measured at fair market value. Gains
or losses resulting from changes in the values of those derivatives are
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in fair
value or cash flows. SFAS No. 133 is effective for fiscal years beginning after
June 15, 1999 and is currently not applicable to us.

Year 2000 Issues - We are aware of the issues associated with the
programming code in existing computer systems as the year 2000 approaches. The
"Year 2000 Issue" or "Y2K Issue" arises because many computer and hardware
systems use only two digits to represent the year. As a result, these systems
and programs may not process dates beyond

24
<PAGE>

the year 1999, which may cause errors in information or system failures.
Assessments of the potential effects of the Y2K issue vary markedly among
different companies, governments, consultants, economists and commentators, and
it is not possible to predict what the actual impact may be. Because we use
Unix-based systems for our platforms and operating systems to deliver service to
customers, we believe material modifications may not be required to ensure Y2K
compliance. However, we are in the process of assessing and testing the software
resident on all our system hardware to validate this assertion and anticipate
that testing will be completed by June 1999. We are in various stages of our
analysis, assessment, planning and remediation and are using internal and
external resources to identify, correct or reprogram, and test the computer
system for Y2K compliance. We anticipate completing all reprogramming efforts,
including testing, by June 1999. Management is continuing to update and evaluate
the financial impact of Y2K compliance and expects that total costs will not
exceed $1.0 million. We are proceeding with an internal certification process of
our propriety systems (e.g. calling card and billing systems). We intend to use
external sources as necessary to validate our certification of these critical
systems. No material costs have been incurred during the nine month period ended
December 31, 1998 and management estimates that we will incur most of the costs
during 1999.

We are also in the process of assessing Year 2000 readiness of our key
suppliers and customers. This project has been undertaken with a view toward
assuring that we have adequate resources to cover our various telecommunications
requirements. A failure of our suppliers or customers to address adequately
their Year 2000 readiness could affect our business adversely. Our worst-case
Year 2000 scenarios would include: (1) undetected errors or uncorrected defects
in our current product offerings; (2) corruption of data contained in our
internal information systems; and (3) the failure of infrastructure services
provided by external providers. We are in the process of reviewing our
contingency planning in all of these areas and expect the plans to include,
among other things, the availability of support personnel to assist with
customer support issues, manual "work arounds" for internal software failure,
and substitution of systems, if needed. We anticipate that we will have a
contingency plan in place by June 1999. In addition, we are aware of the
potential for claims against us for damages arising from products and services
that are not Year 2000 ready. We believe that such claims against us would be
without merit. Finally, the Year 2000 presents a number of risks and
uncertainties that could affect us, including utilities failures, competition
for personnel skilled in the resolution of Year 2000 issues and the nature of
government responses to the issues, among others. Our expectations as to the
extent and timeliness of modifications required in order to achieve Year 2000
compliance is a forward-looking statement subject to risks and uncertainties.
Actual results may vary materially as a result of a number of factors,
including, among others, those described in this paragraph. There can be no
assurance however, that we will be able to successfully modify on a timely basis
such products, services and systems to comply with Year 2000 requirements, which
failure could have a material adverse effect on our operating results.

Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures

None.

Quantitative and Qualitative Disclosure About Market Risk

We measure our exposure to market risk at any point in time by comparing
the open positions to a market risk of fair value. The market prices we use to
determine fair value are based on management's best estimates, which consider
various factors including: closing exchange prices, volatility factors and the
time value of money. At December 31, 1998, we were exposed to some market risk
through interest rates on our long-term debt and preferred stock and foreign
currency. At December 31, 1998, our exposure to market risk was not material.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Other Expenses (Income)."

<PAGE>

OUR BUSINESS

General

We incorporated in 1987 as International 800 TeleCard, Inc., a wholly owned
subsidiary of Residual, a publicly traded company that provided toll-free (800)
and related value-added telecommunications services to businesses around the
world. We changed our name to Executive TeleCard, Ltd. by amending our
certificate of incorporation on October 18, 1988. We built on the national
relationships with telecommunications administrations, and in 1989 we began
installing calling card platforms in or close to the facilities of various PTTs.
We went public that same year by way of a dividend in kind from our former
parent company.

In December 1997, we brought in new management to handle some adverse
results of our business. Until 1998, our entire focus was on supporting calling
card services. In 1998, that focus began to change. In 1998, we restructured key
portions of our operations, refocused our business to include Internet Protocol
technologies through an acquisition, and changed our name. We took these actions
because we believed that we needed to concentrate on what we do best and do it
better.

Operating Platforms and IP Network

We have installed operating platforms in more than 40 locations around the
world. These platforms are computers, software and related communications
termination equipment. In many instances, our platforms are co-located with the
international gateway facilities of the dominant telephone company in a national
market - frequently that company is both the operating partner and the customer.
See Note 13 to the Consolidated Financial Statements for further discussion of
our foreign sales. See also "Risk Factors-Our business is exposed to the risks
associated with international business." The platforms are connected to both the
local telephone network and to international networks. The platforms supply
global services to our customers - their functions include managing voice and
data access to one or more networks, identifying and validating user access,
providing various levels of transaction processing, routing calls or data
messages, providing access to additional service functions (for example, the
unified messaging service currently in beta test), and supplying billing and
accounting information. One of the strengths of the platform is its inherent
flexibility, subject to necessary interface and applications programming, in
providing a "front end" access node for a range of different services.

Until the end of 1998, we had no transmission facilities of our own. Our
network of platforms relied on transmission services supplied by others to route
calls or messages. With the acquisition of IDX, that began to change. IDX has
developed, and is expanding, an international network of telecommunications
trunks that employ Internet Protocol as the basic method of transporting
telephone calls, faxes or data messages. A telecommunications trunk is a large
communications channel configured for data traffic. Our platforms are beginning
to use the IDX network to route calls and messages. Using the IDX network to
provide transmission services for our other services will reduce costs, create
other operating efficiencies and, perhaps most important, permit us to offer new
IP based services to our customers, services which would have been difficult, if
not impossible, to supply without the IDX network.

IDX, like eGlobe, works principally as a provider to, and operating partner
with, telephone companies and ISPs. This key element of the IDX network and
service model helps it mesh with our operating platform service. In combination
with us, IDX is concentrating on developing business and operating arrangements
with our existing customers. We intend to continue to establish IDX
communications connections co-located with the operating platforms in the
international gateway facilities of our customers.

<PAGE>

Services

In 1999, we will concentrate on three lines of service: Network Services
(the IP voice and fax capabilities of IDX); Card Services; and the first
elements of a new suite of services called Global Office(tm)", regulatory,
political and other which is being built around the global access capabilities
of the operating platforms and the first phase of the unified messaging service.

Network Services. We offer new, low-cost transmission services by
transmitting digitized and compressed voice and data messages as IP packets over
an international network of frame relay which we manage as a packet-switched
private network. Frame relay is a high-speed, data packet switching service used
to transmit digital information, including voice and data. Packet switching is a
way of transmitting digitally-encoded messages by splitting the data to be sent
into packets of a certain size. This approach resembles that used by many large
corporations to transport voice and data over their wide area networks. We
believe that IDX's voice service, "CyberCall," and fax service, "CyberFax,"
provide significant efficiencies to customers, compared to PSTN transmission,
for the portion of the transmission delivered by the IP network. We believe that
the call quality of IDX service is comparable to that of the Public Switched
Telephone Network. Although a portion of the telephony connection must be routed
over the PSTN, we expect to reduce the portion of the call flowing over the PSTN
by increasing the number of nodes on the IDX network over time, as supported by
traffic flow. This should reduce cost and increase the network's efficiency,
since the call or fax can be delivered to the intended recipient from the
closest network node.

IDX offers several additions to each of its primary services, including
billing and report generation designed exclusively to support the CyberFax and
CyberCall products. We believe that these features significantly enhance the
attractiveness of the IDX services to telephone companies and ISPs. We are
working with telephone companies and ISPs to increase the use of the IDX network
and increase the number of network nodes through which service can be delivered.

eGlobe offers an international toll free service, "Service 800," that
allows a caller to make a long distance telephone call without paying the
applicable international toll charges, which are billed to the Service 800
customer, normally the recipient of the calls. This service was our original
service prior to introducing our calling card services several years ago. We are
presently offering international toll-free service for calls originating in
Australia, Austria, Canada, Denmark, France, Hong Kong, Japan, the Netherlands,
Switzerland, the United Kingdom, the United States and West Germany, among
others. Given its characteristics, the service has been consolidated into the
network services division managed by IDX.

Card Services. Card Services provide customers (telephone companies, ISPs
and other card issuers, such as specialized carriers and banks) with the ability
to offer calling card programs to their customers. Services include platform
services - we provide our operating platforms and the customer provides
transmission services - and enhancement services where we provide a combination
of platform and transmission services. Calling card services include validation,
routing, multi-currency billing and payments, in addition to credit, prepaid and
true debit functionality.

Card Services are designed for telecommunications operators, including
integrated telephone companies, wholesale network providers, resale carriers and
ISPs, and corporations looking for a calling card solution to enhance their core
business (which is often not related to telecommunications companies) with
global calling capabilities on a prepaid, postpaid, debit or limit basis. These
customers want us to originate and terminate calls domestically and
internationally. Customers are billed for use of the platform and transmission
on a per minute basis. Contracts are ordinarily multi-year, sometimes with
minimum use requirements.

We maintain a central processing center in Denver, Colorado for user
validation, storage, and processing of billing information. We offer card
service customer interface in

<PAGE>

multiple languages by computer or operators.

We provide 24-hour operator assistance and other customer service options.
This assistance includes "default to operator" assistance for calls from rotary
and pulse-tone telephones. Our operating platforms divert calls placed from such
telephones to an operator who processes the call. The default-to-operator
feature enables access to our platforms from any telephone in any country or
territory in our network.

The following table lists some features provided in our card services
offerings:

CALLING CARD FEATURES

STANDARD FEATURES:
Operator Default
Operator Assistance
Language Selection
Self-Selected PIN
Multiple Calling
Star Key (*) Prompt Restart
Auto Redial
Prompt Interrupt
Voice Mail Compatibility

ENHANCED FEATURES:
Customized Languages, Prompts and Closing
Conference Calling
Translation Services
Access to U.S. Toll-Free Numbers

Global Office and New Services. In 1998, we invested more than $1 million
in unified messaging and related technologies to help prepare the core elements
of a new service offering. In combination with the voice and data access
capabilities of the operating platforms, this unified messaging technology will
provide global capability for an end user to dial up the Internet while
traveling, or dial into a corporate intranet, and retrieve and manage voice
mail, e-mail and faxes around the world with a local telephone call.

This new offering is being developed in combination with key customers,
primarily a handful of national telephone companies that combine their local
telephone dominance with a dominant Internet position in their home markets. The
service will be supplied to the telephone company which will in turn make it
available to their telephone and Internet customers. The target audience is the
early technology adapter and the business executive and professional traveling
away from the office.

Though our unified messaging technology is software-based, we will add a
server to the operating platform to support the messaging functionality.

We intend to expand the first phase of the offering described above over
the course of the next year with additional services. In particular, the same
software that supports the messaging capability is capable of supporting
voice-based telephone access to the net and the world wide web, both to retrieve
or review information or to support other transactions.

Strategy

Our goal is to become a leading network-based provider of global software
defined services. To achieve this goal, our present strategy includes:

Building on global presence and strategic relationships. We believe that
international relationships and alliances are important in offering services and
that these relationships will be even more important as competition expands
globally. We have long-standing relationships with national telephone companies
and ISPs. We want to deepen our relationships with these telecommunications
companies and increase the number of services we provide to them. We believe
that we will have a competitive advantage to the extent that we can maintain and
further develop our existing relationships.

Expanding service offerings and functionality. We believe that it will be
necessary to offer a suite of enhanced business communications services, and
that the early providers of credible multi-service offerings will have an
advantage. We have introduced global IP voice and IP fax services, and we plan
to introduce a broad range of other services including Global Office(tm). We
believe that new service offerings and increased product diversification will
allow us to achieve

28
<PAGE>

a greater return on assets, reduce the seasonality of our revenue stream and
decrease exposure to global or regional economic downturns.

Focusing on national telephone companies, ISPs and other card companies.
Many telecommunications companies market their services directly to businesses
and other end users. We offer our services principally to national telephone
companies and ISPs, as well as to some specialized telecommunications companies
and card issuers. These companies, in turn, use our services to provide an
enhanced service to their customers. We believe that many of these providers
will continue to outsource the kind of services we offer and are increasingly
seeking new revenue sources by offering value-added services such as those we
intend to offer. We also believe that we provide a cost-efficient opportunity
because of our existing international network and low cost processing made
possible by the network operating platforms. We further believe that we derive a
significant advantage in marketing to these customers because of our
independence from the major global carriers, which allows national telephone
companies, ISPs and card issuers to do business with us without risking their
customer bases.

Continuing focus on the business traveler. In identifying and offering new
services to support our customers, we will continue to pursue services which
build upon our strengths, particularly our global reach. As a result, we have,
focused on providing services that will be valuable to the business or
professional user away from their office, or traveling around the world.

Industry Background

During the last decade, due to changing regulatory environments and
numerous mergers, acquisitions and alliances among the major communications
providers, there has been a convergence in the services offered by
communications companies. The result has been increased globalization of
services, strong competition from new entrants into different communications
industry segments and the increasing need to differentiate services. In
addition, companies have been focusing on areas where they have expertise,
superior technology and cost advantages, and have sought to purchase or
outsource the portions of the service where they do not have such advantages. We
believe that this trend is precipitating the pursuit of new services and expect
that it will result in increased outsourcing of more complex value-added
services that are unrelated to the core expertise of an organization.

The evolving environment for communications has increased the number of
messages sent and received and the types and means of communications mobile
professionals use. With advances in many areas of communications technology,
professionals and other travelers are demanding additional features from their
telephone and Internet providers, particularly ease of Internet access, true
global access and unified messaging.

Internet Protocol (IP). Unlike the transmission technology which is the
basis of the PSTN, where voice and data are transported in the form of
relatively continuous analog and digital signals, IP based transmission
transports voice and data in the form of data packets which do not flow in a
continuous channel. As a result of this essentially "random" packet transport
system, the information being transported - whether voice, video, fax or other
forms of messages or information - is much more easily managed and manipulated.
The relative ease of data management and manipulation leads to a wide range of
new functions and services, all of which are possible as a result of the
underlying IP capability. This has led to a proliferation of IP based services
and is rapidly making IP the technical basis for many new value-added and
enhanced services, including voice (telephone) services. Indeed, our card
services already rely on IP capabilities in key billing and transaction
management functions.

In our judgment, IP ultimately will become the dominant underlying service
protocol. That means that without regard to the type of information - whether
voice or data, card service or messaging, the ability to call home or "surf" the
web - IP will be a key building block for "enhanced," "value added," or
"intelligent" network services in the future.

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With the acquisition of IDX and our investment in unified messaging, IP has
become a core technology in our service mix.

Early Internet voice transmission was of poor quality, but IP transmission
quality improved significantly with the development of an IP "gateway" that
connects telephone calls between IP networks and PSTN networks. The computer
server converts the PSTN voice into data packets and routes the data over the
Internet or another IP network. A second computer server in the destination area
converts the data back to analog form and switches it to the local phone network
as a local call. IP gateways have enabled IP telephony to evolve into numerous
new services and networks.

IP telephony offers many benefits:

o simplified management;

o use for both voice and data transmission allows consolidation of
traffic over a single network;

o reduction of overhead and maintenance costs for the IP portion of the
transmission; and

o use of applications such as video, voice mail, conferencing,
messaging, data-sharing, and directory services over the same network.

While other technologies - such as ISDN and ATM - also have brought some of the
benefits of consolidating telephone and data networks, IP transmission offers
nearly universal access. The communications industry requires large scale
acceptance of new technologies to justify the massive investment in
infrastructure needed to implement them. The universal access and critical mass
that the Internet has achieved has attracted significant investment and
application development, which also have promoted and developed IP transmission.

Market

The global telecommunications services industry is growing
significantly. Two of the fastest growth areas have been mobile communication
related services and international telecommunication services.

We believe that demand for global telecommunications services,
including our offerings, will continue to grow substantially as a result of
increased (1) reliance by business users on telecommunication services; (2)
globalization of business; and (3) use of the Internet.

Changes in global telecommunication services have dramatically
increased both the number of messages and the form of media used. Messages are
increasingly taking electronic form as electronic mail and other electronic
communications tools usage has grown. Increased e-mail usage, in turn, has led
to increased demand for mobile, dial-up access to the Internet.

The growth in the global telecommunications market also reflects the
increasingly international nature of business, the significant growth of
emerging and newly industrialized economies and the increase in international
trade. We believe that as multinational corporations globalize, and expand into
new markets, their demand for diverse and customized telecommunications services
will continue to grow. Increased globalization will lead to increased demand for
products and services that address the communication and information management
needs of an increasingly mobile society. Growth in communication and information
demand on the part of international travelers is further evidenced by the
proliferation of electronic devices (such as notebook and subnotebook computers
with modems, both wireline and wireless) and the explosive growth of the
Internet, corporate intranets and network services that allow travelers remote
access to their home offices. As business travel grows, the percentage of
travelers who have a need for remote office access to messaging and
communication services will increase.

The Internet continues to become a preferred solution to the increased
message and communication needs of mobile consumers. The worldwide commercial
Internet/intranet market has grown very rapidly, and this growth is expected to

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continue. Many factors are driving this increase in demand for Internet access
by an increasingly more mobile group of end users. Strategic developments
affecting this demand for accessing the Internet from anywhere include:

o increasing deregulation and competition in telecommunications
markets;

o growth of Internet usage to a critical mass to achieve near
universal acceptance;

o dramatic increase in the use of e-mail; and

o decreasing access costs to backbone providers and end users.

In addition to consumer use, corporations have been moving online. The
number of large companies with a Web presence continues to increase, as does the
number of registered commercial domains. This increase in corporate use
indicates how quickly the Internet has become a mainstream channel for corporate
marketing, communications and business transactions.

Competition

Our industry is intensely competitive and rapidly evolving. The
communications industry is dominated by companies much larger than us, with much
greater name recognition, much larger customer bases and substantially greater
financial, personnel, marketing, engineering, technical and other resources than
we have. In addition, several other companies have commenced offerings, or have
announced intentions to offer, enhanced communications services similar to
certain of the enhanced services we plan to offer.

Our core services compete against services provided by companies such
as AT&T Corp., British Telecom, MCI/Worldcom and Global One, as well as some
smaller multinational providers. In providing enhanced services we expect to
compete with businesses already offering or planning to offer such services.
These companies include Premiere Technologies (provides enhanced communication
services and is developing a unified messaging platform), JFAX (provides remote
office services) and General Magic (provides IP based integrated voice and data
applications). We expect other parties to develop platform products and services
similar to the services we offer.

We believe the principal factors affecting competition include services and
features, geographic coverage, price, quality, reliability of service and name
recognition. We expect to build upon our global network and operating platform
by offering a broader range of services, by expanding our relationships with
national telephone companies and other large companies that outsource business
to us, and by continuing to provide processing services efficiently. We believe
we will be able to compete effectively if we can successfully implement our
competitive strategy. However, to the extent other companies are successful in
offering superior enhanced communication services or introducing such services
before we do, we likely would be adversely affected and such effects could be
material. See "Risk Factors - Rapid technological and market changes create
significant risks to us."

Sales and Marketing

We market our services to national telephone companies, ISPs, specialized
telecommunications companies, and card issuers which in turn provide our
services to their customers. During 1998, we established a direct sales force of
(approximately 15 people) to focus on sales to these customers. To be close to
our customers, we have based much of our direct sales force in Europe and Asia.
Also during 1998, we established a marketing staff responsible primarily for
providing marketing support to the sales efforts at varying levels of
involvement. The marketing staff also promotes our corporate image in the
marketplace and provides marketing support to our customers to encourage their
customers to use our services. We pay sales commissions to our sales employees
and agents.

<PAGE>

Engineering

Our engineering personnel are responsible for provisioning and implementing
network upgrades and expansion and updating, testing and supporting proprietary
software applications, as well as creating and improving enhanced system
features and services. Our software engineering efforts include (1) updating our
proprietary network of operating platforms and integrating our software with
commercially available software and hardware when feasible and (2) identifying
and procuring improved services compatible with our existing services and
platforms.

Technology: Intellectual Property Rights. We regard our operating platforms
and our global IP voice, IP fax and other software as proprietary and have
implemented some protective measures of a legal and practical nature to ensure
they retain that status. We have filed a patent application relating to aspects
of the operating platform with the U.S. Patent and Trademark Office, and are
taking steps to extend our patent application to certain international
jurisdictions. We have also registered trade or service marks with the U.S.
Patent and Trademark Office, and applications for registration of additional
marks are currently pending. We have also registered trade or service marks in
some European and other countries, and applications for registration of
additional marks are pending. In addition to filing patents and registering
marks in various jurisdictions, we obtain contractual protection for our
technology by entering into confidentiality agreements with our employees and
customers. We also limit access to and distribution of our operating platforms,
hardware, software, documentation and other proprietary information.

There can be no assurance, however, the steps we have taken to protect our
proprietary rights will be adequate to deter misappropriation of our technology.
Despite these measures, competitors could copy certain aspects of our operating
platform and our global IP voice, IP fax and other software or obtain
information which we regard as trade secrets. Further, if challenged, there can
be no assurance we can successfully defend any patent issued to us or any marks
registered by us. In any event, we believe that such technological innovation
and expertise and market responsiveness are as (or more) important than the
legal protections described above. We believe it is likely our competitors will
independently develop similar technology and we will not have any rights under
existing laws to prevent the introduction or use of such technology.

Customers

For the nine month period ended December 31, 1998, Telefonos de Mexico,
S.A., de C.V. ("Telmex"), MCI and Worldcom, Inc. (primarily its subsidiaries,
ATC and LDDS), and Telecom Australia accounted for 19%, 16% and 10%,
respectively, of our revenues and were the only customers accounting for 10% or
more of our revenues. In the fourth calendar quarter of 1998, we experienced a
significant and permanent decline in revenues from several North American
customers, particularly Telmex. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Regulation

We are subject to regulation as a telecommunications service provider in
some jurisdictions. In addition, we or a local partner are required to have
licenses or approvals in those countries where we operate and where equipment is
installed.

United States Federal Regulation. Pursuant to the Communications Act of
1934, as amended (the "Communications Act"), the FCC is required to regulate the
telecommunications industry in the U. S. Under current FCC policy,
telecommunications carriers reselling the services of other carriers, and not
owning domestic telecommunications transmission facilities of their own, are
considered non-dominant and, as a result, are subject to streamlined regulation.
The degree of regulation varies between domestic telecommunications services
(services which originate and terminate within the U. S.) and international
telecommunications services (services which originate in the U. S. and terminate
in a foreign country or vice versa).

Non-dominant providers of domestic services do not require prior
authorization

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from the FCC to provide service. However, non-dominant providers of
international services must obtain authorization to provide service from the FCC
pursuant to Section 214 of the Communications Act. Carriers providing
international service also must file a tariff with the FCC, setting forth the
terms and conditions under which they provide international services. The FCC
has determined that it no longer will require non-dominant providers of domestic
services to file tariffs, but instead will require carriers to post this
information on the Internet. That decision has been stayed, pending appeal by
the U.S. Court of Appeals for the District of Columbia Circuit. We provide both
domestic and international services to and from the U.S. and therefore must
possess authority under Section 214 of the Communications Act and must file
tariffs for domestic and international services with the FCC. We have held an
authorization to provide service since 1989. We also have tariffs on file with
the FCC setting forth the terms and conditions under which we provide domestic
and international services.

In addition to these authorization and tariff requirements, the FCC imposes
a number of additional requirements on all telecommunications carriers.

The regulatory requirements in force today impose a relatively minimal
burden on us. There can be no assurance, however, that the current regulatory
environment and the present level of FCC regulation will continue, or that we
will continue to be considered non-dominant.

Non-U.S. Government Regulation. Telecommunications activities are subject
to government regulation to varying degrees in every country throughout the
world. In many countries where we operate, equipment cannot be connected to the
telephone network without regulatory approval, and therefore installation and
operation of our operating platform or other equipment requires such approval.
We have licenses or other equipment approvals in the jurisdictions where we
operate. In most jurisdictions where we conduct business, we rely on our local
partner to obtain the requisite authority. In many countries our local partner
is a national telephone company, and in some jurisdictions also is (or is
controlled by) the regulatory authority itself.

As a result of relying on our local partners, we are dependent upon the
cooperation of the telephone utilities with which we have made arrangements for
our authority to conduct business, as well as for operational and some of our
administrative requirements. Our arrangements with these utilities are
nonexclusive and take various forms. Although some of these arrangements are
embodied in formal contracts, any telephone utility could cease to accommodate
our requirements at any time. Depending upon the location of the telephone
utility, such action could have a material adverse effect on our business and
prospects. In some cases, principally countries which are members of the
European Community and the U. S., laws and regulations provide that the
arrangements necessary for us to conduct our service may not be arbitrarily
terminated. However, the time and cost of enforcing our rights may make legal
remedies impractical. We presently have good relations with most of the foreign
utilities with which we do business. There can be no assurance, however, that
such relationships will continue or that governmental authorities will not seek
to regulate aspects of our services or require us to obtain a license to conduct
our business.

Many aspects of our international operations and business expansion plans
are subject to foreign government regulations, including currency regulations.
There can be no assurance that foreign governments will not adopt regulations or
take other actions that would have a direct or indirect adverse impact on our
business opportunities. See "Risk Factors-Our business is exposed to the risks
associated with international business."

IP Telephony The regulation of IP telephony is still evolving. The FCC has
stated that some forms of IP telephony appear to be similar to "traditional"
telephone service, but the FCC has not decided whether, or how, to regulate
providers of IP telephony. In addition, several efforts have been made to enact
U.S. federal legislation that would either regulate or exempt from regulation
services provided over the Internet. State public utility commissions also may
retain

<PAGE>

intrastate jurisdiction and could initiate proceedings to regulate the
intrastate aspects of IP telephony. A number of countries currently prohibit IP
telephony. Other countries permit but regulate IP telephony. If and to the
extent that governments prohibit or regulate IP telephony, we could be subject
to regulation and possibly to a variety of penalties under foreign or U.S. law,
including without limitation, orders to cease operations or to limit future
operations, loss of licenses or of license opportunities, fines, seizure of
equipment and, in certain foreign jurisdictions, criminal prosecution.

Certain Recent Developments

Fiscal Year. Effective with the period ended December 31, 1998, we changed
our fiscal year end from March 31 to December 31. Therefore, the period ended
December 31, 1998 represents a nine month period as compared to the twelve month
fiscal years ended March 31, 1998, 1997, 1996 and 1995.

IDX Acquisition. On December 2, 1998, we acquired IDX, a privately held
Virginia corporation. IDX is a supplier of IP fax and IP voice platforms and
services to telecommunications operators and ISPs in 14 countries. With 56
employees, IDX currently has approximately $6.5 million of annualized revenue
(based upon revenues for the most recent two month period ended December 31,
1998). IDX will provide us with two key services for our new suite of Internet
services: IP fax and IP voice. For at least the first year, IDX will operate as
a separate subsidiary, although we have begun to use its services to support
some of the card services requirements. IDX will operate with its existing
management and personnel in facilities in Reston, Virginia.

Under the merger agreement signed with IDX, we recently elected Hsin Yen,
the President of IDX, and Richard Chiang, the Chairman of IDX prior to the IDX
acquisition, to our Board of Directors. This expands our Board to a total of 11
directors. As the President of IDX, Hsin Yen reports directly to Mr. Vizas, our
Chairman and Chief Executive Officer.

As a result of the IDX acquisition, all of the shares of common stock and
preferred stock of IDX, outstanding immediately prior to the effective time of
the IDX acquisition (excluding any treasury shares) were converted into, in the
aggregate, (a) 500,000 shares of our Series B convertible preferred stock
("Series B Preferred Stock"), which are convertible into up to 2,500,000 shares
(2,000,000 shares until stockholder approval is obtained) of our common stock,
subject to adjustment as described below, (b) warrants to purchase up to
2,500,000 shares of our common stock, subject to stockholder approval and
adjustment as described below (the "IDX Warrants"), and (c) $5.0 million which
amount is subject to decrease as described below, in interest bearing
convertible subordinated promissory notes.

The shares of Series B Preferred Stock are convertible at the holders
option at any time at the then current conversion rate. The shares of Series B
Preferred Stock will automatically convert into shares of our common stock on
the earlier to occur of (a) the first date that the 15 day average closing sales
price of our common stock is equal to or greater than $8.00 or (b) 30 days after
the later to occur of (1) December 2, 1999 or (2) the receipt of any necessary
stockholder approval relating to the issuance of the common stock upon such
conversion, subject to IDX's achievement of certain revenue and EBITDA
objectives.

The IDX Warrants are exercisable only to the extent that IDX achieves
certain revenue and EBITDA goals over the twelve months ending December 2, 1999
and stockholder approval is received. We have "guaranteed" a price of $8.00 per
share at December 2, 1999 to recipients of the common stock issuable upon the
conversion or exercise, as the case may be, of the Series B Preferred Stock and
IDX Warrants, subject to IDX's achievement of certain revenue and EBITDA
objectives. If the market price is less than $8.00 on December 2, 1999, subject
to IDX's achievement of certain revenue and EBITDA objectives, we will issue
additional shares of common stock upon conversion of the Series B Preferred
Stock and exercise of the IDX Warrants (subject to the receipt of any necessary
stockholder approval) based on the ratio of $8.00 to the market price, but not

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more than an aggregate of 7 million additional shares of common stock. The terms
of the Series B Preferred Stock and IDX Warrants are discussed in more detail
below under the caption "Description of Capital Stock."

The convertible subordinated promissory notes are due in three installments
(the first of which was paid in stock in March 1999) through October 30, 1999,
and are payable in cash or common stock (valued at the then market price). In
addition, we have agreed to pay the accrued but unpaid dividends (the "IDX
Accrued Dividends") on IDX's preferred stock under an interest bearing
convertible subordinated promissory note in the original principal amount of
$418,000 due May 31, 1999. We are entitled to reduce the aggregate principal
balance of the last payment due on the convertible subordinated promissory notes
by the amount of the IDX Accrued Dividends and certain other deferred amounts
unless offset by net proceeds from the sale of a subsidiary of IDX and a note
issued to IDX by an option holder. See Note 6 to the Consolidated Financial
Statements for further discussion.

UCI Acquisition. On December 31, 1998, we acquired UCI, a privately held
corporation established under the laws of the Republic of Cyprus. UCI is a
development stage calling card business serving Greece, Cyprus and the Middle
East. We have projected that the UCI acquisition will provide projected revenues
in 1999 ranging between $2 and $3 million. UCI will operate with its existing
management and personnel from offices in Limassol, Cyprus.

We acquired UCI for (a) 125,000 shares of our common stock (50% delivered
at the acquisition date and 50% to be delivered February 1, 2000, subject to
adjustment); (b) warrants to purchase 50,000 shares of our common stock, with an
exercise price equal to the market price at the time of our issuance of $1.63
and (c) $2.1 million in promissory notes or cash, according to a payment
schedule and subject to adjustments based on an earnout formula, each as
described below. We paid UCI $75,000 in January 1999. We agreed to pay UCI
$500,000 with interest at the rate of 8% per annum 180 days following the UCI
closing date. We agreed to pay UCI $500,000 with interest at the rate of 8% per
annum 18 months following the UCI closing date. We agreed to pay UCI $1.025
million on February 1, 2000 or December 31, 2000, subject to certain adjustments
as discussed below.

We agreed to adjust the purchase price we paid to acquire UCI as follows.
If the closing market price on the Nasdaq National Market of our common stock on
February 1, 2000 is less than $8.00, we will issue additional shares of our
common stock equal in number to: $1 million divided by the closing market price
of our common stock on December 1, 1999, less 125,000 shares of our common
stock. These shares as well as the remaining 62,500 shares of common stock to be
delivered are subject to adjustment as discussed below.

If UCI does not achieve 100% of its revenue target as of February 1, 2000,
we will pay less cash and issue fewer shares of our common stock on February 1,
2000. If UCI achieves more than 100% of its revenue target for the same period,
then we shall pay up to $300,000 in additional cash to UCI. See Note 6 to the
Consolidated Financial Statements for further discussion.

Exchange with Ronald Jensen. In November 1998, we reached an agreement with
Mr. Ronald Jensen, who is also our largest stockholder. The agreement concerned
settlement of unreimbursed costs and potential claims. Mr. Jensen had purchased
$7.5 million of our common stock in a private placement in June 1997 and later
was elected Chairman of our Board of Directors. After approximately three
months, Mr. Jensen resigned his position, citing both other business demands and
the challenges of managing our business. During his tenure as Chairman, Mr.
Jensen incurred staff and other costs that were not billed to eGlobe. Also, Mr.
Jensen subsequently communicated with our current management, indicating there
were a number of issues raised during his involvement with eGlobe relating to
the provisions of his share purchase agreement which could result in claims
against us.

In December 1998, to resolve all current and potential issues, we exchanged
75 shares of our 8% Series C cumulative

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convertible preferred stock ("Series C Preferred Stock"), which management
estimated to have a fair market value of approximately $3.4 million and a face
value of $7.5 million, for Mr. Jensen's then current holding of 1,425,000 shares
of common stock. The terms of the Series C Preferred Stock permit Mr. Jensen to
convert the Series C Preferred Stock into the number of shares equal to the face
value of the preferred stock divided by 90% of the common stock market price,
but with a minimum conversion price of $4.00 per share and a maximum of $6.00
per share, subject to adjustment if we issue common stock for less than the
conversion price. The difference between the estimated fair value of the Series
C Preferred Stock to be issued and the market value of the common stock
surrendered resulted in a one-time non-cash charge to our statement of
operations of $1.0 million in the quarter ended September 30, 1998 with a
corresponding credit to stockholders' equity. The terms of the Series C
Preferred Stock are discussed in more detail below under the caption
"Description of Capital Stock."

In connection with subsequent issuances of securities which are convertible
into or exercisable for our common stock, we discussed with Mr. Jensen the
extent to which the conversion price of the Series C Preferred Stock should be
adjusted downward. On February 12, 1999 (1) Mr. Jensen exchanged 75 shares of
Series C Preferred Stock (convertible into 1,875,000 shares of common stock) for
3,000,000 shares of common stock, which exchange would have the same economic
effect as if the Series C Preferred Stock had been converted into common stock
with an effective conversion price of $2.50 per share and (2) Mr. Jensen waived
any rights to the warrants associated with the Series C Preferred Stock. The
market value of the 1,125,000 incremental shares of common stock issued of
approximately $2.7 million was recorded as a preferred stock dividend in the
quarter ended March 31, 1999. See Notes 7 and 17 to the Consolidated Financial
Statements for further discussion.

Mr. Jensen has transferred or will transfer all his interests in the
3,000,000 shares of common stock he received in exchange for the Series C
Preferred Stock to EXTL Investors LLC, a limited liability company in which Mr.
Jensen and his wife are the sole members. Accordingly, Mr. Jensen is no longer,
or will no longer be, a record holder of shares of our common stock.

Series D Preferred Stock. We concluded a private placement of $3 million in
January 1999 with Vintage Products Ltd. We sold (1) 30 shares of our 8% Series D
cumulative convertible preferred stock (the "Series D Preferred Stock"), (2)
warrants to purchase 112,500 shares of common stock, with an exercise price of
$.01 per share, and (3) warrants to purchase 60,000 shares of common stock, with
an exercise price of $1.60 per share, to Vintage. In addition, we agreed to
issue to Vintage, for no additional consideration, additional warrants to
purchase the number of shares of common stock equal to $250,000 (based on the
market price of the common stock on the last trading day prior to June 1, 1999
or July 1, 2000, as the case may be), or pay $250,000 in cash, if we do not (1)
consummate a specified merger transaction by May 30, 1999, or (2) achieve, in
the fiscal quarter commencing July 1, 2000, an aggregate amount of gross
revenues equal to or in excess of 200% of the aggregate amount of gross revenues
we achieved in the fiscal quarter ended December 31, 1998.

The shares of Series D Preferred Stock are convertible, at the holder's
option, into shares of our common stock at any time after April 13, 1999 at a
conversion price, which is subject to adjustment if we issue common stock for
less than the conversion price, equal to the lesser of $1.60 or, if we fail to
have positive EBITDA for at least one of the first three fiscal quarters of 1999
or we fail to complete a public offering of equity securities for a price of at
least $3.00 per share and with gross proceeds to us of at least $20 million on
or before the end of the third fiscal quarter of 1999, the market price just
prior to conversion. The shares of Series D Preferred Stock will automatically
convert into common stock upon the earliest of (1) the first date on which the
market price of the common stock is $5.00 or more per share for any 20
consecutive trading days, (2) the date on which 80% or more of the Series D
Preferred Stock we issued has been converted into common stock, or (3) the date
we close a public offering of equity securities at a price of at least

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$3.00 per share and with gross proceeds to us of at least $20 million.

The shares of Series D Preferred Stock must be redeemed if it ceases to be
convertible, which would happen if the number of shares of common stock issuable
upon conversion of the Series D Preferred Stock exceeded 19.9% of the number of
shares of common stock outstanding when the Series D Preferred Stock was issued,
less shares reserved for issuance under warrants. Redemption is in cash at a
price equal to the liquidation preference of the Series D Preferred Stock at the
holder's option or our option 45 days after the Series D Preferred Stock ceases
to be convertible. If we receive stockholder approval to increase the number of
shares issuable we must issue the full amount of common stock upon conversion of
the Series D Preferred Stock even if the number of shares exceeds the 19.9%
maximum number.

Vintage has agreed to purchase 20 additional shares of Series D Preferred
Stock plus warrants for $2 million upon the registration of the common stock
issuable upon the conversion of the Series D Preferred Stock. At that time we
will issue to Vintage warrants to purchase 75,000 shares of common stock, with
an exercise price of $.01 per share, and warrants to purchase 40,000 shares of
common stock, with an exercise price of $1.60 per share. The terms of the Series
D Preferred Stock and related warrants are discussed in more detail below under
the caption "Description of Capital Stock" and in Note 17 to the Consolidated
Financial Statements.

Series E Preferred Stock. In February 1999, contemporaneously with the
exchange of Mr. Jensen's Series C Preferred Stock for shares of common stock, we
concluded a private placement of $5 million with EXTL Investors. We sold 50
shares of our 8% Series E cumulative convertible redeemable preferred stock (the
"Series E Preferred Stock"), and warrants (the "Series E Warrants") to purchase
(1) 723,000 shares of common stock with an exercise price of $2.125 per share
and (2) 277,000 shares of common stock with an exercise price of $.01 per share
to EXTL Investors.

The shares of the Series E Preferred Stock may be redeemed at a redemption
price equal to the face value plus accrued dividends, in cash or in common
stock, at our option or at the option of any holder, provided that the holder
has not previously exercised the convertibility option described, at any time
following the date that is five years after we issue the Series E Preferred
Stock. The Series E Preferred Stockholder may elect to make the shares of Series
E Preferred Stock convertible into shares of common stock at any time after
issuance. We also may elect to make the shares of Series E Preferred Stock
convertible, but only if (1) we have positive EBITDA for at least one of the
first three fiscal quarters of 1999 or (2) we complete a public offering of
equity securities for a price of at least $3.00 per share and with gross
proceeds to us of at least $20 million on or before the end of the third fiscal
quarter of 1999. On April 9, 1999 in connection with the $20 million financing
discussed below, the Series E Preferred Stock holder exercised the
convertibility option. As a result, the Series E Preferred Stock is no longer
redeemable.

The shares of Series E Preferred Stock will automatically be converted into
shares of our common stock, on the earliest to occur of (1) the first date as of
which the last reported sales price of our common stock on Nasdaq is $5.00 or
more for any 20 consecutive trading days during any period in which Series E
Preferred Stock is outstanding, (2) the date that 80% or more of the Series E
Preferred Stock we have issued has been converted into common stock, or (3) we
complete a public offering of equity securities at a price of at least $3.00 per
share and with gross proceeds to us of at least $20 million. The initial
conversion price for the Series E Preferred Stock is $2.125, subject to
adjustment if we issue common stock for less than the conversion price. The
terms of the Series E Preferred Stock and Series E Warrants are discussed in
more detail below under the caption "Description of Capital Stock" and in Note
17 to the Consolidated Financial Statements.

Telekey Acquisition. On February 12, 1999, we acquired Telekey, a privately
held Georgia corporation. Telekey provides a range of card based
telecommunications services (calling, voice mail, e-mail and others) primarily
to foreign academic travelers

<PAGE>

(teachers and students) visiting the US and Canada. Telekey will operate with
its existing management and personnel in existing facilities in Atlanta,
Georgia.

As a result of the Telekey acquisition, all of the shares of common stock
of Telekey outstanding immediately prior to the effective time of the Telekey
acquisition were converted into, in the aggregate, (a) a base amount of
1,010,000 shares of our Series F convertible preferred stock ("Series F
Preferred Stock") at closing, (b) at least 505,000 and up to 1,010,000 shares of
Series F Preferred Stock two years later (or upon a change of control or certain
events of default if they occur before the end of two years), subject to
Telekey's meeting certain revenue and EBITDA tests, (c) $125,000 in cash at
closing and (d) a promissory note in the original principal amount of $150,000,
payable in equal monthly installments over one year, issued at closing.

The shares of Series F Preferred Stock will automatically convert into
shares of our common stock on the earlier to occur of (1) the first date that
the 15 day average closing sales price of our common stock is equal to or
greater than $4.00 or (2) July 1, 2001. We have "guaranteed" a price of $4.00
per share at December 31, 1999 to recipients of the common stock issuable upon
the conversion of the Series F Preferred Stock, subject to Telekey's achievement
of certain revenue and EBITDA objectives. If the market price is less than $4.00
on December 31, 1999, we will issue additional shares of common stock upon
conversion of the Series F Preferred Stock based on the ratio of $4.00 to the
market price, but not more than an aggregate of 606,000 additional shares of
common stock. The terms of the Series F Preferred Stock are discussed in more
detail below under the caption "Description of Capital Stock."

Debt Placement. On April 9, 1999, we and our wholly owned subsidiary,
eGlobe Financing Corporation, entered into a loan and note purchase agreement
with EXTL Investors (which, together with its affiliates, is our largest
stockholder). eGlobe Financing initially borrowed $7 million from EXTL Investors
and we granted EXTL Investors warrants (1/3 of which are presently exercisable)
to purchase 1,500,000 shares of our common stock at an exercise price of $.01
per share. As a condition to receiving this $7.0 million unsecured loan, we
entered into a subscription agreement with eGlobe Financing under which we have
irrevocably agreed to subscribe for eGlobe Financing stock for an aggregate
subscription price of up to $7.5 million (the amount necessary to repay the loan
and accrued interest).

As part of our loan and note purchase agreement, EXTL Investors agreed to
purchase $20 million of 5% secured notes from eGlobe Financing, upon our
request, provided that we first obtain any required stockholder approval at our
next stockholder meeting. If we issue the 5% secured notes to EXTL Investors, we
must repay the $7 million initial loan. We also must grant EXTL Investors
warrants to purchase 5,000,000 shares of our common stock at an exercise price
of $1.00 per share, although 2/3 of the initial warrants to purchase 1,500,000
shares will expire if we issue the secured notes.

If eGlobe Financing does not issue 5% secured notes for the $20 million
after we obtain stockholder approval (or if we do not obtain approval at our
next annual stockholder meeting), the $7 million loan must be repaid on the
earliest to occur of (1) April 9, 2000, (2) the date that we complete an
offering of debt or equity securities from which we receive net proceeds of at
least $30 million or (3) the occurrence of an event of default. Also, the
remaining 2/3 of the initial warrants to purchase 1,500,000 shares will become
exercisable at that time.

The 5% secured notes, if sold, must be repaid in 36 specified monthly
installments commencing on the first month following issuance, with the
remaining unpaid principal and accrued interest being due in a lump sum with the
last payment. The entire amount becomes due earlier if we complete an offering
of debt or equity securities from which we receive net proceeds of at least $100
million (a "Qualified Offering"). The principal and interest of the 5% secured
notes may be paid in cash. However, up to 50% of the original principal amount
of the 5% secured notes may be paid in our common stock at our option if (1) the
closing price of our common stock on Nasdaq is $8.00 or more for any 15

<PAGE>

consecutive trading days, (2) we close a public offering of our equity
securities at a price of at least $5.00 per share and with gross proceeds to us
of at least $30 million, or (3) we close a Qualified Offering (at a price of at
least $5.00 per share, in the case of an offering of equity securities).

We will use the proceeds of these financings to fund capital expenditures
relating to our network enhancement of IP trunks and intelligent platforms for
calling card and unified messaging services, and for working capital and general
corporate purposes. We intend to use the proceeds of the 5% secured notes also
to repay the $7 million initial loan and approximately $8 million of our senior
indebtedness to IDT Corporation.

If eGlobe Financing issues the 5% secured notes, we will transfer
substantially all of our operating assets to eGlobe Financing so that EXTL
Investors can have a security interest in our assets to secure payment under the
5% secured notes. The security interest would be subject to certain exceptions
for existing debt and vendor financing. We and our operating subsidiaries would
guarantee payment of the secured notes.

EXTL Investors also has agreed, under our loan and note purchase agreement
with them, to make advances to eGlobe Financing from time to time based upon
eligible accounts receivable. These advances may not exceed (1) the lesser of
50% of eligible accounts receivable or (2) the aggregate amount of principal
payments made by eGlobe Financing under the 5% secured notes. We will guarantee
repayment of these advances, which also will be secured by the same security
arrangement as the 5% secured notes.

Our loan and note purchase agreement with EXTL Investors contains several
covenants which we believe are fairly customary, including prohibitions on:

o mergers and sales of substantially all assets;

o sales of material assets other than on an arm's length basis and in
the ordinary course of business;

o encumbering any of our assets (except for certain permitted liens);

o incurring or having outstanding indebtedness other than certain
permitted debt (which includes certain existing debt and future
equipment and facilities financing), or prepaying any subordinated
indebtedness; or

o paying any dividends or distributions on any class of our capital
stock (other than any dividend on outstanding preferred stock or
additional preferred stock issued in the future) or repurchasing any
shares of our capital stock (subject to certain exceptions).

Our loan and note purchase agreement with EXTL Investors contains several
fairly standard events of default, including:

o non-payment of any principal or interest on the $7 million loan or the
5% secured notes, or non- payment of $250,000 or more on any other
indebtedness;

o failure to perform any obligation under the loan and note purchase
agreement or related documents;

o breach of any representation or warranty in the loan and note purchase
agreement;

o inability to pay our debts as they become due, or initiation or
consent to judicial proceedings relating to bankruptcy, insolvency or
reorganization;

o dissolution or winding up, unless approved by EXTL Investors; and

o final judgment ordering payment in excess of $250,000.

Other Potential Acquisitions. We are currently negotiating to acquire,
substantially

<PAGE>

all the assets of two other companies, one of which we intend to acquire by
forming a joint venture between the seller and us. The cash element of the
aggregate purchase prices for these potential acquisitions is approximately $1.0
million plus financial commitments of approximately $1.3 million. In addition,
we will issue preferred stock convertible into between 230,000 and 1.1 million
shares of common stock.

Employees

As of December 31, 1998, we employed two hundred and two (202) employees,
as follows: one hundred and eleven (111) in Denver, Colorado, seven (7) in
Tarrytown, New York, four (4) in Washington, D.C., twenty-seven (27) in Reston,
Virginia, one (1) in Nyon, Switzerland, nine (9) in Silkeborg, Denmark, fourteen
(14) in Hong Kong, twenty-nine (29) in Taipei, Taiwan, one (1) in Brussels,
Belgium, seven (7) in Godalming, United Kingdom and one (1) in Limassol, Cyprus.
See Note 13 to the Consolidated Financial Statements for geographic business
segment information.

Facilities

Our corporate headquarters are located in Washington, D.C. in a leased
facility consisting of approximately 1000 square feet. We also own a facility at
4260 East Evans Avenue, Denver, Colorado, consisting of approximately 14,000 sq.
ft., which we purchased in December 1992. In addition, we lease office space for
sales and operations at the following locations: Tarrytown, New York; Paris,
France; Brussels, Belgium; Nyon, Switzerland; Hong Kong, H.K.; Silkeborg,
Denmark; Godalming, United Kingdom; Washington, D.C.; Reston, Virginia; Atlanta,
Georgia; Taipei, Taiwan; and Limassol, Cyprus. We believe that our existing
facilities are adequate for operations over the next year.

Legal Proceedings

The following information sets forth information relating to material legal
proceedings involving us and certain of our executive officers and directors.
From time to time, we and our executive officers and directors become subject to
litigation which is incidental to and arises in the ordinary course of business.
Other than as set forth herein, there are no material pending legal proceedings
involving us or our executive officers and directors.

CSI Litigation. We are a defendant in an action brought by a Colorado
reseller of transmission services on October 28, 1998. The lawsuit arises out of
a transaction wherein the plaintiff contemplated forming with OS a limited
liability company for purposes of developing sales opportunities generated by
the plaintiff. We were unable to arrive at a definitive agreement on their
arrangement and the plaintiff sued, claiming breach of a noncircumvention
agreement. The parties have agreed in principle, to a settlement, which is being
documented presently. In the event that settlement does not go forward, we are
defending this action and believe that, ultimately, we will prevail.

Robert N. Schuck Litigation. A former officer of eGlobe who was terminated
in the fall of 1997 filed suit against eGlobe in July 1998. The executive
entered into a termination agreement. We made the determination that there were
items which the executive failed to disclose to us and therefore we ceased
making payments to the executive pending further investigation. The executive
sued, claiming employment benefits including expenses, vacation pay and rights
to options. The parties have agreed in principle to a settlement which is being
documented presently. In the event that settlement does not go forward, we are
defending this action and believe that, ultimately, we will prevail.

<PAGE>

MANAGEMENT

Shown below are the names of all directors and executive officers of
eGlobe, all positions and offices held by each such person, the period during
which each person has served as such, and the principal occupations and
employment of each such person during the last five years:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Christopher J. Vizas..... 49 Chairman of the Board and Chief Executive Officer and Director
Edward J. Gerrity........ 75 Non-Executive Director
Anthony Balinger......... 45 Senior Vice President and Vice Chairman of the Board and Director
David W. Warnes.......... 52 Non-Executive Director
Richard A. Krinsley...... 68 Non-Executive Director
James O. Howard.......... 56 Non-Executive Director
Martin Samuels........... 55 Non-Executive Director
Donald H. Sledge......... 58 Non-Executive Director
John E. Koonce........... 56 Chief Financial Officer and Director
Hsin Yen................. 40 Non-Executive Director
Richard Chiang........... 43 Non-Executive Director
Allen Mandel............. 60 Senior Vice President
Colin Smith.............. 55 Vice President and General Counsel
Anne Haas................ 48 Vice President, Controller and Treasurer
John H. Wall ............ 33 Nominee Director
</TABLE>

Directors and Executive Officers

CHRISTOPHER J. VIZAS, age 49, has been a Director of eGlobe since October
25, 1997 and the Chairman of the Board of Directors since November 10, 1997. Mr.
Vizas served as eGlobe's acting Chief Executive Officer from November 10, 1997
to December 5, 1997, on which date he became eGlobe's Chief Executive Officer.
Before joining eGlobe, Mr. Vizas was a co-founder of, and since October 1995,
served as Chief Executive Officer of Quo Vadis International, an investment and
financial advisory firm. Before forming Quo Vadis International, he was Chief
Executive Officer of Millennium Capital Development, a merchant banking firm,
and of its predecessor Kouri Telecommunications & Technology. Before joining
Kouri, Mr. Vizas shared in the founding and development of a series of
technology companies, including Orion Network Systems, Inc. of which he was a
founder and a principal executive. From April 1987 to 1992, Mr. Vizas served as
Vice Chairman of Orion, an international satellite communications company, and
served as a Director from 1982 until 1992. Mr. Vizas has also held various
positions in the United States government.

EDWARD J. GERRITY, JR., age 75, has been a Director of eGlobe since our
inception. He is a business consultant and President of Ned Gerrity &
Associates, a consulting firm, begun in 1985. Mr. Gerrity has also served as
Chairman of our Board of Directors. Mr. Gerrity served as an officer of ITT
Corp. from 1961 to 1985. While at ITT Corp., he was a member of the Management
Policy Committee, Director of Corporate and Government Relations on a worldwide
basis and a Director of several ITT Corp. subsidiaries. He retired from ITT
Corp. in February 1985. Mr. Gerrity was the President of American National
Collection Corp., a New York corporation, from 1993 to 1995 and he was a
director of Residual Corporation from 1987 until October 1994. See "Certain
Relationships and Related Transactions" below.

ANTHONY BALINGER, age 45, has been a Director of eGlobe since March 15,
1995. He served as eGlobe's President from April 25, 1995 to November 10, 1997
and also served as eGlobe's Chief Executive Officer from January 3, 1997 to
November 10, 1997. On November 10, 1997, he was appointed Senior Vice President
and Vice Chairman of eGlobe. Mr. Balinger has held a variety of positions at

41
<PAGE>

eGlobe since his arrival in September 1993, including Chief Operating Officer
and Director of eGlobe's Asia-Pacific Operations. Mr. Balinger started his
career in 1971 with British Telecom as a digital systems design engineer. In
1983, he joined the Cable and Wireless Federation, an international alliance of
companies that provide telephone, cable and wireless operations in over 50
countries, where he performed much of the early design work for the Mercury
Communications Optical Fiber National Digital Network. In 1989, Mr. Balinger
moved to New York where he headed the Banking and Finance division for Cable and
Wireless Americas, Inc. from 1989 to 1992. In 1992, while still at Cable and
Wireless, Mr. Balinger was appointed International Product Manager for Optus
Communications, where he remained until he joined the Company. Mr. Balinger is a
Director and 45% stockholder of Executive Card Services HK Ltd., which provides
printing services to an affiliate of eGlobe in Hong Kong.

DAVID W. WARNES, age 52, has been a Director of eGlobe since June 30, 1995.
Mr. Warnes has been the Chief Operating Officer of Global Light
Telecommunications Inc. since September 1997 and a Director since June 1997. He
has been the President and Chief Executive Officer of Vitacom, a subsidiary of
Highpoint, since December 1995, and President and CEO of Highpoint since April
1998. Previously, Mr. Warnes held various senior management and executive
positions with Cable and Wireless or its affiliated companies for two decades.
From October 1992 through October 1995, he was Vice President, Operations and
Chief Operating Officer, and from August 1994 through October 1995, he was
Assistant Managing Director of Tele 2, a telecommunications service provider in
Sweden partially owned Cable and Wireless. From August 1988 through June 1992,
he was a principal consultant and General Manager, Business Development of IDC,
an international telecommunications service provider based in Japan and
partially owned by Cable and Wireless. Mr. Warnes is a Chartered Engineer, a
Fellow of the Institution of Electrical Engineers, and a graduate of the
University of East London.

RICHARD A. KRINSLEY, age 68, has been a Director of eGlobe since June 30,
1995. Mr. Krinsley retired in 1991 as the Executive Vice President and Publisher
of Scholastic Corporation; a publicly held company traded on the Nasdaq Stock
Market. He is presently, and has been since 1991, a member of Scholastic's Board
of Directors. While employed by Scholastic between 1983 and 1991, Mr. Krinsley,
among many other duties, served on that company's management committee. From
1961 to 1983, Mr. Krinsley was employed by Random House where he held, among
other positions, the post of Executive Vice President. At Random House, Mr.
Krinsley also served on that company's executive committee.

JAMES O. HOWARD, age 56, has been a Director of eGlobe since January 16,
1998. Since 1990, Mr. Howard has served as the Chief Financial Officer and a
member of the management committee of Benton International, Inc., a wholly owned
subsidiary of Perot Systems Corporation. From 1981 to 1990, Mr. Howard was
employed by Benton International, Inc. as a consultant and sector manager.
Before joining Benton International, Inc., Mr. Howard held a number of legal
positions in the federal government, including General Counsel of the National
Commission on Electronic Fund Transfers.

MARTIN SAMUELS, age 55, has been a Director of eGlobe since October 25,
1997. Mr. Samuels is an entrepreneur, strategic business planner and
professional investor with over twenty years of experience. Mr. Samuels' current
project is Y2K Strategies Corp. ("YSC"), a liaison company that Mr. Samuels
co-founded in 1997. Mr. Samuels is a principal, director and senior vice
president of YSC. Mr. Samuels' responsibilities at YSC include identifying,
negotiating with and contracting with the Year 2000 service providers and
systems integrators that YSC assists with their marketing, proposal development
and ongoing business relationship management. YSC also works with significant
public and private sector institutions in identifying, coordinating and
fulfilling their Year 2000 remediation requirements.

42
<PAGE>

DONALD H. SLEDGE, age 58 has been a Director of eGlobe since November 10,
1997. Mr. Sledge has served as vice chairman, President and Chief Executive
Officer of TeleHub Communications Corp., a privately held technology development
company, since 1996. Mr. Sledge served as President and Chief Operating Officer
of West Coast Telecommunications, Inc., a long distance company, from 1994 to
1995. From 1993 to 1994, Mr. Sledge was employed by New T&T, a Hong Kong-based
company, as head of operations. Mr. Sledge was Chairman and Chief Executive
Officer of Telecom New Zealand International from 1991 to 1993 and the Managing
Director of Telecom New Zealand International's largest local carrier from 1988
to 1991. Mr. Sledge is currently Chairman of the Board of United Digital
Network, a small interexchange carrier that operates primarily in Texas,
Oklahoma, Arizona and California. Mr. Sledge is a member of the Board of
Advisors of DataProse and serves as a director of AirCell Communications, Inc.
He also serves as advisor and board member to several small technology-based
start-up companies.

JOHN E. KOONCE, age 56, has been a Director of eGlobe since March 27, 1998.
In April 1998, Mr. Koonce was also engaged to serve as a financial advisor to
eGlobe and effective September 1, 1998 became the Company's Chief Financial
Officer. Mr. Koonce served as Chief Financial Officer of Orion from 1990 to
1993. During 1981-89, Mr. Koonce was employed by Biotech Capital Corporation and
its successor, Infotechnology, Inc. where he served in the positions of Chief
Financial Officer and President. During this time, he also served on the boards
of several public and private companies. Before 1981, Mr. Koonce worked for the
accounting firm Price Waterhouse at various domestic and foreign offices.

HSIN YEN, age 40, has been a Director of eGlobe since December 2, 1998. Mr.
Yen is the President and a founder of IDX and has served as the primary
architect of its growth. Before founding IDX, he served as founder and CEO of
InteliSys, Inc., the predecessor of IDX. Mr. Yen has had a 15-year career in
management information systems, including complex Internet/intranet global
network development.

RICHARD CHIANG, age 43, has been a Director of eGlobe since December 2,
1998. Mr. Chiang has been the Chairman and President of Princeton Technology,
Corp. since 1986 and Chairman since 1996. He has been on the Board of Directors
of Taitron Companies, Inc. and Buslogic, Inc. since 1989 and Alliance Venture
Capital Corp. since 1996. Mr. Chiang served as Chairman for IDX International,
Inc. from 1997 to 1998. Mr. Chiang currently sits on the Board of Proware
Technology, Corp. which is a RAID subsystem business and as a Chairman at
Advanced Communication Devices, Corp. whose primary business is Networking
Switch Controller Chips. He has served with these two companies since 1996.

ALLEN MANDEL, age 60, was named Senior Vice President in 1991 and a
Director of eGlobe in 1990. He resigned from the Board of Directors on March 29,
1995 and as Senior Vice President on August 18, 1995 in connection with the then
ongoing proxy contest. Mr. Mandel was engaged to serve as a consultant to eGlobe
concerning accounting and financial matters on August 18, 1995 and was renamed
an officer of eGlobe on September 27, 1995, when he became Executive Vice
President - Finance and Administration and Chief Financial Officer, in which
posts he served until December 1997. Mr. Mandel currently serves as Senior Vice
President, Corporate Affairs of eGlobe. Mr. Mandel is a Certified Public
Accountant. He was an officer of Residual Corporation from 1991 to March 1995.

COLIN SMITH, age 55, was named Vice President of Legal Affairs and General
Counsel of eGlobe on February 1, 1998. From 1972 to February 1998, Mr. Smith was
a professor of law at the New England School of Law. Mr. Smith's areas of legal
expertise include business organizations, dispute resolution and practice
management. In addition to his teaching, Mr. Smith also ran a private consulting
practice that specialized in issues of corporate governance and entrepreneurial
ventures.

ANNE HAAS, age 48, was appointed Vice President, Controller and Treasurer
of

<PAGE>

eGlobe on October 21, 1997. Ms. Haas served as the Vice President of Finance of
Centennial Communications Corp., a start-up multi-national two way radio
company, during 1996-97. From 1992 to 1996, Ms. Haas served as Controller of
Quark, Inc., a multi-national desk top publishing software company. Before 1992,
Ms. Haas worked for the accounting firm of Price Waterhouse in San Jose,
California and Denver, Colorado.

Director Nominee

JOHN H. WALL, age 33, a nominee for Director of the Company, has been the
Vice President and Chief Technology Officer for Insurdata Incorporated, a
healthcare technology solutions and services provider, since March 3, 1998.
Prior to joining Insurdata, Mr. Wall served as Chief Technical Officer for BT
Systems Integrators, a provider of imaging and information management solutions
from 1996 to 1998. Mr. Wall also was employed as an engineer and technical
analyst by Georgia Pacific and Dana Corporation from 1995 to 1996 and 1988 to
1995, respectively.

Directors are elected annually and hold office until the next annual
meeting of stockholders and until their successors are elected and qualified.
Executive Officers serve at the pleasure of the Board or until the next annual
meeting of stockholders.

There are no family relationships between eGlobe's Directors and Executive
Officers.

44
<PAGE>

EXECUTIVE COMPENSATION

The following table summarizes the compensation for the three most recent
fiscal periods ended December 31, 1998, March 31, 1998 and March 31, 1997 of our
Chief Executive Officer and the most highly compensated other executive officers
whose total annual salary and bonus exceed $100,000 (the "Named Executive
Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------------- ----------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING
NAME AND PRINCIPAL COMPEN- STOCK OPTIONS/
POSITION YEAR SALARY ($) BONUS ($) SATION ($) AWARDS ($) SARS
- ------------------------- ----------- --------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Christopher J. Vizas *1998 153,847 0 0 0 110,000
Chairman and Chief 1998 62,308 0 0 0 520,000
Executive Officer (1) 1997 0 0 0 0 0

W.P. Colin Smith *1998 91,539 25,000 0 0 25,000
Vice President 1998 11,538 0 0 0 0
Legal Affairs (2) 1997 0 0 0 0 100,000

Anthony Balinger *1998 103,846 0 9,600 0 45,000
Senior Vice President 1998 150,000 0 0 7,875 84,310
and Vice Chairman (3) 1997 109,612 8,000 28,500 0 50,000

</TABLE>

- --------------
* Nine month period ended December 31, 1998

(1) Mr. Vizas has served as our Chief Executive Officer since December 5, 1997.
From November 10, 1997 to December 5, 1997, Mr. Vizas served as our acting
Chief Executive Officer. Mr. Vizas' employment agreement provides for a
base salary of $200,000, performance based bonuses of up to 50% of base
salary and options to purchase up to 500,000 shares, subject to various
performance criteria. See "Employment Agreements and Termination of
Employment and Change in Control Arrangements."

(2) Mr. Smith has served as our Vice President of Legal Affairs since February
1, 1998. Mr. Smith's employment agreement provides for a base salary of
$135,000, performance based bonuses of up $50,000 and options to purchase
up to 100,000 shares, subject to various performance criteria. See
"Employment Agreements and Termination of Employment and Change in Control
Arrangements."

(3) Mr. Balinger served as our President from April 1995 until November 10,
1997. Mr. Balinger served as Chief Executive Officer from January 3, 1997
through November 10, 1997. Mr. Balinger has served as our Senior Vice
President and Vice Chairman since November 6, 1997. Amounts shown as Other
Annual Compensation consist of an annual housing allowance paid to Mr.
Balinger while he resided in the United States and while he resides in Hong
Kong. See "Employment Agreement and Termination of Employment and Change of
Control Agreements."

45
<PAGE>

Option/SAR Grants in Last Fiscal Period

The following table sets forth the information concerning individual grants
of stock options and stock appreciation rights ("SARs") during the last periods
to each of the Named Executive Officers during such periods. All of the options
granted in the nine month period ended December 31, 1998 to the Named Executive
Officers have a five year term. A total of 947,500 options were granted to our
employees in the nine month period ended December 31, 1998 under eGlobe's 1995
Employee Stock Option and Appreciation Rights Plan (the "Employee Stock Option
Plan").

OPTION/SAR GRANTS IN LAST FISCAL PERIODS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- ------------------------------------------------------------------------------------- ------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL PERIOD ($/SH) DATE 5% ($) 10% (%)
- -------------------------- ------------------ ---------------- -------------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Christopher J. Vizas 10,000 1.06% $3.18 04/01/03 $ 8,808 $19,463
100,000 10.55% $1.57 12/27/03 $ 0 $ 0

W.P. Colin Smith 25,000 2.64% $1.57 12/27/03 $ 0 $ 0

Anthony Balinger 10,000 1.06% $3.18 04/01/03 $ 8,808 $19,463
10,000 1.06% $3.68 04/16/03 $ 10,269 $22,596
25,000 2.64% $1.57 12/27/03 $ 0 $ 0
</TABLE>

<PAGE>

The following table sets forth information concerning each exercise of
stock options during the last fiscal period by each of the Named Executive
Officers during such fiscal period and the fiscal period end value of
unexercised options.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL PERIOD AND FISCAL PERIOD-END
OPTION/SAR VALUES

<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs at Options/SARs at
FP-End FP'End ($)
Name Shares Acquired
on Exercise (1) Exercisable/ Exercisable/
Value Realized (2) Unexercisable Unexercisable
- -------------------------------- ----------------- ---------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Christopher J. Vizas 0 0 110,000/- $ (10,050)/-
W.P. Colin Smith 0 0 25,000/- $ 1,375/-
Anthony Balinger 0 0 45,000/- $ (34,725)/-
</TABLE>

- ----------
(1) Represents the aggregate number of stock options held as of December 31,
1998, including those which can and those which cannot be exercised
pursuant to the terms and provisions of eGlobe's current stock option
plans.

(2) Values were calculated by multiplying the closing transaction price of the
common stock as reported on the Nasdaq National Market on December 31, 1998
of $1.625 by the respective number of shares of common stock and
subtracting the exercise price per share, without any adjustment for any
termination or vesting contingencies.

COMPENSATION OF DIRECTORS

Effective November 10, 1997, and contingent upon eGlobe experiencing a
fiscal quarter of profitability, members of the Board receive a Director's fee
of $500 for each regular meeting and committee meeting attended. Our directors
are also reimbursed for expenses incurred in connection with attendance at Board
meetings.

During the fiscal periods ended 1995, 1996 and 1997, under eGlobe's 1995
Directors Stock Option and Appreciation Rights Plan which then provided for
automatic annual grants, each Director received an annual grant of ten year
options to purchase 10,000 shares at an exercise price equal to the fair market
value of our common stock on the date of grant. Commencing with the amendments
to the Directors Stock Option Plan which were approved by our stockholders at
the 1997 annual meeting held on February 26, 1998, options to directors may be
made at the discretion of the Board of Directors or Compensation Committee and
there are no automatic grants.

On June 18, 1998, Mr. Sledge and Mr. Warnes were granted options to
purchase 15,000 shares of common stock at $2.719 per share, the fair market
value on the date of the grant, which vested on the date of grant and has a term
of five years. On December 16, 1998, each of Messrs. Gerrity, Warnes, Krinsley,
Sledge, Samuels and Howard received an option to purchase 25,000 shares of
common stock at $1.813 per share, the fair

<PAGE>

market value on the date of the grant, which vested on the grant date and has a
term of five years. On December 27, 1998, options to purchase 10,000 shares of
common stock that were granted on November 10, 1997 to each of Messrs. Gerrity,
Warnes, Krinsley, Balinger, Samuels, and Sledge expired. On December 31, 1998,
options to purchase 10,000 shares of common stock that were granted on April 1,
1998 to each of Messrs. Gerrity, Warnes, Krinsley, Sledge, Samuels and Howard
expired. Both groups of the expired options noted above vested only upon the
achievement of certain corporate economic and financial goals which were not
achieved.

On April 16, 1998, Mr. Balinger was granted options to purchase an
aggregate of 10,000 shares of common stock. Such options have a term of five
years and vest in three equal annual installments, beginning on April 16, 1999,
at an exercise price per share equal to $3.68, the fair market value on the date
of the grant. These options vest only upon the achievement of certain
performance goals to be set by the Chief Executive Officer.

On December 27, 1998, Mr. Vizas was granted bonus options to purchase an
aggregate of 50,000 shares of common stock. Such options have a term of five
years and vest in ninety days from the grant date, at an exercise price per
share equal to $1.57, the fair market value on the date of the grant. In
addition, Mr. Vizas was granted options on December 27, 1998 to purchase an
aggregate of 50,000 shares of common stock at $1.57 per share, the fair market
value on the date of the grant. Such options have a term of five years and vest
in three equal annual installments, beginning on December 27, 1999. These
options vest only upon the achievement of certain performance goals to be set by
the Board. On December 5, 1998, options to purchase 100,000 shares of common
stock that were granted on December 5, 1997 to Mr. Vizas expired. These options
vested only upon the achievement of certain performance goals which were not
achieved.

On December 27, 1998, Mr. Balinger was granted bonus options to purchase an
aggregate of 10,000 shares of common stock. Such options have a term of five
years and vest in ninety days from the grant date, at an exercise price per
share equal to $1.57, the fair market value on the date of the grant. In
addition, Mr. Balinger was granted options on December 27, 1998 to purchase an
aggregate of 15,000 shares of common stock at $1.57 per share, the fair market
value on the date of the grant. Such options have a term of five years and vest
in three equal annual installments, beginning on December 27, 1999. These
options vest only upon the achievement of certain performance goals to be set by
the Chief Executive Officer.

EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS

Effective December 5, 1997, we entered into a three year employment
agreement with Christopher J. Vizas, our Chief Executive Officer. Mr. Vizas'
employment agreement provides for a minimum salary of $200,000 per annum,
reimbursement of certain expenses, annual bonuses based on financial performance
targets to be adopted by eGlobe and Mr. Vizas, and the grant of options to
purchase an aggregate of 500,000 shares of common stock. The options granted to
Mr. Vizas pursuant to his employment agreement are comprised of:

o options to purchase 50,000 shares of common stock at an exercise price
of $2.32 which vested upon their grant;

o options to purchase 50,000 shares of common stock at an exercise price
of $2.32 which vested on December 5, 1998;

o options to purchase up to 100,000 shares of common stock at an
exercise price of $2.32 which vested on December 5, 1998, but which
expired due to eGlobe's failure to achieve certain financial
performance targets;

o options to purchase 50,000 shares at an exercise price of $3.50 which
vest on December 5, 1999 (contingent upon Mr. Vizas' continued
employment as of such date);

<PAGE>

o options to purchase up to 100,000 shares of common stock at an
exercise price of $3.50 which vest on December 5, 1999 (contingent
upon Mr. Vizas' continued employment as of such date and the
attainment of certain financial performance targets);

o options to purchase 50,000 shares at an exercise price of $4.50 which
vest on December 5, 2000 (contingent upon Mr. Vizas' continued
employment as of such date);

o and options to purchase up to 100,000 shares of common stock at an
exercise price of $4.50 which vest on December 5, 2000 (contingent
upon Mr. Vizas' continued employment as of such date and the
attainment of certain financial performance targets).

Each option has a term of five years.

Mr. Vizas' employment agreement provides that, if eGlobe terminates Mr.
Vizas' employment other than for "cause," Mr. Vizas shall continue to receive,
for one year commencing on the date of such termination, his full base salary,
any bonus that is earned after the termination of employment, and all other
benefits and compensation that Mr. Vizas would have been entitled to under his
employment agreement in the absence of termination of employment (the "Vizas
Severance Amount"). Mr. Vizas may be terminated for cause if he engages in any
personal dishonesty, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule, or regulation (other than traffic violations or similar
offenses), or material breach of any provision of his employment agreement.

If there is an early termination of Mr. Vizas' employment following a
"change of control," Mr. Vizas would be entitled to a lump cash payment equal to
the Vizas Severance Amount. Additionally, if during the term of Mr. Vizas'
employment agreement there is a "change in control" of eGlobe and in connection
with or within two years after such change of control eGlobe terminates Mr.
Vizas' employment other than "termination for cause," all of the options
described above will vest in full to the extent and at such time that such
options would have vested if Mr. Vizas had remained employed for the remainder
of the term of his employment agreement. A "change of control" means if (1) any
person becomes the beneficial owner of 20% or more of the total number of voting
shares of eGlobe; (2) any person becomes the beneficial owner of 10% or more,
but less than 20%, of the total number of voting shares of eGlobe, if the Board
of Directors makes a determination that such beneficial ownership constitutes or
will constitute control of eGlobe; or (3) as the result of any business
combination, the persons who were directors of eGlobe before such transaction
shall cease to constitute at least two-thirds of the Board of Directors.

On September 22, 1997, we entered into a new three year employment
agreement with Anthony Balinger. Pursuant to his new employment agreement, Mr.
Balinger served as eGlobe's President and Chief Executive Officer until November
10, 1997 when he resigned that position and was appointed Senior Vice President
and Vice Chairman of eGlobe. Mr. Balinger's employment agreement provides for a
minimum salary of $150,000 per annum, reimbursement of certain expenses, a
$1,600 per month housing allowance, and payment for health, dental and
disability insurance and various other benefits. Mr. Balinger's employment
agreement also provides for payment of one year severance pay paid out over
time, relocation to the Philippines, buy-out of his auto lease and a 90 day
exercise period for his vested options after termination if eGlobe terminates
Mr. Balinger without "cause." "Cause" means any criminal conviction for an
offense by Mr. Balinger involving dishonesty or moral turpitude, any
misappropriation of Company funds or property or a willful disregard of any
directive of eGlobe's Board of Directors. This employment agreement superseded a
prior employment agreement.

On February 1, 1998, we entered into an employment agreement with W. P.
Colin Smith pursuant to which Mr. Smith agreed to serve as Vice President of
Legal Affairs and General Counsel of the Company through December 31, 2000. Mr.
Smith's employment

<PAGE>

agreement provides for a minimum salary of $125,000 per annum, reimbursement of
certain expenses, annual and quarterly bonuses based on financial performance
targets to be adopted by the Chairman and Chief Executive and Mr. Smith, and the
grant of options to purchase an aggregate of 100,000 shares of common stock. The
options granted to Mr. Smith pursuant to his employment agreement are comprised
of options to purchase 33,333 shares of common stock at an exercise price of
$3.125 which vested on February 1, 1999 but which expired due to eGlobe's
failure to achieve certain financial performance targets, 33,333 shares of
common stock at an exercise price of $3.125 which will vest on February 1, 2000
(contingent upon Mr. Smith's continued employment as of such date and the
attainment of certain financial performance targets) and 33,334 shares of common
stock at an exercise price of $3.125 which will vest on February 1, 2001
(contingent upon Mr. Smith's continued employment as of such date and the
attainment of certain financial performance targets). Each of the options have a
term of five years. Vesting of all options will accelerate in the event that the
current Chairman and Chief Executive Officer (Christopher J. Vizas) ceases to be
the Chief Executive Officer of the Company and Mr. Smith's employment terminates
or reasonable advance notice of such termination is given.

Mr. Smith's employment agreement provides that, if eGlobe terminates Mr.
Smith's employment other than "for cause" or after a material breach of the
employment agreement by eGlobe, Mr. Smith shall continue to receive, for six
months (in all cases thereafter) commencing on the date of such termination, his
full base salary, any annual or quarterly bonus that has been earned before
termination of employment or is earned after the termination of employment
(where Mr. Smith met the applicable performance goals prior to termination and
eGlobe meets the applicable corporate performance goals after termination), and
all other benefits and compensation that Mr. Smith would have been entitled to
under his employment agreement in the absence of termination of employment (the
"Smith Severance Amount"). Mr. Smith may be "terminated for cause" if he has
engaged in termination by eGlobe because of Mr. Smith's (1) fraud or material
misappropriation with respect to eGlobe's business or assets; (2) persistent
refusal or willful failure materially to perform his duties and responsibilities
to eGlobe which continues after Mr. Smith receives notice of such refusal or
failure; (3) conduct that constitutes disloyalty to eGlobe and which materially
harms eGlobe or conduct that constitutes breach of fiduciary duty involving
personal profit; (4) conviction of a felony or crime, or willful violation of
any law, rule, or regulation, involving moral turpitude; (5) the use of drugs or
alcohol which interferes materially with Mr. Smith's performance of his duties;
or (6) material breach of any provision of his employment agreement.

If, during the term of Mr. Smith's employment agreement, there is a "change
in control" of eGlobe and in connection with or within two years after such
change of control eGlobe terminates Mr. Smith's employment other than
"termination for cause" or Mr. Smith terminates with good reason, eGlobe shall
be obligated, concurrently with such termination, to pay the Smith Severance
Amount in a single lump sum cash payment to Mr. Smith. A "change of control"
occurs if (1) any person becomes the beneficial owner of 35% or more of the
total number of voting shares of eGlobe, (2) eGlobe sells substantially all of
its assets, (3) eGlobe merges or combines with another company and immediately
following such transaction the persons and entities who were stockholders of
eGlobe before the merger own less than 50% of the stock of the merged or
combined entity, or (4) the current Chairman and Chief Executive Officer
(Christopher J. Vizas) ceases to be the Chief Executive Officer of the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. Vizas, our Chief Executive Officer, serves as a member of the
Compensation Committee of the Board of Directors. Although Mr. Vizas makes
recommendations to the Compensation Committee of the Board of Directors with
regard to the other executive officers, including Named Executive Officers, he
did not participate in the Compensation Committee's deliberations with respect
to his own compensation.

<PAGE>

THE 1995 EMPLOYEE STOCK OPTION AND APPRECIATION RIGHTS PLAN

The Compensation Committee of our Board of Directors administers the 1995
Employee Stock Option Plan and may grant stock options and stock appreciation
rights to our employees, advisors and consultants.

Incentive stock options granted under the Employee Plan are intended to
qualify as incentive stock options under Section 422 of the Internal Revenue
Code, unless they exceed certain limitations or are specifically designated
otherwise, and, accordingly, may be granted to our employees only. All other
options granted under the Employee Plan are nonqualified stock options, meaning
an option not intended to qualify as an incentive stock option or an incentive
stock option which is converted into a nonqualified stock option under the terms
of the Employee Plan.

The option exercise price for incentive stock options granted under the
Employee Plan may not be less than 100% of the fair market value of our common
stock on the date of grant of the option (or 110% in the case of an incentive
stock option granted to an optionee beneficially owning more than 10% of our
common stock). For nonqualified stock options, the option price shall be equal
to the fair market value of our common stock on the date the option is granted.
The maximum option term is 10 years (or five years in the case of an incentive
stock option granted to an optionee beneficially owning more than 10% of the
outstanding common stock) and the options vest over periods determined by the
Compensation Committee.

The Compensation Committee has decided not to grant any more tandem stock
appreciation rights with stock options. However, the Compensation Committee may
award freestanding stock appreciation rights.

The maximum number of shares of common stock that may be issued upon
exercise of stock options and stock appreciation rights granted under the
Employee Plan is 1,750,000 shares. The Employee Plan will terminate on December
14, 2005, unless terminated earlier by our Board of Directors.

THE DIRECTORS STOCK OPTION AND APPRECIATION RIGHTS PLAN

The Directors Stock Option and Appreciation Rights Plan is administered by
our Compensation Committee. Stock options and stock appreciation rights may be
granted under the Director Plan to members of our Board of Directors (including
Directors who are employees). Options granted under the Director Plan that are
incentive stock options within the meaning of Section 422 of the Code may be
granted only to Directors who are our employees. Directors who are not employees
may be granted only nonqualified stock options. Subject to the Director Plan, no
Director who is an employee may be granted options to purchase more than 300,000
shares of common stock in any two year period under the Director Plan.

Effective November 10, 1997, each Director who continued to serve on the
Board after subsequent stockholder meetings (other than members of the
Compensation Committee) was granted two options under the Director Plan, to
purchase 10,000 shares of common stock under each option. The options are
effective for five-year terms commencing on April 1, 1998 and 1999,
respectively. Each option vests only upon the achievement of certain corporate
economic and financial goals set by the Board. As of December 31, 1998, these
options expired because we failed to achieve certain corporate economic and
financial goals.

Options granted under the Director Plan expire ten (10) years from the date
of grant, or in the case of incentive stock options granted to Directors who are
employees holding more than 10% of the total combined voting power of all
classes of our stock, five (5) years from the date of grant. Most new grants
(since November 1997) have been for five year terms, and we expect this practice
to continue. However, upon a change of control of eGlobe as defined in the
Director Plan, all options will become fully exercisable.

Unless terminated earlier by the Compensation Committee, the Director Plan
will terminate on December 14, 2005.

<PAGE>

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth the number and percentage of shares of
eGlobe's common stock owned beneficially, as of April 15, 1999, by each Director
(including Mr. Wall, a nominee to become a Director) and executive officer of
eGlobe, and by all directors and executive officers of eGlobe as a group.
Information as to beneficial ownership is based upon statements furnished to us
by such persons. Unless otherwise indicated, the address of each of the named
individuals is c/o Executive TeleCard, Ltd., 2000 Pennsylvania Avenue, N.W.,
Suite 4800, Washington, DC 20006.

NUMBER OF SHARES PERCENT OF
NAME OF OWNED BENEFICIALLY COMMON STOCK
BENEFICIAL OWNER (1) OUTSTANDING (2)
---------------- --- ---------------

Christopher J. Vizas (3) 220,000 1.02%
Edward J. Gerrity, Jr. (4) 117,150 *
Anthony Balinger (5) 98,664 *
David W. Warnes (6) 71,000 *
Richard A. Krinsley (7) 120,182 *
Martin L. Samuels (8) 97,000 *
Donald H. Sledge (9) 70,000 *
James O. Howard (10) 45,000 *
John E. Koonce (11) 98,525 *
Hsin Yen (12) 71,397 *
Richard Chiang (13) 404,148 1.86%
Allen Mandel (14) 79,688 *
Colin Smith (15) 11,333 *
Anne Haas (16) 15,617 *
John H. Wall 0 *
All Named Executive Officers and 1,519,704 6.59%
Directors as a Group
(14 persons) (17)

- ----------
* Less than 1%

(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be a "beneficial owner" of a security if he or she has or shares the power
to vote or direct the voting of such security or the power to dispose or
direct the disposition of such security. A person is also deemed to be a
beneficial owner of any securities of which that person has the right to
acquire beneficial ownership within 60 days from April 15, 1999. More than
one person may be deemed to be a beneficial owner of the same securities.
All persons shown in the table above have sole voting and investment power,
except as otherwise indicated. This table includes shares of common stock
subject to outstanding options granted pursuant to eGlobe's option plans.

(2) For the purpose of computing the percentage ownership of each beneficial
owner, any securities which were not outstanding but which were subject to
options, warrants, rights or conversion privileges held by such beneficial
owner exercisable within 60 days were deemed to be outstanding in
determining the

<PAGE>

percentage owned by such person, but were deemed not to be outstanding in
determining the percentage owned by any other person.

(3) Includes options to purchase 180,000 shares of common stock exercisable
within 60 days from April 15, 1999. Does not include options to purchase
350,000 shares of common stock which are not exercisable within such
period.

(4) Includes 1,100 shares held by Mr. Gerrity as a trustee and options to
purchase 106,050 shares of common stock exercisable within 60 days from
April 15, 1999. Does not include options to purchase 1,331 shares of common
stock which are not exercisable within such period.

(5) Includes options to purchase 97,664 shares of common stock exercisable
within 60 days from April 15, 1999. Does not include options to purchase
21,667 shares of common stock which are not exercisable within such period.

(6) Consists solely of options to purchase common stock exercisable within 60
days from April 15, 1999.

(7) Includes options to purchase 56,000 shares of common stock exercisable
within 60 days from April 15, 1999.

(8) Includes options to purchase 40,000 shares of common stock exercisable
within 60 days from April 15, 1999.

(9) Consists solely of options to purchase common stock exercisable within 60
days from April 15, 1999.

(10) Consists solely of options to purchase common stock exercisable within 60
days from April 15, 1999.

(11) Consists solely of options to purchase common stock exercisable within 60
days from April 15, 1999. Does not include options to purchase 75,000
shares of common stock which are not exercisable within such period.

(12) Includes (1) 57,696 shares of common stock issuable within 60 days from
April 15, 1999 upon the conversion of the Series B Convertible Preferred
Stock and (2) warrants to purchase 1,246 shares of common stock owned by
HILK International, Inc. of which Mr. Yen is the sole stockholder. Does not
include warrants owned by HILK International, Inc. to purchase 72,120
shares of common stock not exercisable within such period.

(13) Includes (1) 395,608 shares of common stock issuable within 60 days from
April 15, 1999 upon the conversion of the Series B Convertible Preferred
Stock and (2) warrants to purchase 8,540 shares of common stock owned by
Tenrich Holdings Ltd., of which Mr. Chiang is the sole stockholder. Does
not include warrants owned by Tenrich Holdings Ltd. to purchase 494,510
shares of common stock not exercisable within such period.

(14) Includes options to purchase 71,778 shares of common stock exercisable
within 60 days from April 15, 1999. Does not include options to purchase
45,898 shares of common stock which are not exercisable within such period.

(15) Consists solely of options to purchase common stock exercisable within 60
days from April 15, 1999. Does not include options to purchase 80,334
shares of common stock not exercisable within 60 days from April 15, 1998.

(16) Consists solely of options to purchase common stock exercisable within 60
days from April 15, 1999. Does not include options to purchase 21,666
shares of common stock which are not exercisable within such period.

(17) Includes (1) options to purchase 862,967 shares of common stock exercisable
within 60 days from April 15, 1999, (2) 865,000 shares of common stock
issuable upon conversion of the Series B Convertible Preferred Stock within
60 days from April 15, 1999 and (3) warrants to purchase 9,786 shares of
common stock exercisable within 60 days from April 15, 1999. Does not
include (1) options to purchase 595,896 shares of common stock or (2)
warrants to purchase 566,630 shares of common stock not exercisable within
such period.

<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth the number and percentage of shares of our
common stock owned beneficially, as of April 15, 1999, by any person who is
known to us to be the beneficial owner of 5% or more of our common stock.
Information as to beneficial ownership is based upon statements furnished to us
by such persons.

<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS (2)
------------------- ------------------------ ------------
<S> <C> <C>
EXTL Investors LLC (3) 4,555,000 19.9%
850 Cannon, Suite 200
Hurst, Texas 76054

Vintage Products, Ltd. (4) 2,047,500 8.75%
111 Arlosorov Street
Tel Aviv, Israel
</TABLE>

- ----------

(3) Includes 1,555,000 shares of common stock issuable within 60 days from
April 15, 1999 upon the conversion of the 8% Series E Cumulative
Convertible Redeemable Preferred Stock ("Series E Preferred Stock"). Does
not include (a) 797,941 additional shares of common stock issuable upon
conversion of the Series E Preferred Stock or warrants to purchase
1,000,000 shares of Common Stock which may not be issued, unless
stockholder approval is obtained, if it would cause EXTL Investors to hold
20% or more of our common stock outstanding or (b) warrants to purchase
1,500,000 shares of common stock, 500,000 of which are presently
exercisable, but where we will issue shares of a new series of non-voting
stock upon exercise unless stockholder approval has been obtained.
Stockholder approval is being sought at the next stockholders' meeting.

(4) Includes (a) 1,875,000 shares of common stock issuable within 60 days from
April 15, 1999 upon the conversion of 8% Series D Cumulative Convertible
Preferred Stock ("Series D Preferred Stock") and (b) warrants to purchase
172,500 shares of common stock exercisable within 60 days from April 15,
1999. Does not include 1,365,000 shares issuable upon the conversion of the
shares of Series D Preferred Stock and exercise of related warrants which
are to be sold to Vintage upon our registration of the shares listed in the
table above. Does not include an indefinite number of shares that could
become issuable upon conversion of the Series D Preferred Stock if the
conversion price becomes based on market price. This will occur if we do
not have positive EBITDA and we fail to complete a public offering of
equity securities at a price of at least $3.00 per share and with gross
proceeds to us of at least $20 million on or before the end of the third
fiscal quarter of 1999.

<PAGE>

CERTAIN TRANSACTIONS AND RELATIONSHIPS

On December 31, 1998, two officers of eGlobe each loaned $50,000 to us for
short term needs. The loans were repaid, including a 1% fee, in February, 1999.

On December 28, 1998, we exchanged 75 shares of Series C Preferred Stock
for 1,425,000 shares of common stock then held by Ronald Jensen in settlement of
potential claims. For more information, see the "Business" Certain Recent
Developments "Exchange with Ronald Jensen" section above.

On January 12, 1999, we issued 50 shares of Series E Preferred Stock and
warrants to purchase 1,000,000 shares of common stock to EXTL Investors in a $5
million private placement. For more information, see the "Business" Certain
Recent Developments "Series E Preferred Stock" section above.

On April 9, 1999, one of our wholly owned subsidiaries borrowed $7 million
from EXTL Investors and we granted EXTL Investors warrants to purchase 1,500,000
shares of common stock. In addition, upon our request and the receipt of any
required stockholder approval, EXTL Investors agreed to purchase $20 million of
secured notes from our subsidiary and we agreed to grant EXTL Investors warrants
to purchase 5,000,000 shares of common stock. For more information, see the
"Business" Certain Recent Developments "Debt Placement" section above.

<PAGE>

DESCRIPTION OF SECURITIES

The following summary description of our capital stock is not a complete
description and is subject to the provisions of our Restated Certificate of
Incorporation, as amended (the "Restated Charter"), and our Amended and Restated
Bylaws (the "Bylaws"), which are included as exhibits to the Registration
Statement of which this prospectus forms a part, and the provisions of
applicable law.

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

We have the authority to issue one hundred million (100,000,000) shares of
common stock of which twenty-one million three hundred forty-four thousand six
hundred ninety-four (21,344,694) shares are issued and outstanding as of April
15, 1999. In addition, our Board of Directors has authority (without action by
the stockholders) to issue 5,000,000 shares of preferred stock, par value $0.001
per share, in one or more classes or series and, within certain limitations, to
determine the voting rights (including the right to vote as a series on
particular matters), preferences as to dividends and in liquidation, and
conversion and other rights of each such series. As of the date hereof, the
Board of Directors has provided for the issuance of several series of such
preferred stock, including:

o Series A Participation Preference Stock (the "Series A Preferred Stock"),
of which 1,000,000 shares are authorized and no shares are issued and
outstanding;

o Series B Preferred Stock, of which 500,000 shares are authorized and
500,000 shares are issued and outstanding;

o the Series C Preferred Stock, of which 275 shares are authorized and no
shares are issued and outstanding;

o the Series D Preferred Stock, of which 125 shares are authorized and 30
shares are issued and outstanding;

o the Series E Preferred Stock, of which 125 shares are authorized and 50
shares are issued and outstanding; and

o the Series F Preferred Stock, of which 2,020,000 shares are authorized and
1,010,000 shares are issued and outstanding.

The rights of the holders of common stock discussed below are subject to
rights the Board of Directors has granted and may in the future grant to the
holders of preferred stock. Rights granted to holders of preferred stock may
adversely affect the rights of holders of common stock. Under certain
circumstances, the issuance of preferred stock may tend to discourage a merger,
tender offer or proxy contest, the assumption of control by a holder of a large
block of our securities or the removal of incumbent management.

COMMON STOCK

Voting Rights. Each holder of shares of common stock is entitled to attend
all special and annual meetings of our stockholders and, together with the
holders of all other classes of stock entitled to attend such meetings and to
vote (except any class or series of stock having special voting rights), to cast
one vote for each outstanding share of common stock upon any matter (including,
without limitation, the election of directors) acted upon by the stockholders.
The shares of common stock do not have cumulative voting rights in the election
of directors (which means each share gets one vote for each director nominee,
rather than an aggregate number of votes equal to the number of nominees which
can be cast for any one or more directors).

As described below, the holders of the Series B Preferred Stock and the
holders of the Series F Preferred Stock are generally entitled to vote (at 25%
of the as-converted common shares) as a single class with the holders of the
common stock, on all matters coming before our stockholders. Holders of a
majority of the common stock, Series B Preferred Stock and Series F Preferred
Stock represented at a meeting may approve most

<PAGE>

actions submitted to the stockholders. Certain matters require different
approvals: election of directors requires the approval of a plurality of the
votes cast, certain corporate actions such as mergers, sale of all or
substantially all of the Company's assets and charter amendments require the
approval of holders of a majority of the total number of shares of common stock,
Series B Preferred Stock and Series F Preferred Stock outstanding.

Liquidation Rights. If we dissolve, liquidate, or wind-up the Company, the
holders of the common stock, and holders of any class or series of stock
entitled to participate in the distribution of assets in such event, will be
entitled to participate in the distribution of any assets remaining after we
have paid all of our debts and liabilities and after we have paid the holders of
classes of stock having preference over the common stock the full preferential
amounts to which they are entitled.

Dividends. Dividends may be paid on the common stock and on any class or
series of stock entitled to participate therewith as to dividends but only when
and as declared by the Board of Directors.

Miscellaneous. Holders of common stock have no preemptive (right to buy a
pro rata share of new stock issuances), subscription, redemption or conversion
rights. All outstanding shares of common stock, including the shares offered in
this prospectus, are or upon issuance will be fully paid and nonassessable.

PREFERRED STOCK

UNDESIGNATED PREFERRED STOCK. The Restated Charter authorizes our Board of
Directors, from time to time and without further stockholder action, to issue
additional preferred stock in one or more series, and to fix the relative rights
and preferences of the shares, including voting powers, dividend rights,
liquidation preferences, redemption rights and conversion privileges. The
Board's authority is limited by the terms of the series of preferred stock which
are currently designated. At present, 1,479,475 shares of additional preferred
stock can be issued with terms fixed by the Board. Because of its broad
discretion with respect to the creation and issuance of preferred stock without
stockholder approval, the Board of Directors could adversely affect the voting
power of the holders of common stock and, by issuing shares of preferred stock
with certain voting, conversion and/or redemption rights, could discourage any
attempt to obtain control of eGlobe by merger, tender offer or proxy contest or
the removal of incumbent management.

SERIES A PREFERRED STOCK. We have adopted a rights plan and entered into a
stockholder rights agreement with American Stock Transfer & Trust Company, as
rights agent (the "Rights Agreement"). The Rights Agreement provides for the
issuance of rights (the "Rights") for each share of our common stock outstanding
on February 28, 1997 and each share of our common stock that we have issued
since then or will issue in the future. Each Right will represent the right to
purchase one one-hundredth of a share of the Series A Preferred Stock at a price
of $70 per one-hundredth of a share of Series A Preferred Stock, subject to
adjustment. The Rights become exercisable upon the occurrence of certain defined
change of control triggering events. There currently are no issued and
outstanding shares of Series A Preferred Stock. The Rights will have certain
anti-takeover effects as they will cause substantial dilution to a person or
group that acquires a substantial interest in eGlobe without the prior approval
of our Board of Directors. The effect of the Rights may be to inhibit a change
of control in eGlobe (including a third party tender offer at a price which
reflects a premium to then prevailing trading prices) that may be beneficial to
our stockholders.

SERIES B PREFERRED STOCK. As part of the consideration paid to the former
stockholders of IDX, we issued 500,000 shares of Series B Preferred Stock.

Voting Rights. The holders of the Series B Preferred Stock are generally
entitled to vote with the holders of our common stock on all matters coming
before our stockholders. In any vote with respect to which the Series B

<PAGE>

Preferred Stock vote with the holders of our common stock as a single class,
each share of Series B Preferred Stock has the number of votes equal to 25% of
the number of shares of our common stock into which such share of Series B
Preferred Stock is convertible on the date of the vote. With respect to any
matter for which class voting is required by Delaware corporation law, the
holders of the Series B Preferred Stock will vote as a class and each holder
will be entitled to one vote for each share held. The holders of Series B
Preferred Stock are entitled to notice of all stockholder meetings in accordance
with our Bylaws.

Liquidation Rights. Upon our dissolution, liquidation, or winding-up, the
holders of the Series B Preferred Stock are entitled to participate in
distributions of assets to holders of our common stock after payment of all
debts and liabilities of eGlobe and distributions of all preferential amounts to
holders of classes of stock having a preference over the Series B Preferred
Stock.

Dividends. The Series B Preferred Stock is entitled to receive dividends
only when declared by the Board of Directors with respect to the Series B
Preferred Stock and only if the Board of Directors declares dividends upon our
common stock at the same time. In the event the Board of Directors declares a
dividend on the Series B Preferred Stock, the holders of the shares of Series B
Preferred Stock are entitled to receive an amount equal to the amount each such
holder would have received if such holder's shares of Series B Preferred Stock
had been converted into our common stock immediately prior to the date as of
which the record holders entitled to dividends are to be determined.

Conversion. The shares of Series B Preferred Stock are convertible into up
to 2,500,000 shares of our common stock (2,000,000 shares until stockholder
approval is obtained), subject to adjustment as described below. The shares of
Series B Preferred Stock are convertible at the holders' option at any time at
the then current conversion rate. The shares of Series B Preferred Stock will
automatically convert into shares of our common stock on the earlier to occur of
(a) the first date that the 15 day average closing sales price of our common
stock is equal to or greater than $8.00 or (b) 30 days after the later to occur
of (1) December 2, 1999 or (2) the receipt of any necessary stockholder approval
relating to the issuance of our common stock upon such conversion. We have
guaranteed a price of $8.00 per share on December 2, 1999, subject to IDX's
achievement of certain revenue and EBITDA objectives. If the market price of our
common stock is less than $8.00 on December 2, 1999 and IDX meets its
performance objectives, we will issue additional shares of our common stock upon
conversion of the Series B Preferred Stock (subject to the receipt of any
necessary stockholder approval) based on the ratio of $8.00 to the market price
(as defined, but not less than $3.3333 per share), but not more than 3.5 million
additional shares of our common stock.

Redemption. The shares of Series B Preferred Stock are not redeemable.

SERIES C PREFERRED STOCK. We issued 75 shares of Series C Preferred Stock
to Mr. Jensen in a private offering pursuant to Regulation D of the Securities
Act of 1933. We exchanged 3,000,000 shares of our common stock for all of the
outstanding Series C Preferred Stock in February 1999. There currently are no
issued and outstanding shares of Series C Preferred Stock.

Voting Rights. The holders of the Series C Preferred Stock do not have
voting rights, unless otherwise provided by Delaware corporation law or
dividends payable on the Series C Preferred Stock are in arrears for six
quarters, at which time the Series C Preferred Stock would be entitled to vote
as a separate class (with the Series D Preferred Stock and the Series E
Preferred Stock) to elect one director to our Board of Directors at the next
stockholders' meeting. The affirmative vote of the holders of the Series C
Preferred Stock is required to issue any class or series of stock ranking senior
to or on a parity with the Series C Preferred Stock as to dividends or rights on
liquidation, winding up and dissolution.

Liquidation Rights. Upon our dissolution, liquidation, or winding-up, the
holders of the Series C Preferred Stock are

<PAGE>

entitled to a liquidation preference over our common stock and preferred stock
ranking junior to the Series C Preferred Stock, equal to $100,000 per share,
plus any accrued and unpaid dividends.

Dividends. The Series C Preferred Stock carries an annual dividend of 8%,
which is payable quarterly, beginning September 30, 2000, if declared by our
Board of Directors. If the Board does not declare dividends, they accrue and
remain payable. No dividends may be granted on any junior security, including
our common stock and preferred stock ranking junior to the Series C Preferred
Stock until all accrued but unpaid dividends on the Series C Preferred Stock
have been paid in full.

Conversion. The shares of Series C Preferred Stock are convertible, at the
holders' option, into shares of our common stock at any time after 180 days
following the closing at a conversion price, which is subject to adjustment if
we issue our common stock for less than the conversion price, equal to 90% of
the ten day average of the market price prior to the conversion date but not
less than $4 nor greater than $6 per share. The shares of Series C Preferred
Stock are also convertible into our common stock upon a change of control if the
market price of our common stock on the date immediately preceding the change of
control is less than the conversion price. In lieu of issuing the shares of our
common stock issuable upon conversion in the event of a change of control, we
may, at our option, pay an amount equal to the number of shares of our common
stock to be converted multiplied by the market price.

The Certificate of Designations of Series C Preferred Stock provides for
adjustments to the number of shares issuable upon conversion in the event of
certain dividends and distributions to holders of our common stock, certain
reclassifications of our common stock, stock splits, combinations and mergers
and similar transactions and certain changes of control. In addition, the
Certificate of Designations of the Series C Preferred Stock provides for
adjustment to the conversion price if we sell stock for less than the conversion
price.

SERIES D PREFERRED STOCK. We issued 30 shares of Series D Preferred Stock
to Vintage in a private offering pursuant to Regulation S of the Securities Act
of 1933. Vintage has agreed to purchase 20 additional shares of Series D
Preferred Stock upon the registration of our common stock issuable upon the
conversion of the Series D Preferred Stock.

Voting Rights. The holders of the Series D Preferred Stock do not have
voting rights, unless otherwise provided by Delaware corporation law or
dividends payable on the Series D Preferred Stock are in arrears for six
quarters, at which time the Series D Preferred Stock would be entitled to vote
as a separate class (with the Series C Preferred Stock and the Series E
Preferred Stock) to elect one director to the Board of Directors at the next
stockholders' meeting. The holders of the Series D Preferred Stock are entitled
to notice of all stockholder meetings in accordance with the Bylaws. The
affirmative vote of 66-2/3% of the holders of the Series D Preferred Stock is
required for the issuance of any class or series of our stock ranking senior to
or on a parity with the Series D Preferred Stock as to dividends or rights on
liquidation, winding up and dissolution.

Liquidation Rights. Upon our dissolution, liquidation, or winding-up, the
holders of the Series D Preferred Stock are entitled to a liquidation
preference, over our common stock and preferred stock ranking junior to the
Series D Preferred Stock, but after all preferential amounts due holders of any
class of stock having a preference over the Series D Preferred Stock are paid in
full, equal to $100,000 per share, plus any accrued and unpaid dividends.

Dividends. The Series D Preferred Stock carries an annual dividend of 8%,
which is payable quarterly, beginning December 31, 1999, if declared by the
Board of Directors. If the Board of Directors does not declare dividends, they
accrue and remain payable. All dividends that would accrue through December 31,
2000 on each share of Series D Preferred Stock, whether or not then accrued,
will be payable in full upon conversion of such share of Series D Preferred
Stock. No dividends may be

<PAGE>

granted on our common stock or preferred stock ranking junior to the Series D
Preferred Stock until all accrued but unpaid dividends on the Series D Preferred
Stock are paid in full. Dividends on the Series D Preferred Stock are not
payable until all accrued but unpaid dividends on preferred stock ranking senior
to the Series D Preferred Stock are paid in full.

Conversion. The shares of Series D Preferred Stock are convertible, at the
holder's option, into shares of our common stock at any time after April 13,
1999 at a conversion price, which is subject to adjustment if we issue our
common stock for less than the conversion price, equal to the lesser of (a)
$1.60 or, (b) in the case of our failure to achieve positive EBITDA or to
complete a public offering of equity securities at a price of at least $3.00 per
share and with gross proceeds to eGlobe of at least $20 million on or before the
end of the third fiscal quarter of 1999, the market price just prior to the
conversion date. The shares of Series D Preferred Stock are also convertible
into our common stock upon a change of control if the market price of our common
stock on the date immediately preceding the change of control is less than the
conversion price. In lieu of issuing the shares of our common stock issuable
upon conversion in the event of a change of control, we may, at our option, pay
an amount equal to the number of shares of our common stock to be converted
multiplied by the market price. The shares of Series D Preferred Stock will
automatically convert into our common stock upon the earliest of (1) the first
date on which the market price of our common stock is $5.00 or more per share
for any 20 consecutive trading days, (2) the date on which 80% or more of the
Series D Preferred Stock we issued has been converted into our common stock, or
(3) the date we close a public offering of equity securities at a price of at
least $3.00 per share and with gross proceeds to eGlobe of at least $20 million.

The Certificate of Designations of Series D Preferred Stock provides for
adjustments to the number of shares issuable upon conversion in the event of
certain dividends and distributions to holders of our common stock, certain
reclassifications of our common stock, stock splits, combinations and mergers
and similar transactions and certain changes of control. In addition, the
Certificate of Designations of the Series D Preferred Stock provides for
adjustment to the conversion price if we sell stock for less than the conversion
price.

The Certificate of Designations of the Series D Preferred Stock also
provides, that notwithstanding any other provision of the Certificate of
Designations, no holder may convert the Series D Preferred Stock it owns for any
shares of common stock that will cause it to own following such conversion in
excess of 9.9% of the shares of our common stock then outstanding.

Redemption. The shares of Series D Preferred Stock must be redeemed if it
ceases to be convertible (which would happen if the number of shares of our
common stock issuable upon conversion of the Series D Preferred Stock exceeded
19.9% of the number of shares of our common stock outstanding when the Series D
Preferred Stock was issued, less shares reserved for issuance under warrants).
Redemption is in cash at a price equal to the liquidation preference of the
Series D Preferred Stock at the holder's option or our option 45 days after the
Series D Preferred Stock ceases to be convertible. If we receive stockholder
approval to increase the number of shares issuable, we must issue the full
amount of our common stock even if the number of shares exceeds the 19.9%
maximum number.

SERIES E PREFERRED STOCK. We issued 50 shares of Series E Preferred Stock
to EXTL Investors LLC in a private offering pursuant to Regulation D of the
Securities Act of 1933.

Voting Rights. The holders of the Series E Preferred Stock do not have
voting rights, unless otherwise provided by Delaware corporation law or
dividends payable on the Series E Preferred Stock are in arrears for six
quarters, at which time the Series E Preferred Stock would be entitled to vote
as a separate class (with the Series C Preferred Stock and Series D Preferred
Stock) to elect one director to our Board of Directors at the next stockholders'
meeting. The holders of the Series E Preferred Stock are entitled to notice of
all stockholder meetings in accordance with the Bylaws. The affirmative vote of
66-2/3% of

<PAGE>

the holders of the Series E Preferred Stock is required for the issuance of any
class or series of stock of eGlobe ranking senior to or on a parity with the
Series E Preferred Stock as to dividends or rights on liquidation, winding up
and dissolution.

Liquidation Rights. Upon our dissolution, liquidation, or winding-up, the
holders of the Series E Preferred Stock are entitled on a parity basis with any
preferred stock ranking on a parity with the Series E Preferred Stock to a
liquidation preference over our common stock and any preferred stock ranking
junior to the Series E Preferred Stock, but after all preferential amounts due
holders of any class of stock having a preference over the Series E Preferred
Stock are paid in full, equal to $100,000 per share, plus any accrued and unpaid
dividends.

Dividends. The Series E Preferred Stock carries a annual dividend of 8%,
which is payable quarterly, beginning December 31, 2000, if declared by our
Board of Directors. If the Board of Directors does not declare dividends, they
accrue and remain payable. All dividends that would accrue through December 31,
2000 on each share of Series E Preferred Stock, whether or not then accrued,
will be payable in full upon conversion of such share of Series E Preferred
Stock. No dividends may be granted on our common stock or any preferred stock
ranking junior to the Series E Preferred Stock until all accrued but unpaid
dividends on the Series E Preferred Stock are paid in full. Dividends on the
Series E Preferred Stock are not payable until all accrued but unpaid dividends
on preferred stock ranking senior to the Series E Preferred Stock are paid in
full.

Conversion. The Series E Preferred Stock holder may elect to make the
shares of Series E Preferred Stock convertible into shares of our common stock
at any time after issuance. We also may elect to make the shares of Series E
Preferred Stock convertible, but only if (1) we have positive EBITDA for at
least one of the first three fiscal quarters of 1999 or (2) we complete a public
offering of equity securities for a price of at least $3.00 per share and with
gross proceeds to eGlobe of at least $20 million on or before the end of the
third fiscal quarter of 1999. The shares of Series E Preferred Stock are also
convertible (one time right of holder) into our common stock upon a change of
control (as defined in the certificate of designations of the Series E Preferred
Stock) if the market price of our common stock on the date immediately preceding
the change of control is less than the conversion price. In lieu of issuing the
shares of our common stock issuable upon conversion in the event of a change of
control, we may, at our option, pay an amount equal to the number of shares of
our common stock to be converted multiplied by the market price. The shares of
Series E Preferred Stock will automatically be converted into shares of our
common stock, on the earliest to occur of (x) the first date as of which the
last reported sales price of our common stock on Nasdaq is $5.00 or more for any
20 consecutive trading days during any period in which Series E Preferred Stock
is outstanding, (y) the date that 80% or more of the Series E Preferred Stock we
have issued has been converted into our common stock, or (z) we complete a
public offering of equity securities at a price of at least $3.00 per share and
with gross proceeds to eGlobe of at least $20 million. The initial conversion
price for the Series E Preferred Stock is $2.125, subject to adjustment if we
issue our common stock for less than the conversion price.

The Certificate of Designations of Series E Preferred Stock provides for
adjustments to the number of shares issuable upon conversion in the event of
certain dividends and distributions to holders of our common stock, certain
reclassifications of our common stock, stock splits, combinations and mergers
and similar transactions and certain changes of control. In addition, the
Certificate of Designations of the Series E Preferred Stock provides for
adjustment to the conversion price if we sell stock for less than the conversion
price.

Redemption. The shares of the Series E Preferred Stock may be redeemed at a
price equal to the face value plus accrued dividends of Series E Preferred
Stock, in cash or in our common stock, at our option or at the option of any
holder, provided that the holder has not previously exercised the convertibility
option described, at any time following the date that is five years after we
issue the Series E

<PAGE>

Preferred Stock. On April 9, 1999, the Series E Preferred Stock holder exercised
the convertibility option. As a result, the Series E Preferred Stock is no
longer redeemable.

SERIES F PREFERRED STOCK. As part of the consideration issued to the former
stockholders of Telekey, we issued 1,010,000 shares of Series F Preferred Stock.
We have agreed to issue at least 505,000 and up to an additional 1,010,000
shares of Series F Preferred Stock to the former stockholders of Telekey if
Telekey achieves certain revenue and EBITDA objectives.

Voting Rights. The holders of the Series F Preferred Stock are generally
entitled to vote with the holders of our common stock on all matters coming
before our stockholders. In any vote with respect to which the Series F
Preferred Stock vote with the holders of our common stock as a single class,
each share of Series F Preferred Stock has the number of votes equal to 25% of
the number of shares of our common stock into which such share of Series F
Preferred Stock is convertible on the date of the vote. With respect to any
matter for which class voting is required by Delaware corporation law, the
holders of the Series F Preferred Stock will vote as a class and each holder
will be entitled to one vote for each share held. The holders of Series F
Preferred Stock are entitled to notice of all stockholder meetings in accordance
with the Bylaws.

Liquidation Rights. Upon our dissolution, liquidation, or winding-up, the
holders of the Series F Preferred Stock are entitled to participate in
distributions of assets to holders of our common stock after payment of all
debts and liabilities and distributions of all preferential amounts to holders
of classes of stock having a preference over the Series F Preferred Stock.

Dividends. The Series F Preferred Stock is entitled to receive dividends
only when and as declared by the Board of Directors with respect to the Series F
Preferred Stock and only if the Board of Directors declares or pays any
dividends upon our common stock at the same time. In the event the Board of
Directors declares a dividend on the Series F Preferred Stock, the holders of
the shares of Series F Preferred Stock are entitled to receive as a dividend an
amount equal to the amount each such holder would have received if such holder's
shares of Series F Preferred Stock had been converted into our common stock
immediately prior to the date as of which the record holders entitled to
dividends are to be determined.

Conversion. The Series F Preferred Stock is convertible into an equal
number of shares of our common stock, subject to adjustment as described below,
at the holders' option at any time. The shares of Series F Preferred Stock will
automatically convert into shares of our common stock on the earlier to occur of
(a) the first date that the 15 day average closing sales price of our common
stock is equal to or greater than $4.00 or (b) July 1, 2000. If the market price
of our common stock is less than $4.00 on December 31, 1999 (in the case of the
shares issued at closing) or December 31, 2000 (in the case of the shares
subject to performance tests (or on the date of a change of control or default
event, if earlier)), we must issue additional shares of our common stock upon
conversion of the Series F Preferred Stock based on the ratio of $4.00 to the
market price (subject to exceptions for stock converted prior to December 31,
1999 or where minimum performance tests are not met).

WARRANTS

IDX WARRANTS. As part of the consideration paid to the former stockholders
of IDX in the recent merger, we issued warrants to purchase up to 2,500,000
shares of our common stock, subject to stockholder approval and to adjustment as
described below. The IDX Warrants, if approved by the stockholders, are
exercisable only to the extent that IDX (which is managed by the former IDX
executives for the "earn-out" period) achieves certain revenue and EBITDA goals
over the twelve months following the merger closing date. We have guaranteed a
price of $8.00 per share on December 2, 1999, subject to IDX's achievement of
certain revenue and EBITDA objectives. If the market price of our common stock
is less than $8.00 on December 2, 1999 and IDX has met these performance
objectives, we will issue

<PAGE>

additional shares of our common stock upon exercise of the IDX Warrants based on
the ratio of $8.00 to the market price (but not less than $3.3333 per share), up
to a maximum of 3.5 million additional shares of our common stock.

SERIES C WARRANT. If we do not achieve for the four calendar quarters
beginning July 1, 1999 an aggregate amount of gross revenues in excess of 150%
of the aggregate amount of gross revenues we achieved in the four calendar
quarters ended June 30, 1998 as reported in our publicly filed financial
statements, the Series C Preferred Stock provides that we will issue, for no
additional consideration, to the holder thereof a warrant (the "Series C
Warrant") to purchase 5,000 shares of our common stock for each share of Series
C Preferred Stock of which the holder is the record owner as of June 30, 2000.
The Series C Warrant will have an exercise price of $.01 per share and will be
exercisable only if the market price of our common stock for 20 trading days
prior to June 30, 2000 has not exceeded a price per share equal to 125% of the
conversion price. There are currently no shares of Series C Preferred Stock
outstanding.

SERIES D WARRANTS. In connection with the closing of the Series D Preferred
Stock in January 1999, we issued warrants to purchase 112,500 shares of our
common stock, with an exercise price of $.01 per share, and warrants to purchase
60,000 shares of our common stock, with an exercise price of $1.60 per share to
Vintage (collectively, the "Series D Warrants"). The Series D Warrants are
exercisable for three years beginning March 13, 1999. The Series D Warrants
provide for adjustments to the exercise price and number of shares to be issued
in the event of certain dividends and distributions to holders of our common
stock, stock splits, combinations and mergers.

When we issue the additional 20 shares of Series D Preferred Stock, we will
issue warrants to purchase 75,000 shares of our common stock, with an exercise
price of $.01 per share, and warrants to purchase 40,000 shares of our common
stock, with an exercise price of $1.60 per share to the Series D Preferred Stock
holder. These warrants have terms which are substantially similar to the Series
D Warrants except that the exercise period commences 60 days after issuance.

In addition, we agreed to issue, for no additional consideration,
additional warrants to purchase the number of shares of our common stock equal
to $250,000 (based on the market price of our common stock on the last trading
day prior to June 1, 1999 or July 1, 2000, as the case may be) or pay $250,000
in cash, if we do not (1) consummate a specified merger transaction by May 30,
1999, or (2) achieve, in the fiscal quarter commencing July 1, 2000, an
aggregate amount of gross revenues equal to or in excess of 200% of the
aggregate amount of gross revenues achieved by eGlobe in the fiscal quarter
ended December 31, 1998.

SERIES E WARRANTS. In connection with the issuance of the Series E
Preferred Stock in February 1999, we issued warrants to purchase 723,000 shares
of our common stock with an exercise price of $2.125 per share and 277,000
shares of our common stock with an exercise price of $.01 per share (the "Series
E Warrants"). The Series E Warrants will be exercisable for three years
beginning April 17, 1999. The Series E Warrants provide for adjustments to the
exercise price and number of shares to be issued in the event of certain
dividends and distributions to holders of our common stock, stock splits,
combinations and mergers.

OTHER WARRANTS. In connection with certain bridge loans and various other
transactions, we have issued warrants to purchase 2,686,167 shares of our common
stock with exercise prices ranging from $.01 to $6.61 per share. These warrants
are exercisable for periods ending between June 23, 1999 and February 18, 2007.

OPTIONS

We have granted options to purchase 2,367,660 shares of our common stock.

<PAGE>

CERTAIN CHARTER AND STATUTORY PROVISIONS

The Restated Charter provides that any action required or permitted to be
taken by the stockholders of eGlobe must be effected at a duly called annual or
special meeting of stockholders and may not be taken or effected by a written
consent of stockholders in lieu thereof.

We are subject to the provisions of Section 203 of the Delaware Corporation
Law. In general, the statute prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless (1) prior to such date, the board
approved either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder, (2) upon consummation of the
transaction that resulted in such person becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding, for purposes of
determining the number of shares outstanding, shares owned by certain directors
or certain employee stock plans), or (3) on or after the date the stockholder
became an interested stockholder, the business combination is approved by the
Board of Directors and authorized by the affirmative vote (and not by written
consent) of at least two-thirds of the outstanding voting stock excluding that
stock owned by the interested stockholder. A "business combination" includes a
merger, asset sale or other transaction resulting in a financial benefit to the
interested stockholder. An "interested stockholder" is a person who (other than
the corporation and any direct or indirect majority-owned subsidiary of the
corporation), together with affiliates and associates, owns (or, as an affiliate
or associate, within three years prior, did own) 15% or more of the
corporation's outstanding voting stock.

<PAGE>
SELLING STOCKHOLDERS

The selling stockholders include (1) former stockholders of IDX, which we
acquired in December 1998 for Series B Preferred Stock, the IDX Warrants and
convertible subordinated promissory notes; (2) EXTL Investors LLC, which owns
(following a transfer shortly) or will own shares of common stock issued in
exchange for the Series C Preferred Stock and which acquired Series E Preferred
Stock and warrants to purchase common stock from us in February and April 1999;
(3) Vintage Products Ltd., which acquired Series D Preferred Stock and warrants
to purchase common stock from us in January 1999; (4) United Communications
International LLC, from which we acquired UCI Tele Networks, Ltd. in December
1998 common stock and promissory notes; (5) Seymour Gordon and certain of his
affiliates, who received warrants to purchase common stock in connection with
certain loans; and (6) former stockholders of Telekey, which we acquired in
February 1999 for Series F Preferred Stock, warrants and promissory notes. We
are registering the shares under the Securities Act in accordance with
registration rights we granted to the selling stockholders when we conducted
these transactions. Our registration of the shares does not necessarily mean
that any selling stockholder will sell all or any of his shares.

The following table sets forth certain information with respect to the
selling stockholders.

<TABLE>
<CAPTION>
SHARES SHARES
OWNED PRIOR OWNED AFTER
NAME OF OWNER TO OFFERING SHARES OFFERED OFFERING
------------- ----------- -------------- -----------
<S> <C> <C> <C>
Former IDX Stockholders (1)
HILK International Inc. 12,455 157,941 0
Chadwick Investment, Ltd. 174,376 2,211,324 0
Jeffey J. Gee 31,138 394,882 0
Dr. Yi-Shang Shen 15,569 197,436 0
Dr. Michael Muntner 9,342 118,466 0
Trylon Partners, Inc. 15,569 197,436 0
Dr. Orville Greynolds 6,228 78,981 0
Teknos Comunicaciones, S.A 6,228 78,981 0
Tenrich Holdings Limited 85,398 1,082,958 0
Telecommunications Development
Corporation II, LDC 45,288 574,317 0
Cheng Li-Yun Chang 7,933 100,606 0
Silicon Application (B.V.I.) Corp. 4,760 60,356 0
Chih Hsian Chang 4,760 60,356 0
Ming Yang Chang 3,173 40,240 0
Kou Yuan Chen 3,173 40,240 0
Tien Fu Jane 2,380 30,188 0
Chuang Su Chen 1,587 20,016 0
Hao Li Lin 793 10,062 0
Flextech Holdings Limited 1,578 20,016 0

EXTL Investors LLC (2) 3,000,000 8,107,941 0

Vintage Products Limited (3) 0 3,412,500 0

United Communications
International LLC (4) 62,500 175,000 0

Gordon Affiliates (5)
Seymour Gordon 549,870 260,000 0
Nancy Lewis 0 22,334 0
Robert Gordon 0 22,333 0
Peter Gordon 0 22,333 0

Former Telekey Stockholders (6)
Sanford H. Levings, Jr. 0 673,334 0
David J. McDaniel 0 673,332 0
Harold M. Solomon 0 673,334 0
</TABLE>

<PAGE>

- ----------
(1) The shares of common stock listed in the table under the caption "Shares
Owned Prior to the Offering" represent 431,728 shares of common stock
issued to the former IDX stockholders in payment of the first convertible
subordinated promissory note in March 1999. In addition to those shares,
the shares of common stock listed in the table for the former IDX
stockholders under the caption "Shares Offered" include shares issuable
upon conversion of 500,000 shares of Series B Preferred Stock. The 500,000
shares of Series B Preferred Stock are currently convertible into 2,000,000
shares of common stock. The conversion rate is subject to adjustment first,
upon stockholder approval at our next stockholders' meeting of a higher
conversion rate, and second, in December 1999 based upon the market price
of our stock and achievement of certain performance tests by IDX through
December 1999 and stockholder approval. If the stockholder approval is
obtained, the 500,000 shares of Series B Preferred Stock will be
convertible into 2,500,000 shares of common stock. Such stockholders also
have been granted warrants to purchase 2,500,000 shares of common stock
which are contingent upon the market price of our stock and IDX meeting
certain performance tests through December 1999 and stockholder approval.
Such stockholders also hold warrants to purchase an additional 43,174
shares of common stock which are currently exercisable. Such stockholders
intend to convert and exercise such securities prior to the offer and sale
of the shares listed in the table under the caption "Shares Offered." A
fuller description of the possible adjustments to the conversion rate and
the terms of the warrants is contained above under the caption "Business"
Certain Recent Developments "IDX Acquisition."

(2) The shares of common stock listed in the table under the caption "Shares
Owned Prior to the Offering" represent 3,000,000 shares of common stock
issued in exchange for all the outstanding Series C Preferred Stock. In
addition to those shares, the shares of common stock listed in the table
under the caption "Shares Offered" include 2,352,941 shares of common stock
issuable upon the conversion of the Series E Preferred Stock and warrants
to purchase 2,500,000 shares of common stock. The number of shares of
common stock listed in the table is based upon the current conversion rate
of the Series E Preferred Stock. Such conversion rate is subject to
adjustments. The stockholder intends to convert and exercise such
securities prior to the offer and sale of the shares listed in the table
under the caption "Shares Offered." A fuller description of the possible
adjustments to the conversion rate and the terms of the warrants is
contained above under the caption "Business-Certain Recent Developments
"Series E Preferred Stock; and-Debt Placement."

(3) The shares of common stock listed in the table under the caption "Shares
Offered" represent 3,125,000 shares of common stock issuable upon the
conversion of the Series D Preferred Stock and warrants to purchase 287,500
shares of common stock, including shares of Series D Preferred Stock and
warrants which we have agreed to sell to Vintage upon effectiveness of the
Registration Statement of which this prospectus is a part. The
effectiveness of the Registration Statement is the only material
contingency to the sale of such additional shares of Series D Preferred
Stock and warrants. The number of shares of common stock listed in the
table are based upon the current conversion rate of the Series D Preferred
Stock. Such conversion rate is subject to adjustment. The certificate of
designations of the Series D Preferred Stock provides that no holder may
convert the shares of Series D Preferred Stock it owns for shares of common
stock that will cause it to own following such conversion in excess of 9.9%
of the shares of our common stock then outstanding. The stockholder intends
to convert and exercise such securities prior to the offer and sale of the
shares listed in the table under the caption "Shares Offered." For more
information, see the discussion under the caption "Business-Certain Recent
Developments-Series D Preferred Stock."

(4) The shares of common stock listed in the table under the caption "Shares
Owned Prior to the Offering" represent 62,500 shares of common stock issued
to United Communications International in connection with our acquisition
of UCI. In addition, we agreed to issue an additional 62,500 shares of
common stock in February 2000, subject to adjustment. Such stockholder also
has been granted

<PAGE>

warrants to purchase 50,000 shares of common stock. The stockholder intends
to exercise such securities prior to the offer and sale of the shares
listed in the table under the caption "Shares Offered." For more
information, see the discussion under the caption "Business-Certain Recent
Developments-UCI Acquisition."

(5) The shares of common stock listed in the table under the caption "Shares
Owned Prior to the Offering" represent 541,620 shares of common stock owned
solely by Seymour Gordon and 8,250 shares of common stock owned with his
wife, as joint tenants. The shares of common stock listed in the table
under the caption "Shares Offered" by the Gordon affiliates represent
shares issuable upon exercise of warrants to purchase 202,000 shares of
common stock and 125,000 shares of common stock issued to Mr. Gordon in
payment of a loan to us. The stockholders intends to exercise such
securities prior to the offer and sale of the shares listed in the table
under the caption "Shares Offered."

(6) The shares of common stock listed in the table under the caption "Shares
Owned Prior to the Offering" represent shares of common stock issuable upon
conversion of 1,010,000 shares of Series F Preferred Stock we issued to the
former Telekey stockholders. In addition, we agreed to issue at least
505,000 and up to 1,010,000 additional shares of Series F Preferred Stock
two years from closing. Such stockholders intend to exercise such
securities prior to the offer and sale of the shares listed in the table
under the caption "Shares Offered." For more information, see the
discussion under the caption "Business-Certain Recent Developments-Telekey
Acquisition."

<PAGE>

PLAN OF DISTRIBUTION

The shares may be sold or distributed from time to time by the selling
stockholders named in this prospectus, by their donees or transferees or by
their other successors in interest. The selling stockholders may sell their
shares at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, at negotiated prices, or at fixed prices, which
may be changed. Each selling stockholder reserves the right to accept or reject,
in whole or in part, any proposed purchase of shares, whether the purchase is to
be made directly or through agents.

The selling stockholders may offer their shares at various times in one or
more of the following transactions:

o in ordinary brokers' transactions and transactions in which the broker
solicits purchasers;

o in transactions involving cross or block trades or otherwise on the
Nasdaq National Market (including transactions in which brokers or
dealers may attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction);

o in transactions in which brokers, dealers or underwriters purchase the
shares as principal and resell the shares for their own accounts
pursuant to this prospectus;

o in transactions "at the market" to or through market makers in the
common stock or into an existing market for the common stock;

o in other ways not involving market makers or established trading
markets, including direct sales of the shares to purchasers or sales
of the shares effected through agents;

o through transactions in options, swaps or other derivatives which may
or may not be listed on an exchange;

o in privately negotiated transactions;

o in short sales or transactions to cover short sales; or

o in a combination of any of the foregoing transactions.

The selling stockholders also may sell their shares in accordance with Rule 144
under the Securities Act, rather than under this prospectus.

From time to time, one or more of the selling stockholders may pledge or
grant a security interest in some or all of the shares owned by them. If the
selling stockholders default in performance of the secured obligations, the
pledgees or secured parties may offer and sell the shares from time to time. The
selling stockholders also may transfer and donate shares in other circumstances.
The number of shares beneficially owned by selling stockholders who transfer,
donate, pledge or grant a security interest in their shares will decrease as and
when the selling stockholders take these actions. The plan of distribution for
the shares offered and sold under this prospectus will otherwise remain
unchanged, except that the transferees, donees or other successors in interest
will be selling stockholders for purposes of this prospectus.

A selling stockholder may sell the common stock short. A short sale of
stock occurs when an investor borrows stock and sells it, and then must purchase
stock later, hopefully after the price of the stock declines. The selling
stockholder may deliver this prospectus in connection with such short sales and
use the shares offered by this prospectus to cover such short sales.

<PAGE>

A selling stockholder may enter into hedging transactions with
broker-dealers. The broker-dealers may engage in short sales of the common stock
in the course of hedging the positions they assume with the selling
stockholders, including positions assumed in connection with distributions of
the shares by such broker-dealers. A selling stockholder also may enter into
option or other transactions with broker-dealers that involve the delivery of
the shares to the broker-dealers, who may then resell or otherwise transfer such
shares. In addition, a selling stockholder may loan or pledge shares to a
broker-dealer, which may sell the loaned shares or, upon a default by the
selling stockholder of the secured obligation, may sell or otherwise transfer
the pledged shares.

The selling stockholders may use brokers, dealers, underwriters or agents
to sell their shares. The persons acting as agents may receive compensation in
the form of commissions, discounts or concessions. This compensation may be paid
by the selling stockholders or the purchasers of the shares for whom such
persons may act as agent, or to whom they may sell as principal, or both. The
compensation as to a particular person may be less than or in excess of
customary commissions. The selling stockholders and any agents or broker-dealers
that participate with the selling stockholders in the offer and sale of the
shares may be deemed to be "underwriters" within the meaning of the Securities
Act. Any commissions they receive and any profit they realize on the resale of
the shares by them may be deemed to be underwriting discounts and commissions
under the Securities Act. Neither we nor any selling stockholders can presently
estimate the amount of such compensation.

We have advised the selling stockholders that during such time as they may
be engaged in a distribution of the shares, they are required to comply with
Regulation M under the Exchange Act. With certain exceptions, Regulation M
prohibits any selling stockholder, any affiliated purchasers and any
broker-dealer or other person who participates in such distribution from bidding
for or purchasing, or attempting to induce any person to bid for or purchase,
any security which is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or purchases made
in order to stabilize the price of a security in connection with the
distribution of that security. The foregoing restrictions may affect the
marketability of the shares.

Under our registration rights agreements with the selling stockholders, we
are required to bear the expenses relating to this offering, excluding any
underwriting discounts or commissions, stock transfer taxes and fees of legal
counsel to the selling stockholders. We estimate these expenses will total
approximately $10,000.

We have agreed to indemnify the selling stockholders and any underwriters,
brokers, dealers or agents and their respective controlling persons against
certain liabilities, including certain liabilities under the Securities Act.

It is possible that a significant number of shares could be sold at the
same time. Such sales, or the perception that such sales could occur, may
adversely affect prevailing market prices for the common stock.

This offering by any selling stockholder will terminate on the date
specified in the selling stockholder's registration rights agreement with eGlobe
or, if earlier, on the date on which the selling stockholder has sold all of his
shares.

LEGAL MATTERS

Hogan & Hartson L.L.P., of Washington, D.C., will issue an opinion about
certain legal matters with respect to the common stock for eGlobe.

EXPERTS

The financial statements and schedule of Executive TeleCard, Ltd. (d/b/a
eGlobe, Inc.) and subsidiaries; the financial statements of IDX International,
Inc. and subsidiaries, and the combined financial statements of Telekey, Inc.
and subsidiary and Travelers Teleservices, Inc.

<PAGE>

included in this prospectus and in the Registration Statement have been audited
by BDO Seidman, LLP, independent certified public accountants, to the extent and
for the periods set forth in their reports appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such reports given
upon the authority of said firm as experts in auditing and accounting.

The financial statements of IDX International, Inc. as of December 31, 1997
and 1996 and for the year ended December 31, 1997 and for the period from April
17, 1996 (inception) to December 31, 1996 included in this prospectus have been
so included in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the Commission under the Exchange Act. You may read and copy
any of the information we file with the SEC at the SEC's public reference rooms
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at 7 World Trade
Center, 13th Floor, New York, New York 10048 and at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You can also obtain copies
of filed documents by mail from the Public Reference Section of the SEC at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. You
may call the SEC at 1-800-SEC-0330 for further information on the operation of
the public reference rooms. We file information electronically with the SEC. Our
SEC filings are available from the SEC's Internet site at http://www.sec.gov,
which contains reports, proxy and information statements, and other information
regarding issuers that file electronically. You can also inspect our reports,
proxy statements and other information about us at the offices of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006.

This prospectus is part of a registration statement we filed with the SEC
under the Securities Act. As permitted by SEC rules, this prospectus omits
information that is included in the registration statement. For further
information about us and our common stock, you should refer to the registration
statement and its exhibits. If we have filed a contract, agreement or other
document as an exhibit to the registration statement, you may read the exhibit
for a more complete understanding of the document or matter involved. Each
statement in this prospectus regarding a contract, agreement or other document
is qualified in its entirety by reference to the actual document.

<PAGE>

GLOSSARY OF TECHNICAL TERMS

"ATM" shall mean a commercialized switching and transmission technology that is
one of a general class of packet technologies that relay traffic by way of an
address contained within the first five bits of a standard fifty-three bit-long
packet or cell. ATM-based packet transport was specifically developed to allow
switching and transmission of mixed voice, data and video (sometimes referred to
as "multi-media" information) at varying rates. The ATM format can be used by
many different networks, including LANs.

"BIT" shall mean the smallest unit in data communications.

"CARRIERS" shall mean providers of telecommunications services locally or
between local exchanges on a interstate or intrastate basis.

"DATA PACKETS" shall mean blocks of information being sent or received over a
network.

"EBITDA" shall mean earnings before interest, taxes, depreciation and
amortization. EBITDA represents operating income plus depreciation and
amortization.

"800 SERVICES" shall mean toll free services to the person making the call. The
call is billed to the recipient.

"FCC" shall mean Federal Communications Commission.

"FRAME RELAY" shall mean a high speed, data packet switching service used to
transmit digital information, including, but not limited to voice and data
between Frame Relay Access Devices (FRADs). Frame relay supports data units of
variable lengths at access speeds ranging from 56 kilobits per second to 1.5
megabits per second.

"GATEWAY" shall mean the connection between otherwise incompatible networks,
such as technology necessary to translate or convert the code and protocol used
by PSTN networks for use on IP networks.

"IP" or "INTERNET PROTOCOL" shall mean the method of transmission of electronic
data typically utilized across the Internet.

"IP FAX" shall mean the ability to route fax transmission over a data packet
switched network, including the Internet.

"IP TELEPHONY" shall mean the technology and the techniques to communicate via
voice, video or image at varying speeds from real-time to time-delayed over a
data packet switched network, generally referring to the Internet.

"IP VOICE" shall mean the ability to route voice calls over a data packet
switched network, including the Internet.

"ISPS" or "INTERNET SERVICE PROVIDERS" shall mean a vendor who provides access
for customers to the Internet and World Wide Web.

"ISDN" or "INTEGRATED SERVICES DIGITAL NETWORK" shall mean a complex network
concept designed to provide a variety of voice, data and digital interface
standards. Incorporated into ISDN are many new enhanced services, such as high
speed data file transfer, desk top video conferencing, telepublishing,
telecommuting, telepresence learning (distance learning), remote collaboration

G-1

<PAGE>

(screened sharing), data network linking and home information services.

"KILOBIT" shall mean one thousand bits of information. The information carrying
capacity of a circuit may be measured in "kilobits per second."

"LOW COST ROUTING OR TRANSMISSION" shall mean the use of a carrier's facilities
that, based on cost advantages are preferable to use by a carrier of its own
facilities.

"MEGABIT" shall mean one million bits of information. The information carrying
capacity of a circuit may be measured in "megabits per second."

"NODE" shall mean an individual point of origination and termination of data on
the network transported using frame relay or similar technology.

"PIN" or "PERSONAL IDENTIFICATION NUMBER" shall mean a code used by a customer
to complete a call with a calling card.

"POST-PAID CALLING CARD SERVICES" shall mean the service that entitles a
customer to make telephone calls by using a telephone card and be billed
subsequently for the service. The customer periodically pays for time actually
used in the same way a customer would pay for local telephone service from their
home. Mobile professionals and other high volume and repetitive users often use
these services because the amount of telephone calling time is not limited.

"PREPAID CALLING CARD SERVICES" shall mean the service that entitles a customer
to purchase in advance a specified amount of telephone calling time. Generally
companies sell prepaid telephone cards in many denominations up to $50 and the
value of the card decreases as the customer makes calls.

"PSTN" or "PUBLIC SWITCHED TELEPHONE NETWORK" shall mean the world wide voice
telephone network available to anyone with a telephone and access privileges.

"PTTS" or "POSTAL, TELEGRAPH AND TELEPHONE AUTHORITIES" shall mean the telephone
and telecommunication providers in most foreign countries which are usually
controlled by their governments.

"REMOTE OFFICE SERVICES" shall mean technology which enables access from
personal computers or telephones to a corporate LAN to enable a mobile
professional to access voice, electronic mail and fax messages from outside
their office.

"SWITCH" shall mean a device that opens or closes circuits or selects the paths
or circuits to be used for transmission of information. Switching is a process
of interconnecting circuits to form a transmission path between users.

"UNIFIED MESSAGING" shall mean a platform which provides a single source access
to voice, electronic mail and fax messages.

"WORLD DIRECT" shall mean the network over which eGlobe originates voice traffic
in 88 countries and territories and terminates traffic anywhere in the world.

G-2

<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial
statements give effect to the acquisitions by the Company for the entities
detailed below and are based on the estimates and assumptions set forth herein
and in the notes to such financial statements. This pro forma presentation has
been prepared utilizing historical financial statements and notes thereto,
certain of which are included herein as well as pro forma adjustments as
described in the Notes to Pro Forma Condensed Consolidated Financial Statements.
The pro forma financial data does not purport to be indicative of the results
which actually would have been obtained had the acquisitions been effected on
the dates indicated or the results which may be obtained in the future.

The pro forma condensed consolidated balance sheet as of December 31, 1998
assumes the acquisition of Telekey was consummated at such date. The pro forma
condensed consolidated statement of operations for the year ended December 31,
1998 includes the operating results of the Company, IDX International, Inc. and
Subsidiaries ("IDX"), and Telekey, Inc. and Subsidiary and Travelers
Teleservices, Inc. ("Telekey") assuming the acquisitions occurred January 1,
1998. UCI was acquired on December 31, 1998 and had minimal operations which
have not been reflected in the Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1998. However, the recurring effect
of the goodwill amortization related to the UCI acquisition has been included
in the Pro Forma Condensed Consolidated Statement of Operations.

The unaudited pro forma condensed consolidated financial statements are
presented for illustrative purposes only and do not purport to represent what
the Company's results of operations or financial position would have been had
the acquisitions described herein occurred on the dates indicated for any
future period or at any future date, and are therefore qualified in their
entirety by reference to and should be read in conjunction with the historical
consolidated financial statements of the Company and the historical financial
statements of IDX and Telekey, contained elsewhere herein.

ACQUISITIONS

IDX International, Inc and Subsidiaries

On December 2, 1998, the Company acquired all of the common and preferred
stock of IDX, a privately-held IP based fax and telephony company, for (a)
500,000 shares of the Company's Series B Convertible Preferred Stock ("Series B
Preferred") valued at $3.5 million which are convertible into 2,500,000 shares
(2,000,000 shares until stockholder approval is obtained and subject to
adjustment as described below) of common stock; (b) warrants ("IDX Warrants")
to purchase up to an additional 2,500,000 shares of common stock (subject to
stockholder approval as well as adjustment as described below); (c) $5.0
million in 7.75% convertible subordinated promissory notes ("IDX Notes")
(subject to adjustment as described below); (d) $1.5 million in bridge loan
advances to IDX made by the Company prior to the acquisition which were
converted into part of the purchase price plus associated accrued interest of
$0.04 million; (e) $0.4 million for IDX dividends accrued and unpaid on IDX's
Preferred Stock under a convertible subordinated promissory note and (f) direct
costs associated with the acquisition of $0.4 million. The Company also
advanced approximately $0.4 million to IDX prior to acquisition under an
agreement to provide IDX up to $2.3 million for working capital purposes over
the next twelve months. These pre-acquisition advances were not considered part
of the purchase price.

The Company plans to include these requests for the approval of the
warrants and additional stock as matters to be voted upon by the stockholders
at the next annual meeting. If these matters are not approved by the
stockholders, the Company has no obligation to provide additional consideration
to the IDX stockholders. This acquisition has been accounted for under the
purchase method of accounting. The financial statements of the Company reflect
the preliminary allocation of the purchase price. The preliminary allocation
has resulted in acquired goodwill of $10.9 million that is being amortized on a

P-1
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )

straight-line basis over seven years. The Company has not completed the review
of the purchase price allocation and will determine the final allocation based
on appraisals and other information. To the extent that the estimated useful
lives of other identified intangibles are less than seven years, the related
amortization expense as reflected in the accompanying Pro Forma Condensed
Consolidated Statement of Operations could be greater. In addition, the purchase
price allocation has not been finalized pending resolution of several purchase
price elements, which are contingent upon the following:

(a) The amounts of Series B Preferred Stock and IDX Warrants to be
issued are subject to stockholder approval subsequent to the date of
acquisition.

(b) IDX's ability to achieve certain revenue and EBITDA (EBITDA
represents income (loss) before interest expense, income taxes,
depreciation and amortization) objectives twelve months after the
acquisition date may limit the amount of warrants to be granted as
well as eliminate the Company's price guarantee as discussed in (d)
below.

(c) The shares of Series B Preferred stock are convertible at the
holders' option at any time at the then current conversion rate. The
shares of Series B Preferred stock will automatically convert into
shares of common stock on the earlier to occur of (a) the first date
that the 15 day average closing sales price of common stock is equal
to or greater than $8.00 or (b) 30 days after the later to occur of
(i) December 2, 1999 or (ii) the receipt of any necessary
stockholder approval relating to the issuance of the common stock
upon such conversion. The Company has guaranteed a price of $8.00
per share on December 2, 1999, subject to IDX's achievement of
certain revenue and EBITDA objectives. If the market price of the
common stock is less than $8.00 on December 2, 1999, and IDX has met
its performance objectives, the Company will issue additional shares
of common stock upon conversion of the Series B Preferred stock
(subject to the receipt of any necessary stockholder approval) based
on the ratio of $8.00 to the market price (as defined, but not less
than $3.3333 per share), but not more than 3.5 million additional
shares of common stock will be issued.

(d) The Company has guaranteed a price of $8.00 per common stock share
relative to the warrants issuable as of December 2, 1999, subject to
IDX's achievement of certain revenue and EBITDA objectives. If these
objectives are achieved and the market price of the common stock is
less than $8.00 on December 2, 1999, the Company will issue
additional shares of common stock upon exercise of the IDX Warrants
based on the ratio of $8.00 to the market price (as defined, but not
less than $3.3333 per share), up to a maximum of 3.5 million
additional shares of common stock. However, if the average closing
sales price of the common stock for any 15 consecutive days equals
or is greater than $8.00 per share prior to December 2, 1999 there
is no price guarantee upon exercise of the warrants. The IDX
warrants cannot be issued until stockholder approval is obtained.

(e) IDX must meet certain working capital levels at the date of
acquisition. To the extent that IDX has a working capital
deficiency, as defined, as of the date of acquisition, the Company
may reduce the number of shares of the Series B Preferred Stock
currently held by the stockholders and may in some circumstances
reduce the amount outstanding on the principal balance of the third
IDX note referred to below.

P-2
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

by proceeds from the sale of an IDX subsidiary and a note issued to
IDX by an option holder. The Company may also elect to pay this
obligation in cash or in shares of common stock.

(g)The IDX Notes consist of four separate notes and are payable in cash
or common stock at the Company's sole discretion. The notes have
varying maturity dates through October 31, 1999.

Based on the contingent purchase price elements as listed above, goodwill
associated with the acquisition may materially increase when these
contingencies are resolved.

The holders of the Series B Preferred Stock are not entitled to dividends
unless declared by the Board of Directors. The shares of Series B Preferred
Stock are not redeemable. Further, the Company has agreed to register for
resale the shares of common stock underlying the conversion rights of the
holders of the Series B Preferred Stock, the IDX warrants and the IDX Notes.

At the acquisition date, the stockholders of IDX received Series B
Preferred Stock and warrants as discussed above, which are ultimately
convertible into common stock subject to IDX meeting its performance
objectives. These stockholders in turn granted preferred stock and warrants,
each of which is convertible into a maximum of 240,000 shares of the Company's
common stock, to IDX employees. The underlying common stock granted by the IDX
stockholders to certain employees has been initially valued as $420,000 of
compensation. The actual number of common shares issued upon conversion of the
preferred stock and warrants will ultimately be determined by stockholder
approval, the achievement, by IDX, of certain performance goals and the market
price of the Company's stock over the contingency period of up to twelve months
from the date of acquisition. The stock grants are performance based and will
be adjusted each reporting period (but not below zero) for the changes in stock
price until the shares and/or warrants (if and when) issued are converted to
common stock.

UCI TELE NETWORKS, LTD

On December 31, 1998, the Company acquired all of the common stock issued
and outstanding of UCI Tele Networks, Ltd. ("UCI"), a privately-held
corporation established under the laws of the Republic of Cyprus, for 125,000
shares of common stock (50% delivered at the acquisition date and 50% to be
delivered February 1, 2000, subject to adjustment as described below), and $2.1
million payable as follows: (a) $75,000 payable in cash in January 1999; (b)
$0.5 million in the form of a note, with 8% interest payable monthly due June
30, 1999; (c) $0.5 million in the form of a note, with 8% interest payable
monthly due no later than June 30, 2000; and (d) $1.0 million in the form of a
non-interest bearing note ("Anniversary Payment") to be paid on February 1,
2000 or December 31, 2000, depending on the percentage of projected revenue
achieved, subject to adjustment. In connection with the $0.5 million note
payable due in June 1999, a warrant to purchase 50,000 shares of common stock
was issued with an exercise price of $1.63 per share. The warrant was valued at
$43,000 and recorded as a discount to the note payable to be amortized as
additional interest expense over the term of the note payable. The 62,500
shares of common stock issued at the acquisition date were valued at $101,563.
The Company has agreed to register for resale the shares of common stock and
UCI warrants.

This acquisition has been accounted for under the purchase method of
accounting. The 1998 financial statements of the Company reflect the
preliminary purchase price allocation. The purchase price allocation has not
been finalized pending resolution of several purchase price elements, which are
contingent upon the following:

(a) If the closing sales price on NASDAQ of the Company's common stock
on February 1, 2000 is less than $8.00, additional shares will be
issued determined by subtracting from 125,000

P-3
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

the amount calculated by dividing $1.0 million by the closing sales
price on February 1, 2000. These shares as well as the 62,500 shares
to be delivered are subject to adjustment as discussed below.

(b) If UCI does not achieve 100% of its $3.0 million projected revenue
target as of February 1, 2000, for each 10% by which the projected
revenue is less than 100% of the projected revenue target, there
will be a 10% reduction in the Anniversary Payment and the number of
shares issuable pursuant to (a).

(c) If UCI achieves more than 100% of its $3.0 million projected revenue
target as of December 31, 1999, there will be a 10% increase in the
Anniversary Payment, not to exceed $0.3 million due, and payable as
of December 31, 2000.

(d) If the Company completes a private financing and receives between
$10 million to $19.9 million or $20 million, it will be required to
repay 50% or 100%, respectively, of the outstanding principal and
interest of the first note as discussed above.

(e) If after the date of acquisition, a contract with a major customer
of UCI is canceled and it is not reinstated or replaced by June 30,
1999, the principal amount of the first and second note as discussed
above will be adjusted.

TELEKEY, INC. AND SUBSIDIARY AND TELESERVICES, INC.

On February 12, 1999, the Company completed the acquisition of Telekey for
which it paid: (i) $0.1 million at closing; (ii) issued a promissory note for
$0.2 million payable in equal monthly installments over one year; (iii) issued
1,010,000 shares of Series F Convertible Preferred Stock ("Series F
Preferred"); and (iv) agreed to issue at least 505,000 and up to an additional
1,010,000 shares of Series F Preferred two years from the date of closing (or
upon a change of control or certain events of default if they occur before the
end of two years), subject to Telekey meeting certain revenue and EBITDA
objectives. The 1,515,000 shares of Series F Preferred Stock which are not
contingently issuable have been valued at $2.9 million.

The shares of Series F Preferred initially issued will automatically
convert into shares of common stock on the earlier to occur of (a) the first
date that the 15 day average closing sales price of the common stock is equal
to or greater than $4.00 or (b) July 1, 2001. The Company has guaranteed a
price of $4.00 per share at December 31, 1999 to recipients of the common stock
issuable upon the conversion of the Series F Preferred, subject to Telekey's
achievement of certain defined revenue and EBITDA objectives. If the market
price is less that $4.00 on December 31, 1999, the Company will issue
additional shares of common stock upon conversion of the Series F Preferred
based on the ratio of $4.00 to the market price, but not more than an aggregate
of 600,000 additional shares of common stock. The Series F Preferred carries no
dividend obligation.

Based on the contingent purchase price elements as listed above, goodwill
associated with the acquisition may materially increase when these
contingencies are resolved.

At the acquisition date, the stockholders of Telekey received shares of
Series F Preferred Stock as discussed above, which are ultimately convertible
into common stock. These stockholders in turn granted a total of 120,000 shares
of eGlobe common stock to certain Telekey employees. The underlying common

P-4
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

stock granted by Telekey stockholders to certain employees has been initially
valued as $232,000 and has been reflected as compensation expense in the Pro
Forma Condensed Consolidated Statement of Operations. The stock grants will be
adjusted each reporting period (but not below zero) for changes in the price of
the eGlobe common stock until the shares are issued.

P-5
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
EGLOBE
AS OF 12/31/98 TELEKEY
(NOTE A) AS OF 12/31/98
---------------- ----------------
<S> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents ..................................................... $ 1,508,000 $ 99,000
Accounts receivable, net ...................................................... 6,851,000 73,000
Other current assets .......................................................... 494,000 185,000
- -------------------------------------------------------------------------------------------------------------------

Total current assets ........................................................... 8,853,000 357,000
Property and equipment, net .................................................... 13,152,000 497,000
Goodwill and other intangible assets............................................ 12,107,000 236,000
Other assets ................................................................... 2,276,000 --
- -------------------------------------------------------------------------------------------------------------------
Total assets ................................................................... $ 36,388,000 $ 1,090,000
- -------------------------------------------------------------------------------------------------------------------

LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable .............................................................. $ 5,798,000 $ 115,000
Accrued expenses .............................................................. 6,203,000 846,000
Notes payable principally related to
acquisitions ................................................................ 6,299,000 --
Current maturities of long-term
debt ........................................................................ 8,540,000 514,000
Other current liabilities ..................................................... 2,968,000 633,000
Purchase obligation ........................................................... -- --
- -------------------------------------------------------------------------------------------------------------------

Total current liabilities ...................................................... 29,808,000 2,108,000
- -------------------------------------------------------------------------------------------------------------------

Long-term debt, net of current
maturities .................................................................... 1,237,000 504,000
- -------------------------------------------------------------------------------------------------------------------

Total liabilities .............................................................. 31,045,000 2,612,000
Stockholders' Equity
Preferred stock ............................................................... 1,000 --
Common stock .................................................................. 16,000 784,000
Additional paid-in capital .................................................... 33,975,000 --
Accumulated deficit ........................................................... (28,566,000) (2,306,000)
Accumulated other comprehensive
loss ........................................................................ (83,000) --
- -------------------------------------------------------------------------------------------------------------------

Total stockholders' equity (deficit) ........................................... 5,343,000 (1,522,000)
- -------------------------------------------------------------------------------------------------------------------

Total liabilities and stockholders'
equity (deficit) .............................................................. $ 36,388,000 $ 1,090,000
- -------------------------------------------------------------------------------------------------------------------

<CAPTION>
ADJUSTMENTS
(NOTE A) PRO FORMA
-------------------- ----------------
<S> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents ..................................................... $ -- $ 1,607,000
Accounts receivable, net ...................................................... -- 6,924,000
Other current assets .......................................................... -- 679,000
- -----------------------------------------------------------------------------------------------------------------------

Total current assets ........................................................... -- 9,210,000
Property and equipment, net .................................................... -- 13,649,000
Goodwill and other intangible assets............................................ 4,782,000 (1) 17,125,000
Other assets ................................................................... -- 2,276,000
- -----------------------------------------------------------------------------------------------------------------------
Total assets ................................................................... $ 4,782,000 $ 42,260,000
- -----------------------------------------------------------------------------------------------------------------------

LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable .............................................................. $ -- $ 5,913,000
Accrued expenses .............................................................. 50,000 (1) 7,099,000
Notes payable principally related to
acquisitions ................................................................ 150,000 (1) 6,449,000
Current maturities of long-term
debt ........................................................................ -- 9,054,000
Other current liabilities ..................................................... -- 3,601,000
Purchase obligation ........................................................... 125,000 (1) 125,000
- -----------------------------------------------------------------------------------------------------------------------

Total current liabilities ...................................................... 325,000 32,241,000
- -----------------------------------------------------------------------------------------------------------------------

Long-term debt, net of current
maturities .................................................................... -- 1,741,000
- -----------------------------------------------------------------------------------------------------------------------

Total liabilities .............................................................. 325,000 33,982,000
Stockholders' Equity
Preferred stock ............................................................... 2,000 (1) 3,000
Common stock .................................................................. (784,000)(1) 16,000
Additional paid-in capital .................................................... 2,933,000 (1) 36,908,000
Accumulated deficit ........................................................... 2,306,000 (1) (28,566,000)
Accumulated other comprehensive
loss ........................................................................ -- (83,000)
- -----------------------------------------------------------------------------------------------------------------------

Total stockholders' equity (deficit) ........................................... 4,457,000 8,278,000
- -----------------------------------------------------------------------------------------------------------------------

Total liabilities and stockholders'
equity (deficit) .............................................................. $ 4,782,000 $ 42,260,000
- -----------------------------------------------------------------------------------------------------------------------

</TABLE>

See notes to the pro forma condensed consolidated financial statements.

P-6
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
EGLOBE IDX
TWELVE MONTHS ELEVEN MONTHS
ENDED 12/31/98 ENDED 11/30/98
(NOTE B) (NOTE B)
------------------ ----------------
<S> <C> <C>
Revenue ........................................................................ $ 30,030,000 $ 2,795,000
Cost of revenue ................................................................ 16,806,000 3,176,000
- --------------------------------------------------------------------------------------------------------------------

Gross profit (loss) ............................................................ 13,224,000 (381,000)
- --------------------------------------------------------------------------------------------------------------------

Costs and expenses:
Selling, general and
administrative .............................................................. 18,070,000 3,011,000
Depreciation and
amortization ................................................................ 3,070,000 510,000
- --------------------------------------------------------------------------------------------------------------------

Total costs and expenses ....................................................... 21,140,000 3,521,000
- --------------------------------------------------------------------------------------------------------------------

Income (loss) from
operations .................................................................... (7,916,000) (3,902,000)
- --------------------------------------------------------------------------------------------------------------------

Other income (expense):
Other income (expense). (1,981,000) 358,000
Proxy related litigation
expense ..................................................................... (3,647,000) --
- --------------------------------------------------------------------------------------------------------------------

Total other income
(expense) ..................................................................... (5,628,000) 358,000
- --------------------------------------------------------------------------------------------------------------------

Income (loss) before taxes
on income ..................................................................... (13,544,000) (3,544,000)
Minority interest in income
of subsidiary ................................................................. -- --
Income taxes ................................................................... 1,500,000 --
- --------------------------------------------------------------------------------------------------------------------

Net income (loss) .............................................................. $ (15,044,000) $ (3,544,000)
- --------------------------------------------------------------------------------------------------------------------

Net loss per share
Basic and diluted ............................................................. $ (0.85)
Basic and diluted
weighted average
number of
shares outstanding .......................................................... 17,736,654 --
- --------------------------------------------------------------------------------------------------------------------

<CAPTION>
TELEKEY
TWELVE MONTHS ADJUSTMENTS
ENDED 12/31/98 (NOTE B)
---------------- --------------------
<S> <C> <C>
Revenue ........................................................................ $ 4,705,000 $ (121,000)(2)
Cost of revenue ................................................................ 1,294,000 (65,000)(3)
- ----------------------------------------------------------------------------------------------------------------------

Gross profit (loss) ............................................................ 3,411,000 (56,000)
- ----------------------------------------------------------------------------------------------------------------------

Costs and expenses:
Selling, general and
administrative .............................................................. 2,811,000 (113,000)(4)
Depreciation and
amortization ................................................................ 192,000 2,222,000 (5)
- ----------------------------------------------------------------------------------------------------------------------

Total costs and expenses ....................................................... 3,003,000 2,109,000
- ----------------------------------------------------------------------------------------------------------------------

Income (loss) from
operations .................................................................... 408,000 (2,165,000)
- ----------------------------------------------------------------------------------------------------------------------

Other income (expense):
Other income (expense). (61,000) (66,000)(6)
Proxy related litigation
expense ..................................................................... -- --
- ----------------------------------------------------------------------------------------------------------------------

Total other income
(expense) ..................................................................... (61,000) (66,000)
- ----------------------------------------------------------------------------------------------------------------------

Income (loss) before taxes
on income ..................................................................... 347,000 (2,231,000)
Minority interest in income
of subsidiary ................................................................. (59,000) 59,000 (7)
Income taxes ................................................................... -- 21,000 (8)
- ----------------------------------------------------------------------------------------------------------------------

Net income (loss) .............................................................. $ 288,000 $ (2,193,000)
- ----------------------------------------------------------------------------------------------------------------------

Net loss per share
Basic and diluted .............................................................
Basic and diluted
weighted average
number of
shares outstanding .......................................................... -- 3,929,000 (9)
- ----------------------------------------------------------------------------------------------------------------------

<CAPTION>
PRO FORMA
----------------
<S> <C>
Revenue ........................................................................ $ 37,409,000
Cost of revenue ................................................................ 21,211,000
- -------------------------------------------------------------------------------------------------

Gross profit (loss) ............................................................ 16,198,000
- -------------------------------------------------------------------------------------------------

Costs and expenses:
Selling, general and
administrative .............................................................. 23,779,000
Depreciation and
amortization ................................................................ 5,994,000
- -------------------------------------------------------------------------------------------------

Total costs and expenses ....................................................... 29,773,000
- -------------------------------------------------------------------------------------------------

Income (loss) from
operations .................................................................... (13,575,000)
- -------------------------------------------------------------------------------------------------

Other income (expense):
Other income (expense). (1,750,000)
Proxy related litigation
expense ..................................................................... (3,647,000)
- -------------------------------------------------------------------------------------------------

Total other income
(expense) ..................................................................... (5,397,000)
- -------------------------------------------------------------------------------------------------

Income (loss) before taxes
on income ..................................................................... (18,972,000)
Minority interest in income
of subsidiary ................................................................. --
Income taxes ................................................................... 1,521,000
- -------------------------------------------------------------------------------------------------

Net income (loss) .............................................................. $ (20,493,000)
- -------------------------------------------------------------------------------------------------

Net loss per share
Basic and diluted ............................................................. $ (0.95)
Basic and diluted
weighted average
number of
shares outstanding .......................................................... 21,665,654
- -------------------------------------------------------------------------------------------------

</TABLE>

See notes to the pro forma condensed consolidated financial statements.

P-7
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

NOTE A UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

The purchase of IDX was effective December 2, 1998 and is included in the
December 31, 1998 balance sheet of the Company. The following is the
preliminary allocation of the purchase price based on the fair value of the
assets acquired and the liabilities assumed. The final allocations will be
determined when certain contingencies are resolved as discussed earlier. The
components of the purchase price and its preliminary allocation to the assets
and liabilities acquired are as follows:

<TABLE>
<S> <C>
COMPONENTS OF PURCHASE PRICE:
Notes payable to former shareholders of IDX ................... $ 5,000,000
Company's Series B Convertible Preferred Stock ................ 3,500,000
Company's bridge loans converted to investment in IDX ......... 1,500,000
Direct acquisition costs ...................................... 429,000
Note payable to former shareholders of IDX for preferred
dividends payable ............................................ 418,000
Accrued interest on bridge loans .............................. 44,000
-------------

TOTAL PURCHASE PRICE ............................................ 10,891,000
ALLOCATION OF PURCHASE PRICE:
Cash .......................................................... (119,000)
Accounts receivable ........................................... (707,000)
Other current assets .......................................... (394,000)
Property and equipment ........................................ (975,000)
Other assets .................................................. (172,000)
Goodwill ...................................................... (10,917,000)
Current liabilities ........................................... 1,978,000
Long-term liability ........................................... 415,000
-------------
$ --
=============

</TABLE>

The following pro forma adjustment to the condensed consolidated balance
sheet is as if the acquisition of Telekey had occurred on December 31, 1998.

The final purchase price allocation will be determined when certain
contingencies are resolved as discussed earlier and additional information
becomes available. Accordingly, the final purchase price allocation may have a
material effect on the supplemental unaudited pro forma information presented
below.

P-8
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE A. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)

(1) To reflect the acquisition of Telekey and the preliminary allocation
of the purchase price based on the fair value of the assets acquired and
the liabilities assumed. The components of the purchase price and its
preliminary allocation to the assets and liabilities acquired are as
follows:

<TABLE>
<S> <C>
COMPONENTS OF PURCHASE PRICE:
Company's Series F Convertible Preferred Stock ........... $ 2,935,000
Company's note to former shareholders of Telekey ......... 150,000
Cash payment to former shareholders of Telekey ........... 125,000
Direct acquisition costs ................................. 50,000
------------
TOTAL PURCHASE PRICE ....................................... 3,260,000
ALLOCATION OF PURCHASE PRICE:
Cash and cash equivalents ................................ (99,000)
Accounts receivable ...................................... (73,000)
Other current assets ..................................... (185,000)
Property and equipment ................................... (497,000)
Goodwill ................................................. (5,018,000)
Current liabilities ...................................... 1,594,000
Long-term debt, including current maturities ............. 1,018,000
------------
$ --
============

</TABLE>

NOTE B. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Effective with the period ended December 31, 1998, the Company changed
from a March 31 to a December 31 fiscal year end. As a result, the following
table is required to reflect twelve months of operations.

<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS TWELVE MONTHS
ENDED 12/31/98 ENDED 3/31/98 ENDED 12/31/98
---------------- ----------------- ------------------
<S> <C> <C> <C>
Revenue ..................................... $ 22,491,000 $ 7,539,000 $ 30,030,000
Cost of revenue ............................. 12,619,000 4,187,000 16,806,000
------------- ------------- --------------
Gross profit ................................ 9,872,000 3,352,000 13,224,000
Costs and expenses:
Selling, general and administrative ......... 13,555,000 4,515,000 18,070,000
Depreciation and amortization ............... 2,256,000 814,000 3,070,000
------------- ------------- --------------
Total costs and expenses .................... 15,811,000 5,329,000 21,140,000
Loss from operations ........................ (5,939,000) (1,977,000) (7,916,000)
------------- ------------- --------------
Other income (expenses):
Other expense ............................... (1,031,000) (950,000) (1,981,000)
Proxy related litigation expense ............ (120,000) (3,527,000) (3,647,000)
Total other expenses ........................ (1,151,000) (4,477,000) (5,628,000)
------------- ------------- --------------
Loss before taxes on income ................. (7,090,000) (6,454,000) (13,544,000)
Income taxes ................................ -- 1,500,000 1,500,000
------------- ------------- --------------
Net loss ................................... $ (7,090,000) $ (7,954,000) $ (15,044,000)
============= ============= ==============

</TABLE>

P-9
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE B. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(CONTINUED)

UCI was acquired on December 31, 1998 and had minimal operations which
have not been reflected in the Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1998. However, the recurring effect
of the goodwill amortization related to the UCI acquisition has been included
in the Pro Forma Condensed Consolidated Statement of Operations.

The following pro forma adjustments to the condensed consolidated
statement of operations are as if the acquisitions had been completed at the
beginning of the period presented and are not indicative of what would have
occurred had the acquisitions actually been made as of such date. IDX was
acquired on December 2, 1998, therefore, the results of operations of IDX for
the month of December 1998 are included in the historical results of the
Company for the twelve months ended December 31, 1998.

<TABLE>
<S> <C>
(2) Adjustments to revenue:
Elimination of IDX billings to the Company ..................................... $ (41,000)
Adjustment to revenue to give effect to IDX's purchase of a subsidiary in
April, 1998 and its sale of another subsidiary in November, 1998 as if the
purchase and sale had been completed at the beginning of the period
presented .................................................................... (80,000)
-----------
$ (121,000)
===========

(3) Adjustments to cost of revenue:
Elimination of IDX billings to the Company ..................................... $ (41,000)
Adjustment to cost of revenue to give effect to IDX's purchase of a
subsidiary in April, 1998 and its sale of another subsidiary in November,
1998 as if the purchase and sale had been completed at the beginning of
the period presented .........................................................
(24,000)
-----------
$ (65,000)
===========

(4) Adjustments to selling, general and administrative expenses:
Adjustment for the incremental increase in management compensation ............. $ 78,000
Adjustment for deferred compensation related to Telekey purchase ............... 232,000
Adjustment to give effect to IDX's purchase of a subsidiary in April, 1998
and its sale of another subsidiary in November, 1998 as if the purchase
and sale had been completed at the beginning of the period presented.......... (423,000)
-----------
$ (113,000)
===========
</TABLE>

P-10
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

<TABLE>
<S> <C>
NOTE B. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)

(5) Adjustments to depreciation and amortization expenses:
Amortization for eleven months of cost in excess of net assets acquired for
the IDX purchase which was effective December 2, 1998 (7 year
straight-line amortization) ............................................... $1,425,000
Amortization of cost in excess of net assets acquired for the UCI purchase
which was effective December 31, 1998 (7 year straight-line
amortization) ............................................................. 165,000
Amortization of cost in excess of net assets acquired for the Telekey
purchase (7 year straight-line amortization) .............................. 717,000
----------
2,307,000
Less amortization of cost in excess of net assets acquired, recorded by the
the Company in the historical results of operations for the twelve months
ended December 31, 1998. .................................................. 85,000
----------
$2,222,000
==========
(6) Adjustment to other income (expenses):
Adjustment to give effect to IDX's purchase of a subsidiary in April, 1998
and its sale of another subsidiary in November, 1998 as if the purchase
and sale had been completed at the beginning of the period presented . $ (411,000)
Interest on $0.418 million IDX note @ 7.75% due 5/99......................... 13,000
Interest on $0.5 million UCI note @8% due 6/99............................... 20,000
Interest on $0.5 million UCI note @8% due 5/2000............................. 40,000
Interest on $1.0 million IDX note @7.75% due 2/99............................ 19,000
Interest on $1.5 million IDX note @7.75% due 6/99............................ 65,000
Interest on $2.5 million IDX note @7.75% due 10/99........................... 176,000
Additional interest recorded for value of 50,000 warrants issued in
connection with the UCI purchase .......................................... 43,000
----------
(35,000)
Less interest expense recorded by the Company in the historical results of
operations for the twelve months ended December 31, 1998 .................. 31,000
----------
$ (66,000)
==========
(7) To eliminate the minority interest in income of a subsidiary. In
connection with the acquisition of Telekey by the Company, the 20%
minority interest in Telekey, L.L.C. was acquired by Telekey. ............... $ 59,000
==========
(8) To reflect state income taxes (Telekey was previously an S-corporation)
at 6% as Georgia does not allow for a consolidated filing. The Telekey
federal taxable income can be offset with the Company's federal net
operating loss carryforwards. ............................................... $ 21,000
==========
</TABLE>

P-11
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

<TABLE>
<S> <C>
NOTE B. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
(9) Adjustment to the weighted average number of shares outstanding as if
the acquisitions had been completed at the beginning of the period
presented. The Company has the option to pay the IDX notes (including
interest) in common stock with the number of shares to be issued
determined by the market price of the common stock as of the due date. In
March, 1999, the Company elected to repay the $1.0 million IDX note
(including interest) using common stock, which, based on the terms of
conversion, resulted in the issuance of approximately 474,000 shares. The
Company has made no decision on the payment of the remaining two notes
totaling $4.0 million....................................................
IDX purchase .......................................................... 2,000,000
Telekey purchase ...................................................... 1,515,000
Payment of $1.0 million IDX note (including interest) using shares of
common stock (weighted for nine months, the note was outstanding
and interest expense has been reflected for three months in the Pro
Forma Condensed Consolidated Statement of Operations) ................ 351,000
UCI purchase .......................................................... 63,000
---------
3,929,000
=========

</TABLE>

NOTE C. CONTINGENCIES

The following adjustments to the pro forma net loss per share are to
reflect the following: (1) the issuance of additional shares of Series B and
Series F Preferred Stock and the assumed conversion into common stock which
would have occurred if IDX and Telekey had met their earn-out formulas at the
beginning of the period presented and stockholder approval for the IDX
acquisition was obtained; (2) the additional shares of common stock to be
issued to UCI shareholders assuming UCI had met its earn-out provision; (3) the
additional compensation expense related to the IDX stockholders' grant of
shares of Series B Preferred Stock, including shares issuable under the IDX
warrant; and (4) the assumption that the Company's common stock met the
guaranteed trading price of $8.00 per share for IDX and UCI related shares and
$4.00 per share for the Telekey related shares. The increase in goodwill
amortization expense is the result of the additional goodwill recorded as a
result of the above issuances amortized over 7 years using straight-line
amortization. If the Company's common stock does not trade at the guaranteed
trading prices, subject to the acquired companies meeting their earn-out
objectives, and the Company obtaining the required stockholder approval as
discussed above, the Company will be required to issue additional shares of
common stock and the estimated goodwill amortization reflected below will
change. The final purchase price allocations will be determined when certain
contingencies are resolved as discussed earlier and additional information
becomes available. This is not indicative of what would have occurred had the
acquisitions actually been made as of such date.

P-12
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE C. CONTINGENCIES--(CONTINUED)

<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31, 1998
--------------------
<S> <C>
PRO FORMA BASIC LOSS PER SHARE:
NUMERATOR
Pro forma net loss ........................................................ $ (20,493,000)
Increase in goodwill amortization expense for earn-out formulas and
stockholder approval (7 year straight-line amortization) ................ (3,788,000)
Additional compensation related to stock granted to IDX employees by
IDX stockholders after the Company's purchase of IDX .................... (3,420,000)
Additional compensation related to stock granted to Telekey employees by
Telekey stockholders after the Company's purchase of Telekey ............ (248,000)
--------------
Adjusted pro forma net loss ............................................... $ (27,949,000)
--------------

DENOMINATOR

Weighted average shares outstanding ....................................... 21,665,654
Number of shares of common stock issuable under earn-out formulas and
upon stockholder approval:
IDX (stockholder approval) .............................................. 500,000
IDX (contingent earn-out warrants) ...................................... 2,500,000
Telekey (contingent earn-out stock) ..................................... 505,000
UCI (contingent earn-out stock) ......................................... 62,500
--------------
Adjusted pro forma weighted average shares outstanding: ................. 25,233,154
--------------

PER SHARE AMOUNTS

Adjusted pro forma basic and diluted loss per share ........................ $ (1.11)
</TABLE>

P-13
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A/ EGLOBE, INC.

INDEX TO HISTORICAL FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
EXECUTIVE TELECARD, LTD. D/B/A/ EGLOBE, INC. AND SUBSIDIARIES
Report of Independent Certified Public Accountants ...................................... F-2
Consolidated Balance Sheets as of December 31, and March 31, 1998 ....................... F-3
Consolidated Statements of Operations for the Nine Months Ended December 31, 1998, and
the Years
Ended March 31, 1998 and 1997 ......................................................... F-4
Consolidated Statements of Stockholders' Equity for the Nine Months Ended December 31,
1998, and the
Years Ended March 31, 1998 and 1997 ................................................... F-5
Consolidated Statements of Comprehensive Income (Loss) for the Nine Months Ended
December 31,
1998 and the Years Ended March 31, 1998 and 1997 ...................................... F-6
Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 1998, and
for the Years
Ended March 31, 1998 and 1997 ......................................................... F-7-F-8
Summary of Accounting Policies .......................................................... F-9-F-14
Notes to Consolidated Financial Statements .............................................. F-15-F-36
Schedule II-Valuation and Qualifying Accounts ........................................... F-37
IDX INTERNATIONAL, INC. AND SUBSIDIARIES
Report of Independent Certified Public Accountants ...................................... F-38
Consolidated Balance Sheet as of November 30, 1998 ...................................... F-39
Consolidated Statement of Operations for the Eleven-Month Period Ended November 30, 1998 F-40
Consolidated Statement of Stockholders' Deficit and Comprehensive Loss for the
Eleven-Month Period
Ended November 30, 1998 ............................................................... F-41
Consolidated Statement of Cash Flows for the Eleven-Month Period Ended November 30, 1998 F-42
Summary of Accounting Policies .......................................................... F-43-F-45
Notes to Consolidated Financial Statements .............................................. F-46-F-51

Report of Independent Accountants ....................................................... F-52
Consolidated Statements of Financial Position as of December 31, 1996 and 1997 .......... F-53
Consolidated Statements of Operations for the Period from Inception (April 17, 1996) to
December 31,
1996 and for the Year Ended December 31, 1997 ......................................... F-54
Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the Period from
Inception
(April 17, 1996) to December 31, 1996 and for the Year Ended December 31, 1997 ........ F-55
Consolidated Statements of Cash Flows for the Period from Inception (April 17, 1996) to
December 31,
1996 and for the Year Ended December 31, 1997 ......................................... F-56
Notes to Consolidated Financial Statements .............................................. F-57-F-66
TELEKEY, INC. AND SUBSIDIARY AND TRAVELERS TELESERVICES, INC.
Report of Independent Certified Public Accountants ...................................... F-67
Combined Consolidated Balance Sheets as of December 31, 1998 and 1997 ................... F-68
Combined Consolidated Statements of Operations for the Years Ended December 31, 1998 and F-69
1997
Combined Consolidated Statements of Stockholders' Deficit for the Years Ended December
31, 1998 and
1997 .................................................................................. F-70
Combined Consolidated Statements of Cash Flows for the Years Ended December 31, 1998 and F-71
1997
Summary of Accounting Policies .......................................................... F-72-F-74
Notes to Combined Consolidated Financial Statements ..................................... F-75-F-77
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Executive TeleCard, Ltd.
d/b/a eGlobe, Inc.
Denver, Colorado

We have audited the accompanying consolidated balance sheets of Executive
TeleCard, Ltd. (d/b/a eGlobe, Inc.) and subsidiaries as of December 31, 1998
and March 31, 1998 and the related consolidated statements of operations,
stockholders' equity, comprehensive income (loss) and cash flows for the nine
months ended December 31, 1998 and for each of the two years in the period
ended March 31, 1998. We have also audited the schedule listed in the
accompanying index. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Executive
TeleCard, Ltd. (d/b/a eGlobe, Inc.) and subsidiaries at December 31, 1998 and
March 31, 1998, and the results of their operations and their cash flows for
the nine month period ended December 31, 1998 and for each of the two years in
the period ended March 31, 1998, in conformity with generally accepted
accounting principles.

Also, in our opinion, the schedule presents fairly, in all material
respects, the information set forth therein.

/s/ BDO Seidman, LLP
-------------------------------
BDO Seidman, LLP

March 19, 1999
except for Note 18, which is as of April 10, 1999
Denver, Colorado

F-2
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

<S> <C> <C>
December 31, March 31,
1998 1998
- --------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT:
Cash and cash equivalents ..................................................... $ 1,407,131 $ 2,391,206
Restricted cash ............................................................... 100,438 --
Accounts receivable, less allowance of $986,497 and $1,472,197 for doubtful
accounts ..................................................................... 6,850,872 7,719,853
Other current assets .......................................................... 494,186 376,604
- --------------------------------------------------------------------------------------------------------------
Total current assets .......................................................... 8,852,627 10,487,663
PROPERTY AND EQUIPMENT net of accumulated depreciation and amortization
(Note 1) ..................................................................... 13,152,410 11,911,310
GOODWILL AND OTHER INTANGIBLE ASSETS, net of accumulated amortization of
$926,465 and $725,884......................................................... 12,106,603 203,875
OTHER:
Advances to a potential joint venture (Note 17) .............................. 970,750 --
Deposits ..................................................................... 518,992 233,901
Deferred financing and acquisition costs ..................................... 736,071 --
Other assets ................................................................. 50,708 63,707
- --------------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS ............................................................ 2,276,521 297,608
- --------------------------------------------------------------------------------------------------------------
TOTAL ASSETS .................................................................. $ 36,388,161 $ 22,900,456
- --------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable ............................................................. $ 5,798,055 $ 1,135,800
Accrued expenses (Note 2) .................................................... 6,203,177 4,222,806
Income taxes payable (Note 12) ............................................... 1,914,655 2,004,944
Notes payable, principally related to acquisitions (Notes 5 and 6) ........... 6,298,706 --
Current maturities of long-term debt (Note 4) ................................ 8,540,214 244,020
Other liabilities ............................................................ 1,053,292 436,545
- --------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES ..................................................... 29,808,099 8,044,115
LONG-TERM DEBT, net of current maturities (Note 4) ............................ 1,237,344 7,735,581
- --------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES ............................................................. 31,045,443 15,779,696
- --------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Notes 3 - 9, 11, 12, 14, 15, 17 and 18)
STOCKHOLDERS' EQUITY (Note 11 and 17):
Preferred stock, authorized 5,000,000 shares:
Series B Convertible Preferred Stock, $.001 par value, 500,000 shares
authorized and outstanding (Note 6) ....................................... 500 --
8% Series C Cumulative Preferred Stock, $.001 par value, 275 shares
authorized, 75 shares outstanding (Note 7) ................................ 1 --
Common stock, $.001 par value, 100,000,000 shares authorized, 16,362,966
and 17,346,766 shares outstanding .......................................... 16,362 17,346
Additional paid-in capital ................................................... 33,975,268 25,046,831
Stock to be subscribed (Note 8) .............................................. -- 3,500,000
Accumulated deficit .......................................................... (28,566,346) (21,476,154)
Accumulated other comprehensive income (loss) ................................ (83,067) 32,737
- --------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY .................................................... 5,342,718 7,120,760
- --------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................................... $ 36,388,161 $ 22,900,456
- --------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements.

F-3
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
DECEMBER 31,
1998
<S> <C>
- --------------------------------------------------------------------------------------------------------------

REVENUE (Note 13) ................................................................ $ 22,490,642
COST OF REVENUE .................................................................. 12,619,245
- --------------------------------------------------------------------------------------------------------------

Gross profit ..................................................................... 9,871,397
- --------------------------------------------------------------------------------------------------------------

COSTS AND EXPENSES:
Selling, general and administrative ............................................. 12,558,553
Settlement costs (Note 7) ....................................................... 996,532
Corporate realignment expense (Note 2) .......................................... --
Depreciation and amortization ................................................... 2,255,945
- --------------------------------------------------------------------------------------------------------------

Total costs and expenses ......................................................... 15,811,030
- --------------------------------------------------------------------------------------------------------------

Income (loss) from operations .................................................... (5,939,633)
- --------------------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSES):
Interest expense ................................................................ (1,018,049)
Interest income ................................................................. 59,947
Foreign currency transaction loss ............................................... (130,757)
Proxy related litigation expense (Note 8) ....................................... (119,714)
Other income (expense), net ..................................................... 58,014
- --------------------------------------------------------------------------------------------------------------

Total other expenses ............................................................. (1,150,559)
- --------------------------------------------------------------------------------------------------------------

Income (loss) before taxes on income ............................................. (7,090,192)
Taxes on income (Note 12) ........................................................ --
- --------------------------------------------------------------------------------------------------------------

Net income (loss) ................................................................ $ (7,090,192)
- --------------------------------------------------------------------------------------------------------------

NET EARNINGS (LOSS) PER SHARE (Note 5):
Basic ........................................................................... $ (0.40)
Diluted ......................................................................... $ (0.40)
- --------------------------------------------------------------------------------------------------------------

<CAPTION>
YEARS ENDED MARCH 31,
---------------------------------
1998 1997
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------

REVENUE (Note 13) ................................................................ $ 33,122,767 $ 33,994,375
COST OF REVENUE .................................................................. 18,866,292 17,913,995
- ---------------------------------------------------------------------------------------------------------------------

Gross profit ..................................................................... 14,256,475 16,080,380
- ---------------------------------------------------------------------------------------------------------------------

COSTS AND EXPENSES:
Selling, general and administrative ............................................. 14,047,864 11,915,864
Settlement costs (Note 7) ....................................................... -- --
Corporate realignment expense (Note 2) .......................................... 3,139,191 --
Depreciation and amortization ................................................... 2,769,844 1,740,952
- ---------------------------------------------------------------------------------------------------------------------

Total costs and expenses ......................................................... 19,956,899 13,656,816
- ---------------------------------------------------------------------------------------------------------------------

Income (loss) from operations .................................................... (5,700,424) 2,423,564
- ---------------------------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSES):
Interest expense ................................................................ (1,651,236) (849,073)
Interest income ................................................................. 45,839 51,291
Foreign currency transaction loss ............................................... (409,808) (75,409)
Proxy related litigation expense (Note 8) ....................................... (3,900,791) (528,421)
Other income (expense), net ..................................................... (33,490) --
- ---------------------------------------------------------------------------------------------------------------------

Total other expenses ............................................................. (5,949,486) (1,401,612)
- ---------------------------------------------------------------------------------------------------------------------

Income (loss) before taxes on income ............................................. (11,649,910) 1,021,952
Taxes on income (Note 12) ........................................................ 1,640,000 248,000
- ---------------------------------------------------------------------------------------------------------------------

Net income (loss) ................................................................ $ (13,289,910) $ 773,952
- ---------------------------------------------------------------------------------------------------------------------

NET EARNINGS (LOSS) PER SHARE (Note 5):
Basic ........................................................................... $ (0.78) $ 0.05
Diluted ......................................................................... $ (0.78) $ 0.05
- ---------------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements.

F-4
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PREFERRED PREFERRED
COMMON STOCK STOCK -- SERIES B STOCK -- SERIES C
NINE MONTHS ENDED DECEMBER 31, 1998 AND --------------------------- ------------------- -----------------
YEARS ENDED MARCH 31, 1998 AND 1997 SHARES AMOUNTS SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------

BALANCE, APRIL 1, 1996 ........................ 15,849,488 $ 15,849 -- $ -- -- $--
Stock issued in connection with litigation
settlement .................................... 11,000 11 -- -- -- --
Exercise of stock options ...................... 752 1 -- -- -- --
Foreign currency translation adjustment ........ -- -- -- -- -- --
Net income for the year ........................ -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------

BALANCE, MARCH 31, 1997 ....................... 15,861,240 15,861 -- -- -- --
Stock issued in lieu of cash payments .......... 42,178 42 -- -- -- --
Stock issued in connection with private
placement, net (Note 11) ...................... 1,425,000 1,425 -- -- -- --
Stock to be subscribed (Note 8) ................ -- -- -- -- -- --
Exercise of stock appreciation rights .......... 18,348 18 -- -- -- --
Issuance of warrants to purchase stock
(Note 11) ..................................... -- -- -- -- -- --
Foreign currency translation adjustment ........ -- -- -- -- -- --
Net loss for the year .......................... -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------

BALANCE, MARCH 31, 1998 ....................... 17,346,766 17,346 -- -- -- --
Stock issued in connection with litigation
settlement (Note 8) ........................... 28,700 28 -- -- -- --
Subscribed stock issued to common escrow
(Note 8) ...................................... 350,000 350 -- -- -- --
Issuance of warrants to purchase stock
(Note 11) ..................................... -- -- -- -- -- --
Stock issued in connection with acquisitions
(Note 6) ...................................... 62,500 63 500,000 500 -- --
Exchange of common stock for Series C
Preferred (Note 7) ............................ (1,425,000) (1,425) -- -- 75 1
Compensation costs related to acquisition
(Note 6) ...................................... -- -- -- -- -- --
Foreign currency translation adjustment ........ -- -- -- -- -- --
Net loss for the period ........................ -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 1998 .................... 16,362,966 $ 16,362 500,000 $500 75 $ 1
- ------------------------------------------------------------------------------------------------------------------

<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
NINE MONTHS ENDED DECEMBER 31, 1998 AND STOCK TO BE PAID-IN ACCUMULATED COMPREHENSIVE
YEARS ENDED MARCH 31, 1998 AND 1997 SUBSCRIBED CAPITAL DEFICIT INCOME (LOSS)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------

BALANCE, APRIL 1, 1996 ........................ $ -- $ 15,901,574 $ (8,960,196) $ 82,782
Stock issued in connection with litigation
settlement .................................... -- 146,238 -- --
Exercise of stock options ...................... -- -- -- --
Foreign currency translation adjustment ........ -- -- -- (939)
Net income for the year ........................ -- -- 773,952 --
- ------------------------------------------------------------------------------------------------------------------

BALANCE, MARCH 31, 1997 ....................... -- 16,047,812 (8,186,244) 81,843
Stock issued in lieu of cash payments .......... -- 244,226 -- --
Stock issued in connection with private
placement, net (Note 11) ...................... -- 7,481,075 -- --
Stock to be subscribed (Note 8) ................ 3,500,000 -- -- --
Exercise of stock appreciation rights .......... -- 137,530 -- --
Issuance of warrants to purchase stock
(Note 11) ..................................... -- 1,136,188 -- --
Foreign currency translation adjustment ........ -- -- -- (49,106)
Net loss for the year .......................... -- -- (13,289,910) --
- ------------------------------------------------------------------------------------------------------------------

BALANCE, MARCH 31, 1998 ....................... 3,500,000 25,046,831 (21,476,154) 32,737
Stock issued in connection with litigation
settlement (Note 8) ........................... -- 81,600 -- --
Subscribed stock issued to common escrow
(Note 8) ...................................... (3,500,000) 3,499,650 -- --
Issuance of warrants to purchase stock
(Note 11) ..................................... -- 328,231 -- --
Stock issued in connection with acquisitions
(Note 6) ...................................... -- 3,601,000 -- --
Exchange of common stock for Series C
Preferred (Note 7) ............................ -- 997,956 -- --
Compensation costs related to acquisition
(Note 6) ...................................... -- 420,000 -- --
Foreign currency translation adjustment ........ -- -- -- (115,804)
Net loss for the period ........................ -- -- (7,090,192) --
- ------------------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 1998 .................... $ -- $ 33,975,268 $ (28,566,346) $ (83,067)
- ------------------------------------------------------------------------------------------------------------------

<CAPTION>
TOTAL
NINE MONTHS ENDED DECEMBER 31, 1998 AND STOCKHOLDERS'
YEARS ENDED MARCH 31, 1998 AND 1997 EQUITY
<S> <C>
- ------------------------------------------------------------------

BALANCE, APRIL 1, 1996 ........................ $ 7,040,009
Stock issued in connection with litigation
settlement .................................... 146,249
Exercise of stock options ...................... 1
Foreign currency translation adjustment ........ (939)
Net income for the year ........................ 773,952
- ------------------------------------------------------------------

BALANCE, MARCH 31, 1997 ....................... 7,959,272
Stock issued in lieu of cash payments .......... 244,268
Stock issued in connection with private
placement, net (Note 11) ...................... 7,482,500
Stock to be subscribed (Note 8) ................ 3,500,000
Exercise of stock appreciation rights .......... 137,548
Issuance of warrants to purchase stock
(Note 11) ..................................... 1,136,188
Foreign currency translation adjustment ........ (49,106)
Net loss for the year .......................... (13,289,910)
- ------------------------------------------------------------------

BALANCE, MARCH 31, 1998 ....................... 7,120,760
Stock issued in connection with litigation
settlement (Note 8) ........................... 81,628
Subscribed stock issued to common escrow
(Note 8) ...................................... --
Issuance of warrants to purchase stock
(Note 11) ..................................... 328,231
Stock issued in connection with acquisitions
(Note 6) ...................................... 3,601,563
Exchange of common stock for Series C
Preferred (Note 7) ............................ 996,532
Compensation costs related to acquisition
(Note 6) ...................................... 420,000
Foreign currency translation adjustment ........ (115,804)
Net loss for the period ........................ (7,090,192)
- ------------------------------------------------------------------

BALANCE, DECEMBER 31, 1998 .................... $ 5,342,718
- ------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements.

F-5
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED MARCH 31,
DECEMBER 31, -----------------------------
1998 1998 1997
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------

Net income (loss) ................................................................ $ (7,090,192) $ (13,289,910) $773,952
Foreign currency translation adjustments ......................................... (115,804) (49,106) (939)
- ----------------------------------------------------------------------------------------------------------------------------------

Comprehensive net income (loss) .................................................. $ (7,205,996) $ (13,339,016) $773,013
- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements

F-6
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
NINE MONTHS ENDED
DECEMBER 31,
1998
<S> <C>
- -----------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES:
Net income (loss) ............................................................... $ (7,090,192)
Adjustments to reconcile net income (loss) to cash provided by
(used in) operating activities:
Depreciation and amortization ................................................. 2,255,945
Provision for bad debts ....................................................... 789,187
Settlement costs (Note 7) ..................................................... 996,532
Common stock issued in lieu of cash payments .................................. --
Issuance of options and warrants for services (Note 11) ....................... 190,417
Compensation costs related to acquisition (Note 6) ............................ 420,000
Amortization of debt discount (Note 4) ........................................ 254,678
Proxy related litigation expense (Note 8) ..................................... 81,628
Gain on sale of property and equipment ........................................ (57,002)
Impairment reserve for assets ................................................. --
Other, net .................................................................... --
Changes in operating assets and liabilities:
Accounts receivable .......................................................... 886,768
Other current assets ......................................................... 177,494
Accounts payable ............................................................. 3,248,364
Accrued expenses ............................................................. 1,033,420
Other liabilities ............................................................ 371,368
- -----------------------------------------------------------------------------------------------------

Cash provided by (used in) operating activities .................................. 3,558,607
- -----------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
Acquisitions of property and equipment .......................................... (1,990,368)
Proceeds from sale of property and equipment .................................... 126,638
Advances to a potential joint venture (Note 17) ................................. (970,750)
Purchase of companies, net of cash acquired (Note 6) ............................ (2,207,447)
Restricted cash ................................................................. (100,438)
Other assets .................................................................... (108,863)
- -----------------------------------------------------------------------------------------------------

Cash used in investing activities ................................................ (5,251,228)
- -----------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
Proceeds from notes payable (Notes 3 and 4) ..................................... 1,450,000
Deferred financing and acquisition costs ........................................ (524,154)
Proceeds from issuance of common stock .......................................... --
Payments on capital leases ...................................................... (197,938)
Payments on notes payable ....................................................... (19,362)
- -----------------------------------------------------------------------------------------------------

Cash provided by financing activities ............................................ 708,546
- -----------------------------------------------------------------------------------------------------

Net increase (decrease) in cash ................................................. (984,075)
Cash and cash equivalents, beginning of period ................................... 2,391,206
- -----------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period ......................................... $ 1,407,131
- -----------------------------------------------------------------------------------------------------

<CAPTION>
YEARS ENDED MARCH 31,
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ---------------------------------
1998 1997
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES:
Net income (loss) ............................................................... $ (13,289,910) $ 773,952
Adjustments to reconcile net income (loss) to cash provided by
(used in) operating activities:
Depreciation and amortization ................................................. 2,769,844 1,740,952
Provision for bad debts ....................................................... 1,433,939 404,410
Settlement costs (Note 7) ..................................................... -- --
Common stock issued in lieu of cash payments .................................. 144,268 146,249
Issuance of options and warrants for services (Note 11) ....................... 220,000 --
Compensation costs related to acquisition (Note 6) ............................ -- --
Amortization of debt discount (Note 4) ........................................ 478,580 --
Proxy related litigation expense (Note 8) ..................................... 3,500,000 --
Gain on sale of property and equipment ........................................ -- --
Impairment reserve for assets ................................................. 143,668 --
Other, net .................................................................... 137,548 --
Changes in operating assets and liabilities:
Accounts receivable .......................................................... (915,661) (2,359,402)
Other current assets ......................................................... 52,860 (318,437)
Accounts payable ............................................................. 444,673 37,174
Accrued expenses ............................................................. 2,414,406 (2,321,403)
Other liabilities ............................................................ (39,008) (114,914)
- --------------------------------------------------------------------------------------------------------------------

Cash provided by (used in) operating activities .................................. (2,504,793) (2,011,419)
- --------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
Acquisitions of property and equipment .......................................... (2,150,280) (5,043,062)
Proceeds from sale of property and equipment .................................... -- --
Advances to a potential joint venture (Note 17) ................................. -- --
Purchase of companies, net of cash acquired (Note 6) ............................ -- --
Restricted cash ................................................................. -- --
Other assets .................................................................... 26,693 (151,013)
- --------------------------------------------------------------------------------------------------------------------

Cash used in investing activities ................................................ (2,123,587) (5,194,075)
- --------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
Proceeds from notes payable (Notes 3 and 4) ..................................... 7,810,000 10,297,429
Deferred financing and acquisition costs ........................................ -- --
Proceeds from issuance of common stock .......................................... 7,482,500 --
Payments on capital leases ...................................................... (447,997) --
Payments on notes payable ....................................................... (9,997,397) (1,869,938)
- --------------------------------------------------------------------------------------------------------------------

Cash provided by financing activities ............................................ 4,847,106 8,427,491
- --------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash ................................................. 218,726 1,221,997
Cash and cash equivalents, beginning of period ................................... 2,172,480 950,483
- --------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period ......................................... $ 2,391,206 $ 2,172,480
- --------------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements.

F-7
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED
ENDED MARCH 31,
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION DECEMBER 31, --------------------------
1998 1998 1997
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------

CASH PAID DURING THE PERIOD FOR:
Interest ........................................................................ $ 176,095 $1,267,399 $ 654,180
Income taxes .................................................................... $ 96,000 $ 101,181 $ 79,352
- ---------------------------------------------------------------------------------------------------------------------------

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired under capital lease obligations .............................. $ 329,421 $ 312,213 $ 705,660
- ---------------------------------------------------------------------------------------------------------------------------

Common stock issued for acquisition of equipment ................................ $ -- $ 100,000 $ --
- ---------------------------------------------------------------------------------------------------------------------------

Unamortized debt discount related to warrants ................................... $ 321,094 $ 437,608 $ --
- ---------------------------------------------------------------------------------------------------------------------------

</TABLE>

IDX ACQUISITION, NET OF CASH ACQUIRED (Note 6)

<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED
PERIOD ENDED MARCH 31,
DECEMBER 31, --------------
1998 1998 1997
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------

Working capital deficit, other than cash acquired ................................ $ (930,634) $ -- $ --
Property and equipment ........................................................... 975,009 -- --
Purchase price in excess of the net assets acquired .............................. 10,917,867 -- --
Other assets ..................................................................... 163,229 -- --
Notes payable issued in acquisition .............................................. (5,418,024) -- --
Capital stock issued in acquisition .............................................. (3,500,000) -- --
- -----------------------------------------------------------------------------------------------------------------

Net cash used to acquire IDX ..................................................... $ 2,207,447 $ -- $ --
- -----------------------------------------------------------------------------------------------------------------

</TABLE>

UCI ACQUISITION, NET OF CASH ACQUIRED (Note 6)

Purchase price in excess of the net assets acquired .............................. $ 1,176,563 $ -- $ --
Accrued cash payment due in 1999 ................................................. (75,000) -- --
Note payable issued in acquisition ............................................... (1,000,000) -- --
Common stock issued for acquisition .............................................. (101,563) -- --
- -----------------------------------------------------------------------------------------------------------------

Net cash used to acquire UCI ..................................................... $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements.

F-8
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

SUMMARY OF ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

Executive TeleCard, Ltd. (d/b/a eGlobe, Inc.) and subsidiaries,
(collectively, the "Company") provide services to large telecommunications
companies, primarily to telephone companies which are dominant in their
national markets and to specialized telephone companies and to Internet Service
Providers as well. The services of the Company enable its customers to provide
global reach for "enhanced" or "value added" services that they are supplying,
to their end user customers. Prior to 1998, the entire focus was on supporting
calling card services. In 1998, that focus began to change.

The key assets of the Company - its operating platforms in more than 40
countries, its ability to originate telephone calls (and in many cases, provide
data access) in more than 90 countries and territories, and its customer and
operating arrangements around the world -- permit extension of the Company's
line of services at incremental cost. In 1998, the Company began that extension
of services through acquisition and investment.

In December 1998, the Company acquired IDX International, Inc. ("IDX"), a
supplier of Internet Protocol, ("IP") transmission services, principally to
telecommunications carriers, in 14 countries. This acquisition allows the
Company to offer two additional services, IP voice and IP, fax to its customer
base. Also, in December 1998 the Company acquired UCI Tele Network, Ltd.
("UCI"), a development stage calling card business with contracts to provide
calling card services in Cyprus and Greece (See Note 6).

During the nine months ending December 31, 1998, the Company advanced
approximately $1.0 million to a software based service company in which the
Company is considering making a joint venture investment. For these advances,
the Company received a technology license and has participated in the
development and beta testing of the core software. This investment provides the
basis for a new set of IP and voice services which the Company expects to
launch in 1999. (See Note 17).

MANAGEMENT'S PLAN

As of December 31, 1998, the Company had a net working capital deficiency
of $21.0 million resulting principally from a net loss of $7.1 million for the
nine months ended December 31, 1998, reclassification of $8.5 million of debt
due in August 1999 ($7.5 million) and December 1999 ($1.0 million) to a current
liability as of December 31, 1998 and short-term indebtedness of $6.3 million
incurred during the fourth calendar quarter of 1998 primarily related to two
acquisitions (see Note 6 for further discussion). Of this latter amount, up to
$5.4 million (plus accrued interest) may be paid, at the Company's sole
discretion, by the issuance of common stock. The first $1.0 million was repaid
by the issuance of common stock in March 1999.

In January and February 1999, the Company raised $8.0 million in cash
through the issuance of convertible preferred stock and warrants. The Company
will receive an additional $2.0 million upon registration of the common stock
underlying the convertible preferred stock. (See Note 17 for additional
information on these issuances). Substantially all of the $8.0 million of
proceeds was used in the first calendar quarter of 1999 to support current
operations and capital expenditure requirements for equipment to support new
customer contracts and to pay-down accounts payable, principally to
telecommunications vendors and professional service firms. On April 9, 1999,
the Company entered into a financing commitment totaling $20.0 million with an
affiliate of the Company's largest stockholder in the form of long-term debt.
This commitment is subject to approval by the Company's stockholders at its
annual meeting scheduled to occur in the second calendar quarter of 1999. The
Company's management believes that there is a high probability that stockholder
approval will be obtained (see Note 18 for additional information on this
financing). However, if stockholder approval is not obtained, the Company will
be required to pursue additional sources of capital, to repay the indebtedness
due in August 1999 of $8.5 million, including accrued interest of approximately
$1.0 million, and to support the business plan of the Company.

F-9
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

SUMMARY OF ACCOUNTING POLICIES - (CONTINUED)

Under the terms of this commitment, the lender provided the Company with a
$7.0 million unsecured loan which is due on the earlier of one year or approval
of the $20.0 million facility by the stockholders.

The estimated capital requirements for 1999 needed to meet the Company's
pre-existing cash obligations of approximately $12.1 million and to finance its
growth plan are approximately $50.0 million. Through April 10, 1999, the
Company acquired new funding and commitments in excess of $32.0 million: $10
million from the sale of convertible stock (of which the $8.0 million has been
received and $2.0 million will be advanced upon registration of the underlying
common shares); $20.0 million in committed long-term debt which is subject to
stockholder approval (under the commitment the lender has provided a bridge
loan of $7.0 million which the Company has drawn down); and $2.0 million or
more in vendor financing for network equipment purchases. Assuming that
stockholder approval is forthcoming for the long-term debt, these funds should
permit the Company to meet a modest baseline growth plan. To achieve the
growth, both in the short and long term, that the business plan anticipates,
however, will require additional capital of $18.0 million. The Company
anticipates that these cash needs in the latter part of the year will come from
(1) a capital market financing of debt or equity in the second half of the year
of up to $30.0 million and (2) secured equipment-based financing of up to $10.0
million. Should the Company be unable to raise additional funds from these or
other sources, then its plans will be sharply curtailed and its business
adversely affected.

Although the Company's management believes that stockholder approval for
the financing by the lender described above is probable, in the event approval
is not obtained, there can be no assurance that the Company will raise
additional capital or generate funds from operations sufficient to meet its
obligations and planned requirements. The lack of sufficient funds from these
sources would force the Company to curtail both its existing and planned levels
of operations and would therefore have an adverse effect on the Company's
business.

CHANGE OF FISCAL YEAR

Effective with the period ended December 31, 1998, the stockholders of the
Company approved the change of the fiscal year to a December 31 fiscal year
end. Therefore, the period ended December 31, 1998 represents a nine-month
period as compared to a twelve month period for fiscal years ended March 31,
1998 and 1997.

Information for the comparable nine month period ended December 31, 1997
is summarized below (unaudited):

<TABLE>
<S> <C>
Revenue .................. $ 25,583,730
Gross profit ............. $ 10,905,014
Taxes on income .......... $ 140,000
Net loss ................. $ (5,335,692)
Net loss per common share:
Basic ................ $ (0.31)
Diluted .............. $ (0.31)

</TABLE>

BASIS OF PRESENTATION AND CONSOLIDATION

The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles and include the accounts of the
Company and its wholly-owned subsidiaries. All material intercompany
transactions and balances have been eliminated in consolidation.

F-10
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

SUMMARY OF ACCOUNTING POLICIES - (CONTINUED)

FOREIGN CURRENCY TRANSLATION

For subsidiaries whose functional currency is the local currency and which
do not operate in highly inflationary economies, all net monetary and
non-monetary assets and liabilities are translated at current exchange rates
and translation adjustments are included in stockholders' equity. Revenues and
expenses are translated at the weighted average rate for the period. Foreign
currency gains and losses resulting from transactions are included in the
results of operations in the period in which the transactions occurred.

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

FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK

Financial instruments, which potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents
and trade accounts receivable. The Company places its cash and temporary cash
investments with quality financial institutions.

Concentrations of credit risk with respect to trade accounts receivable
are limited due to the variety of customers and markets which comprise the
Company's customer base, as well as the geographic diversification of the
customer base. The Company routinely assesses the financial strength of its
customers and, as a consequence, believes that its trade accounts receivable
credit risk exposure is limited. Generally, the Company does not require
collateral or other security to support customer receivables. As of December
31, 1998, the Company had approximately 30% and 12% in trade accounts
receivable from two customers. In addition, a few of the Company's card
services customers, who accounted for approximately 40% of revenues during the
fiscal year ended March 31, 1998, have during the nine month period ended
December 31, 1998 substantially reduced their use of the Company's services and
can be expected to end their use of such services in the near future. As a
result, the Company has experienced a decline in card service revenue. At
December 31, 1998, there were no other significant concentrations of credit
risk.

Some of the Company's customers are permitted to choose the currency in
which they pay for calling services from among several different currencies
determined by the Company. Thus, the Company's earnings may be materially
affected by movements in the exchange rate between the U.S. dollar and such
other currencies. The Company does not engage in the practice of entering into
foreign currency contracts in order to hedge the effects of foreign currency
fluctuations.

The carrying amounts of financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses
approximated fair value because of the immediate or short-term maturity of
these instruments. The difference between the carrying amount and fair value of
the Company's notes payable and long-term debt is not significant.

RESTRICTED CASH

Restricted cash consists of $0.1 million on deposit with a financial
institution to secure a letter of credit issued to a transmission vendor
related to a new agreement whereby the Company will perform platform and
transmission services.

F-11
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

SUMMARY OF ACCOUNTING POLICIES - (CONTINUED)

PROPERTY, EQUIPMENT, DEPRECIATION AND AMORTIZATION

Property and equipment are recorded at cost. Additions, installation costs
and major improvements of property and equipment are capitalized. Expenditures
for maintenance and repairs are expensed as incurred. The cost of property and
equipment retired or sold, together with the related accumulated depreciation
or amortization, are removed from the appropriate accounts and the resulting
gain or loss is included in the statement of operations.

Depreciation and amortization is computed using the straight-line method
over the estimated useful lives of the related assets ranging from five to
twenty years.

The Company follows the provisions of the Financial Accounting Standards
Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 121
"Accounting for the Impairment of Long-lived Assets and for Long-lived Assets
to Be Disposed Of ". Long-lived assets and certain identifiable intangibles to
be held and used by the Company are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. The Company continuously evaluates the recoverability of its
long-lived assets based on estimated future cash flows from and the estimated
liquidation value of such long-lived assets, and provides for impairment if
such undiscounted cash flows are insufficient to recover the carrying amount of
the long-lived asset.

SOFTWARE DEVELOPMENT COSTS

SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed", requires the capitalization of certain software
development costs incurred subsequent to the date when technological
feasibility is established and prior to the date when the product is generally
available for licensing. The Company defines technological feasibility as being
attained at the time a working model of a software product is completed.
Capitalized software development costs will be amortized using the
straight-line method over the estimated economic life of approximately three
years.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred.

GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist primarily of goodwill arising from acquisitions
and licenses and trademarks which are recorded at cost. Goodwill of $10.9
million and $1.1 million was recorded in connection with the acquisition of IDX
and UCI on December 2, 1998 and December 31, 1998, respectively. See Note 6 for
discussion of acquisitions.

Amortization of goodwill is provided over seven years on a straight-line
basis. Amortization is provided on the straight-line method over ten years for
licenses and trademarks. Amortization expense for the nine months ended
December 31, 1998 and the fiscal years ended March 31, 1998 and 1997 was $0.2
million, $0.05 million and $0.19 million, respectively. At December 31, 1998
and March 31, 1998, accumulated amortization of goodwill and other intangible
assets was $0.93 million and $0.73 million, respectively. The carrying value of
intangible assets is periodically reviewed and impairments, if any, are
recognized when the expected future benefit to be derived from individual
intangible assets is less than its carrying value. The carrying value of
goodwill will be periodically reviewed based on the future estimated
undiscounted cash flows to determine if any impairment should be recognized.

DEFERRED FINANCING AND ACQUISITION COSTS

Deferred financing and acquisition costs represent third party costs and
expenses incurred which are directly traceable to pending acquisitions and
financing efforts. The costs and expenses will be matched with completed
financings and acquisitions and accounted for according to the underlying
transaction.

F-12
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

SUMMARY OF ACCOUNTING POLICIES - (CONTINUED)

The costs and expenses associated with unsuccessful efforts will be expensed in
the period in which the acquisition or financing has been deemed to be
unsuccessful. The Company evaluates all pending acquisition and financing costs
quarterly to determine if any deferred costs should be expensed in the period.

REVENUE RECOGNITION

Revenue from the provision of calling card and IP transmission services is
recognized as utilized by customers. Billings to customers are based upon
established tariffs filed with the United States Federal Communications
Commission, or for usage outside of the tariff requirements, at rates
established by the Company.

TAXES ON INCOME

The Company accounts for income taxes under SFAS No. 109, "Accounting for
Income Taxes". Under SFAS No. 109, deferred tax assets and liabilities are
determined based on the temporary differences between the tax basis of assets
and liabilities and their reported amounts in the financial statements using
enacted tax rates in effect for the year in which the differences are expected
to reverse.

NET EARNINGS (LOSS) PER SHARE

The Company applies SFAS No. 128, "Earnings Per Share" for the calculation
of "Basic" and "Diluted" earnings (loss) per share. Basic earnings (loss) per
share includes no dilution and is computed by dividing income (loss) available
to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings (loss) per share reflects the
potential dilution of securities that could share in the earnings (loss) of an
entity.

STOCK OPTIONS

The Company applies Accounting Principles Board ("APB") Opinion 25,
"Accounting for Stock Issued to Employees," and related Interpretations in
accounting for all stock option plans. Under APB Opinion 25, no compensation
cost has been recognized for stock options granted to employees as the option
price equals or exceeds the market price of the underlying common stock on the
date of grant.

SFAS No. 123, "Accounting for Stock-Based Compensation," requires the
Company to provide pro forma information regarding net income (loss) as if
compensation cost for the Company's stock option plans had been determined in
accordance with the fair value based method prescribed in SFAS No. 123. To
provide the required pro forma information, the Company estimates the fair
value of each stock option at the grant date by using the Black-Scholes
option-pricing model. See Note 11 for required disclosures.

Under SFAS No. 123, compensation cost is recognized for stock options
granted to non-employees at the grant date by using the Black-Scholes
option-pricing model.

CASH EQUIVALENTS

The Company considers cash and all highly liquid investments purchased
with an original maturity of three months or less to be cash equivalents.

COMPREHENSIVE INCOME (LOSS)

During the period ended December 31, 1998, the Company adopted SFAS No.
130, "Reporting Comprehensive Income". The implementation of SFAS No. 130
required comparative information for earlier years to be restated.
Comprehensive income (loss) is comprised of net income (loss) and all

F-13
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

SUMMARY OF ACCOUNTING POLICIES - (CONTINUED)

changes to stockholders' equity, except those due to investments by
stockholders, changes in paid-in capital and distributions to stockholders. The
Company has elected to report comprehensive income (loss) in a consolidated
statement of comprehensive income (loss).

RECENT ACCOUNTING PRONOUNCEMENTS

The FASB has recently issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at fair
market value. Gains or losses resulting from changes in the values of those
derivatives are accounted for depending on the use of the derivative and
whether it qualifies for hedge accounting. The key criterion for hedge
accounting is that the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for fiscal years beginning after June 15, 1999 and is currently not
applicable to the Company.

RECLASSIFICATIONS

Certain consolidated financial amounts have been reclassified for
consistent presentation.

F-14
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. PROPERTY AND EQUIPMENT

Property and equipment at December 31, and March 31, 1998 consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1998
-------------- -------------
<S> <C> <C>
Land .............................................. $ 122,300 $ 192,300
Buildings and improvements ........................ 983,053 941,458
Calling card platform equipment ................... 13,480,369 12,424,718
IP transmission equipment ......................... 887,540 --
Operations center equipment and furniture ......... 8,085,517 7,142,360
Call diverters .................................... 1,400,855 1,400,855
Equipment under capital leases (Note 4) ........... 1,278,743 949,322
Internet communications equipment ................. 562,700 563,175
----------- -----------
26,801,077 23,614,188
Less accumulated depreciation and amortization. 13,648,667 11,702,878
----------- -----------
$13,152,410 $11,911,310
=========== ===========
</TABLE>

Property and equipment at December 31, 1998 and March 31, 1998, includes
certain telephone, IP transmission equipment and office equipment under capital
lease agreements with an original cost of approximately $1.3 million and $1.0
million, respectively and accumulated depreciation of $0.4 million and $0.3
million, respectively. Depreciation expense for the nine month period ended
December 31, 1998 and the years ended March 31, 1998 and 1997 was $2.1 million,
$2.7 million and $1.6 million, respectively.

2. ACCRUED EXPENSES

Accrued expenses at December 31, 1998 and March 31, 1998 consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1998
-------------- -------------
<S> <C> <C>
Telephone carriers ......................... $3,091,457 $2,591,511
Corporate realignment expenses ............. 350,830 754,849
Legal and professional fees ................ 387,130 320,341
Salaries and benefits ...................... 513,230 267,681
Interest expense ........................... 646,360 64,714
Costs associated with acquisitions ......... 696,955 --
Other ...................................... 517,215 223,710
---------- ----------
$6,203,177 $4,222,806
---------- ----------
</TABLE>

The Company incurred various realignment expenses during the year ended
March 31, 1998 resulting from the review of operations and activities
undertaken by new corporate management. These costs, which totaled $3.1
million, included primarily employee severance, legal and consulting fees and
the write down of certain investments made in the Company's Internet service
development program. The Company does not anticipate further realignment
expenses in the future. Costs associated with acquisitions primarily consists
of $0.4 million for billing system development costs for a pending acquisition
and $0.2 million for legal fees related to the issuance of certain preferred
stock subsequent to December 31, 1998.

F-15
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

3. NOTES PAYABLE, PRINCIPALLY RELATED TO ACQUISITIONS

At December 31 and March 31, 1998, current notes payable consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1998
-------------- ----------
<S> <C> <C>
12 % unsecured term note payable to an investor, net of unamortized
discount of $26,351, interest and principal due in March 1999 (1) ............. $ 223,649 $ --
Convertible subordinated promissory note for acquisition of IDX,interest and
principal repaid in March 1999 through issuance of common stock. (2) (See
Note 6) ....................................................................... 1,000,000 --
Convertible subordinated promissory note for acquisition of IDX, interest
and principal payable May 1999. (2) (See Note 6) .............................. 418,024 --
Convertible subordinated promissory note for acquisition of IDX, interest
and principal payable June 1999. (2) (See Note 6) ............................. 1,500,000 --
Convertible subordinated promissory note for acquisition of IDX, interest
and principalpayable October 1999. (2) (See Note 6) ........................... 2,500,000 --
8% promissory note for acquisition of UCI, interest and principal payable
June 1999, net of unamortized discount of $42,967 (3) (See Note 6) ............ 457,033 --
Short-term loan from two officers (See Note 10) ................................ 100,000 --
Short-term note payable to an investor in April 1999. .......................... 100,000 --
---------- ----
Total notes payable ............................................................ $6,298,706 $ --
========== ====
</TABLE>

- ----------
(1) In September 1998, a subsidiary of the Company entered into a bridge loan
agreement with an investor for $250,000. The proceeds were advanced to a
company that is developing messaging technology. The Company is in the
process of negotiating a joint venture arrangement whereby it would own
50% of this software technology. (See Note 17). In connection with this
transaction, the lender was granted warrants to purchase 25,000 shares of
the Company's common stock at a price of $2.00 per share. The value
assigned to the warrants of $26,351 was recorded as a discount to the note
and will be amortized through March 1999 as additional interest expense.
The warrants expire on September 1, 2003 and as of December 31, 1998,
these warrants have not been exercised. The Company is currently
negotiating with the lender to extend this loan. However, there can be no
assurance that such extension will be received.

(2) In December 1998, the Company acquired IDX. In connection with this
transaction, convertible subordinated promissory notes were issued in the
amount of $5.0 million. An additional note of $0.4 million for accrued but
unpaid dividends owed by IDX was also issued by the Company and is due May
31, 1999. The notes bear interest at LIBOR plus 2.5% (7.75% at December
31, 1998). Each of the notes, plus accrued interest, may be paid in cash
or shares of the Company's common stock, at the sole discretion of the
Company. If the Company elects to pay the notes with common stock, the
price of the common stock on the due date of the notes determines the
number of shares to be issued. In March 1999, the Company elected to pay
the first note (including interest) in shares of common stock and issued
approximately 474,000 shares of common stock to discharge this
indebtedness. (See Note 6 for a description of a possible reduction in the
principal amount of the convertible subordinated promissory notes
payable).

(3) On December 31, 1998, the Company acquired UCI. In connection with this
transaction, the Company issued a promissory note for $0.5 million bearing
interest at 8% due June 27, 1999. In connection with the note, UCI was
granted warrants to purchase 50,000 shares of the Company's common stock
at a price of $1.63 per share. The warrants expire on December 31, 2003.
The value assigned to the warrants of $42,967 was recorded as a discount
to the note and will be amortized through June 1999 as additional interest
expense. At December 31, 1998, these warrants have not been exercised.
(See Note 6 for further discussion).

F-16
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

4. LONG-TERM DEBT

At December 31 and March 31, 1998 long-term debt consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1998
-------------- -------------
<S> <C> <C>
8.875% unsecured term note payable to a telecommunications company,
interest and principal payable August 1999, net of unamortized discount
of $205,932 and $437,608 (1) ................................................ $7,294,068 $ 7,062,392
8.87% unsecured term note payable to a stockholder, interest and principal
payable December 1999, net of unamortized discount of $45,844 (2) ........... 954,156 --
8% promissory note for acquisition of UCI, interest and principal payable
June 2000 (See Note 6) ...................................................... 500,000 --
8% mortgage note, payable monthly, including interest through March
2010, with an April 2010 balloon payment; secured by deed of trust on
the related land and building ............................................... 305,135 310,000
Capitalized lease obligations ................................................ 724,199 607,209
---------- -----------
Total ........................................................................ 9,777,558 7,979,601
Less current maturities, net of unamortized discount of $251,776 and
$437,608 .................................................................... 8,540,214 244,020
---------- -----------
Total long-term debt ......................................................... $1,237,344 $ 7,735,581
========== ===========
</TABLE>

- ----------
(1) In February 1998, the Company borrowed $7.5 million from a
telecommunications company. In connection with this transaction, the
lender was granted warrants to purchase 500,000 shares of the Company's
common stock at a price of $3.03 per share. The warrants expire on
February 23, 2001. The value assigned to such warrants when granted in
connection with the above note agreement was approximately $0.5 million
and was recorded as a discount to long-term debt. The discount is being
amortized over the term of the note as interest expense. At December 31,
1998, these warrants have not been exercised.

(2) In June 1998, the Company borrowed $1.0 million from an existing
stockholder. In connection with this transaction, the lender was granted
warrants to purchase 67,000 shares of the Company's common stock at a
price of $3.03 per share. The warrants expire in June 2001. The
stockholder also received as consideration for the loan the repricing and
extension of a warrant for 55,000 shares which is now exercisable on or
before February 2001 at a price of $3.75 per share. The value assigned to
such warrants, including the revision of terms, was approximately $68,846
and was recorded as a discount to the note payable. The discount is being
amortized over the term of the note as interest expense. At December 31,
1998, these warrants have not been exercised. Subsequent to year end, the
exercise price of the 122,000 warrants was lowered to $1.5125 per share
and the expiration dates were extended through January 31, 2002. The value
assigned to the revision in terms will be recorded as additional interest
expense in 1999.

F-17
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Future maturities of long-term debt and future minimum lease payments
under capital lease obligations at December 31, 1998 are as follows:

<TABLE>
<CAPTION>
LONG-TERM CAPITAL
YEAR ENDING DECEMBER 31, DEBT LEASES TOTAL
- ---------------------------------------------- ------------- ------------ --------------
<S> <C> <C> <C>
1999 ....................................... $8,506,956 $ 362,545 $ 8,869,501
2000 ....................................... 507,534 321,115 828,649
2001 ....................................... 8,159 189,939 198,098
2002 ....................................... 8,836 -- 8,836
2003 ....................................... 9,569 -- 9,569
Thereafter ................................. 264,081 -- 264,081
---------- --------- -----------
Total payments ............................. 9,305,135 873,599 10,178,734
Less amounts representing interest ......... -- 149,400 149,400
---------- --------- -----------
Principal payments ......................... 9,305,135 724,199 10,029,334
Less current maturities .................... 8,506,956 285,034 8,791,990
---------- --------- -----------
Total Long-Term Debt ....................... $ 798,179 $ 439,165 $ 1,237,344
========== ========= ===========

</TABLE>

Subsequent to December 31, 1998, the Company entered into additional
capital lease obligations requiring future minimum lease payments of
approximately $0.6 million through 2001.

5. EARNINGS (LOSS) PER SHARE

Earnings per share are calculated in accordance with SFAS No. 128,
"Earnings Per Share". Under SFAS No. 128, basic earnings (loss) per share is
calculated as income (loss) available to common stockholders divided by the
weighted average number of common shares outstanding. Diluted earnings per
share is calculated as net income (loss) divided by the diluted weighted
average number of common shares. The diluted weighted average number of common
shares is calculated using the treasury stock method for common stock issuable
pursuant to outstanding stock options and common stock warrants. Common stock
options and warrants of 44,234 and 203,782 were not included in diluted earning
(loss) per share for the nine months ended December 31, 1998 and the fiscal
year ended March 31, 1998, respectively, as the effect was antidilutive due to
the Company recording a loss for these periods. In addition, convertible
preferred stock and convertible subordinated promissory notes convertible into
5,323,926 shares of common stock were not included in diluted earnings (loss)
per share for the nine month period ended December 31, 1998 due to the loss for
the period.

Options and warrants to purchase 2,017,317 shares of common stock at
exercise prices ranging from $2.56 to $6.61 per share and convertible preferred
stock convertible into 1,875,000 shares of common stock were outstanding at
December 31, 1998 but were not included in the computation of diluted earnings
(loss) per share because the exercise prices or conversion price were greater
than the average market price of the common stock. Options and warrants to
purchase 2,049,315 shares of common stock at exercise prices from $3.00 to
$6.94 per share were outstanding at March 31, 1998 but were not included in the
computation of diluted earnings (loss) per share because the exercise prices
were greater than the average market price of the common shares. Options and
warrants to purchase 821,087 shares of common stock at exercise prices from
$5.75 to $14.88 per share were outstanding at March 31, 1997 but were not
included in the computation of diluted earnings (loss) per share because the
exercise prices were greater than the average market price of the common
shares.

Contingently issuable warrants to purchase up to 2,500,000 shares of
common stock (subject to stockholder approval) related to a recent acquisition
have not been included in the computation of diluted earnings (loss) per share
as the contingency had not been met as of December 31, 1998. See Note 6.

F-18
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Various issuances of convertible preferred stock, relating to financings
and acquisitions, have been completed both prior to and subsequent to December
31, 1998 that could have a significant effect on the weighted average number of
common shares in future periods. See Notes 11 and 17 for further disclosure.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED
DECEMBER 31, ------------------------------------
1998 1998 1997
----------------- ------------------ ---------------
<S> <C> <C> <C>
Basic Earnings (Loss) Per Share:
Numerator
Net earnings (loss) ........................................ $ (7,090,192) $ (13,289,910) $ 773,952
Denominator
Weighted average shares outstanding ........................ 17,736,654 17,082,495 15,861,240
------------- -------------- ------------
Per Share Amounts
Basic earnings (loss) ...................................... $ (0.40) $ (0.78) $ 0.05
------------- -------------- ------------
Diluted Earnings (Loss) Per Share:
Numerator
Net earnings (loss) ........................................ $ (7,090,192) $ (13,289,910) $ 773,952
Denominator
Weighted average shares outstanding ........................ 17,736,654 17,082,495 15,861,240
Effect of dilutive securities Options and warrants ......... -- -- 297,390
------------- -------------- ------------
Weighted average common shares and assumed
conversions outstanding ................................... 17,736,654 17,082,495 16,158,630
------------- -------------- ------------
Per Share Amounts
Diluted earnings (loss) .................................... $ (0.40) $ (0.78) $ 0.05
------------- -------------- ------------

</TABLE>

6. BUSINESS ACQUISITIONS

All acquisitions have been accounted for under the purchase method of
accounting. The results of operations of the acquired businesses are included
in the consolidated financial statements from the date of acquisition.

IDX - On December 2, 1998, the Company acquired all of the common and
preferred stock of IDX, a privately-held IP based fax and telephony company,
for (a) 500,000 shares of the Company's Series B Convertible Preferred Stock
("Series B Preferred") valued at $3.5 million which are convertible into
2,500,000 shares (2,000,000 shares until stockholder approval is obtained and
subject to adjustment as described below) of common stock; (b) warrants ("IDX
Warrants") to purchase up to an additional 2,500,000 shares of common stock
(subject to stockholder approval as well as adjustment as described below); (c)
$5.0 million in 7.75% convertible subordinated promissory notes ("IDX Notes")
(subject to adjustment as described below); (d) $1.5 million in bridge loan
advances to IDX made by the Company prior to the acquisition which were
converted into part of the purchase price plus associated accrued interest of
$0.04 million; (e) $0.4 million for IDX dividends accrued and unpaid on IDX's
Preferred Stock under a convertible subordinated promissory note and (f) direct
costs associated with the acquisition of $0.4 million. The Company also
advanced approximately $0.4 million to IDX prior to acquisition under an
agreement to provide IDX up to $2.3 million for working capital purposes over
the next twelve months. These pre-acquisition advances were not considered part
of the purchase price.

The Company plans to include these requests for the approval of the
warrants and additional stock as matters to be voted upon by the stockholders
at the next annual meeting. This acquisition has been accounted for under the
purchase method of accounting. The financial statements of the Company reflect

F-19
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

the preliminary allocation of the purchase price. The preliminary allocation
has resulted in acquired goodwill of $10.9 million that is being amortized on a
straight-line basis over seven years. The purchase price allocation has not
been finalized pending resolution of several purchase price elements, which are
contingent upon the following:

(a) The amounts of Series B Preferred Stock and IDX Warrants to be
issued are subject to stockholder approval subsequent to the date of
acquisition.

(b) IDX's ability to achieve certain revenue and EBITDA represents
operating income before interest expense, income taxes, depreciation and
amortization) objectives twelve months after the acquisition date may limit
the amount of warrants to be granted as well as eliminate the Company's
price guarantee as discussed in (d) below.

(c) The shares of Series B Preferred stock are convertible at the
holders' option at any time at the then current conversion rate. The shares
of Series B Preferred stock will automatically convert into shares of
common stock on the earlier to occur of (a) the first date that the 15 day
average closing sales price of common stock is equal to or greater than
$8.00 or (b) 30 days after the later to occur of (i) December 2, 1999 or
(ii) the receipt of any necessary stockholder approval relating to the
issuance of the common stock upon such conversion. The Company has
guaranteed a price of $8.00 per share on December 2, 1999, subject to IDX's
achievement of certain revenue and EBITDA objectives. If the market price
of the common stock is less than $8.00 on December 2, 1999, and IDX has met
its performance objectives, the Company will issue additional shares of
common stock upon conversion of the Series B Preferred stock (subject to
the receipt of any necessary stockholder approval) based on the ratio of
$8.00 to the market price (as defined, but not less than $3.3333 per
share), but not more than 3.5 million additional shares of common stock
will be issued.

(d) The Company has guaranteed a price of $8.00 per common stock share
relative to the warrants issuable as of December 2, 1999, subject to IDX's
achievement of certain revenue and EBITDA objectives. If these objectives
are achieved and the market price of the common stock is less than $8.00 on
December 2, 1999, the Company will issue additional shares of common stock
upon exercise of the IDX Warrants based on the ratio of $8.00 to the market
price (as defined, but not less than $3.3333 per share), up to a maximum of
3.5 million additional shares of common stock. However, if the average
closing sales price of the common stock for any 15 consecutive days equals
or is greater than $8.00 per share prior to December 2, 1999 there is no
price guarantee upon exercise of the warrants. The IDX warrants cannot be
issued until stockholder approval is obtained.

(e) IDX must meet certain working capital levels at the date of
acquisition. To the extent that IDX has a working capital deficiency, as
defined, as of the date of acquisition, the Company may reduce the number
of shares of the Series B Preferred Stock currently held by the
stockholders and may in some circumstances reduce the amount outstanding on
the principal balance of the third IDX note referred to below.

(f) The Company is obligated to pay accrued but unpaid dividends
("Accrued Dividends") on IDX's previously outstanding preferred stock under
an interest bearing convertible subordinated promissory note in the
principal amount of approximately $0.4 million due May 31, 1999. The
Company, however, is entitled to reduce the $2.5 million principal balance
of the third IDX Note as discussed below and in Note 3 by the amount of the
Accrued Dividends and certain defined amounts unless offset by proceeds
from the sale of an IDX subsidiary and a note issued to IDX by an option
holder. The Company may also elect to pay this obligation in cash or in
shares of common stock.

(g) The IDX Notes consist of four separate notes and are payable in cash
or common stock at the Company's sole discretion. The notes have varying
maturity dates through October 31, 1999. See Note 3 for the terms and
conditions of the IDX Notes. Payment of the IDX Notes is subject to
adjustment upon the resolution of certain contingencies as discussed above.

F-20
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Based on the contingent purchase price elements as listed above, goodwill
associated with the acquisition may materially increase when these
contingencies are resolved.

The following unaudited pro forma consolidated results of operations are
presented as if the IDX acquisition had been made at the beginning of the
periods presented. For March 31, 1998 pro forma results, IDX amounts include
its December 31, 1997 year end as compared to the Company's March 31, 1998 year
end. The one month period of IDX for December 1998, is included in the
Company's results of operations for the nine months ended December 31, 1998. As
a result, for comparative purposes, the Company has included an eight month
period of IDX from April 1, 1998 through November 30, 1998 in its nine months
ended December 31, 1998 pro forma results below.

<TABLE>
<CAPTION>
PERIODS ENDED
-------------------------------------
DECEMBER 31, MARCH 31,
1998 1998
----------------- -----------------
<S> <C> <C>
Net Revenues ............................. $ 24,251,500 $ 33,690,777
Net Loss ................................. $ (10,053,116) $ (16,548,510)
Basic and Diluted Loss Per Share ......... $ (0.47) $ (0.85)

</TABLE>

UCI - On December 31, 1998, the Company acquired all of the common stock
issued and outstanding of UCI, a privately-held corporation established under
the laws of the Republic of Cyprus, for 125,000 shares of common stock (50%
delivered at the acquisition date and 50% to be delivered February 1, 2000,
subject to adjustment), and $2.1 million payable as follows: (a) $75,000
payable in cash in January 1999; (b) $0.5 million in the form of a note, with
8% interest payable monthly due June 30, 1999; (c) $0.5 million in the form of
a note, with 8% interest payable monthly due no later than June 30, 2000; (d)
$1.0 million in the form of a non-interest bearing note ("Anniversary Payment")
to be paid on February 1, 2000 or December 31, 2000, depending on the
percentage of projected revenue achieved, subject to adjustment; and (e)
warrants to purchase 50,000 shares of common stock with an exercise price of
$1.63 per share. See Note 3 for the terms and conditions of the two $0.5
million UCI Notes. The 62,500 shares of common stock issued at the acquisition
date were valued at $101,563. The Company has agreed to register for resale the
shares of common stock and UCI warrants.

This acquisition has been accounted for under the purchase method of
accounting. The financial statements of the Company reflect the preliminary
purchase price allocation. The purchase price allocation has not been finalized
pending resolution of several purchase price elements, which are contingent
upon the following:

F-21
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

(a) If the closing sales price on NASDAQ of the Company's common stock
on February 1, 2000 is less than $8.00, additional shares will be issued
determined by subtracting (i) $1.0 million divided by the closing sales
price on February 1, 2000 from (ii) 125,000. These shares as well as the
62,500 shares to be delivered are subject to adjustment as discussed below.

(b) If UCI does not achieve 100% of its $3.0 million projected revenue
target as of February 1, 2000, for each 10% by which the projected revenue
is less than 100% of the projected revenue target, there will be a 10%
reduction in the Anniversary Payment and the number of shares issuable
pursuant to (a).

(d) If the Company completes a private financing and receives between
$10 million to $19.9 million or $20 million, it will be required to repay
50% or 100%, respectively, of the outstanding principal and interest of the
first note as discussed above.

(e) If after the date of acquisition, a contract with a major customer
of UCI is cancelled and it is not reinstated or replaced by June 30, 1999,
the principal amount of the first and second note as discussed above will
be adjusted.

Based on the contingent purchase price elements as listed above, goodwill
associated with the acquisition may increase when these contingencies are
resolved. UCI had minimal operations prior to the acquisition and the aggregate
value of the non-contingent consideration of $1.2 million has been recorded as
goodwill and will be amortized, on a straight-line basis, over seven years. The
effects of the acquisition of UCI are not material to net revenues, net
earnings or earnings per share for pro forma information purposes and,
accordingly, has not been included in the pro forma presentation presented for
IDX above.

7. SETTLEMENT WITH PRINCIPAL STOCKHOLDER

In November 1998, the Company reached an agreement with its former
chairman, Mr. Ronald Jensen, who is also the Company's largest stockholder. The
agreement concerned settlement of his unreimbursed costs and other potential
claims.

Mr. Jensen had purchased $7.5 million of eGlobe's common stock in a
private placement in June 1997 and later was elected Chairman of the Board of
Directors. After approximately three months, Mr. Jensen resigned his position
citing both other business demands and the demands presented by the challenges
of the Company. During his tenure as Chairman, Mr. Jensen incurred staff and
other costs which were not billed to the Company. Also, Mr. Jensen subsequently
communicated with the Company's current management indicating that there were a
number of issues raised during his involvement with the Company relating to the
provisions of his share purchase agreement which could result in claims against
the Company.

In order to resolve all current and potential issues, Mr. Jensen and the
Company agreed to exchange his current holding of 1,425,000 shares of common
stock for 75 shares of 8% Series C Cumulative Convertible Preferred Stock
("Series C Preferred"), which management estimated to have a fair market value
of approximately $3.4 million and a face value of $7.5 million. The terms of
the Series C Preferred stock permit Mr. Jensen to convert the face value of the
preferred stock to common stock at 90% of market price, subject to a minimum
conversion price of $4.00 per share and a maximum of $6.00 per share. The
difference between the estimated fair value of the preferred stock issued and
the market value of the common stock surrendered resulted in a one-time
non-cash charge to the Company's statement of operations of approximately $1.0
million for the quarter ended September 30, 1998, with a corresponding credit
to stockholders' equity. See Note 11 for further discussion of the terms of the
Series C Preferred.

F-22
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

In February 1999, contemporaneous with a financing transaction between the
Company and Mr. Jensen, the conversion terms of the Series C Preferred were
amended and Mr. Jensen agreed to exchange his Series C Preferred for 3,000,000
shares of common stock. See Note 17 for further discussion.

8. PROXY RELATED LITIGATION AND SETTLEMENT COSTS

The Company, its former auditors, certain of its present and former
directors and others were defendants in a consolidated securities class action
which alleged that certain public filings and reports made by the Company,
including its Forms 10-K for the 1991, 1992, 1993 and 1994 fiscal years (i) did
not present fairly the financial condition of the Company and its earnings; and
(ii) failed to disclose the role of a consultant to the Company.

The Company and its former auditors vigorously opposed the action,
however, the Company decided it was in the stockholders' best interest to
curtail costly legal proceedings and settle the case.

Under the Stipulation of Settlement dated April 2, 1998, the Company
issued 350,000 shares of its common stock into a Settlement Fund that will be
distributed among the Class. Settlement becomes effective only upon entry of a
final judgment by the Court and upon entry of final judgments in two related
Delaware Actions (which as of March 31, 1999 have not yet been received), and
upon the expiration of the time to appeal or upon exhaustion of appellate
review in this action, were any appeal to be taken.

As a result of the above action and related matters, the Company recorded
$0.1 million, $3.9 million and $0.5 million in costs and expenses during the
nine months ended December 31, 1998 and the years ended March 31, 1998 and
1997. Included in the March 31, 1998 amount, is a charge of $3.5 million which
represented the value assigned to the 350,000 shares of common stock referred
to above, which were valued at $10.00 per share pursuant to the terms of the
settlement agreement. Such value relates to the Company's obligation to issue
additional stock if the market price of the Company's stock is less than $10.00
per share during the defined periods. The Company has no obligation to issue
additional stock if its share price is above $10.00 per share for fifteen
consecutive days during the two year period after all shares have been
distributed to the Class. As of December 31, 1998, all of the shares have not
been distributed to the Class and therefore the start of the two year window
has not commenced.

Additionally, the Company settled with another stockholder related to the
same securities class action in May 1998 and issued that stockholder 28,700
shares of common stock at the market price at the date of settlement for a
total value of $0.08 million.

9. OTHER LITIGATION

The Company is a defendant in an action brought by a Colorado reseller of
transmission services. The lawsuit arises out of a transaction wherein the
plaintiff and the Company contemplated forming a limited liability company for
purposes of developing sales opportunities generated by the plaintiff. The
Company and the plaintiff were unable to arrive at a definitive agreement on
their arrangement and the plaintiff sued, claiming breach of a noncircumvention
agreement, notwithstanding the fact that the plaintiff agreed to and was a part
of the transaction. The Company believes this claim is without merit and plans
to defend this action vigorously.

A former officer of the Company who was terminated in the fall of 1997
filed suit against the Company in July 1998. The executive entered into a
termination agreement. The Company made the determination that there were items
which the executive failed to disclose to the Company and therefore the Company
ceased making payments to the executive pending further investigation. The
executive sued, claiming employment benefits including expenses, vacation pay
and rights to options. The Company is defending this action vigorously and
believes that it ultimately will prevail.

F-23
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Company and its subsidiaries are also parties to various other legal
actions and various claims arising in the ordinary course of business.
Management of the Company believes that the disposition of such other actions
and claims will not have a material effect on the financial position, operating
results or cash flows of the Company.

10. RELATED PARTY TRANSACTION

On December 31, 1998, two officers of the Company each loaned $0.05
million to the Company for short term needs. The loans were repaid, including a
1% fee, in February 1999.

In June 1998, an existing stockholder loaned the Company $1.0 million. See
Note 4 for a description of this transaction. Subsequent to December 31, 1998,
this same stockholder loaned $0.2 million to the Company for short term needs.
This $0.2 million note was subsequently converted into 125,000 shares of common
stock. See Note 17 for further discussion.

As described in Notes 17 and 18, an affiliate of the Company's largest
stockholder made two financing commitments to the Company subsequent to year
end totaling $25.0 million.

11. STOCKHOLDERS' EQUITY

Common Stock

On June 3, 1997, the Board of Directors approved the sale of 1,425,000
shares of the Company's common stock for $7.5 million to Mr. Ronald Jensen.
Proceeds of $3.0 million from the sale were used to reduce long-term debt. The
remainder of the proceeds was used for working capital. In November 1998, the
Company agreed to issue shares of Series C Preferred Stock in exchange for the
1,425,000 shares of common stock as described in Note 7. In February 1999,
contemporaneous with a financing transaction between the Company and Mr. Jensen
(see Note 17), Mr. Jensen agreed to exchange his Series C Preferred for
3,000,000 shares of common stock.

As described in Note 8, during the nine months period ended December 31,
1998 and year ended March 31, 1998, the Company agreed to issue 28,700 shares
and 350,000 shares of common stock in connection with the settlement of
litigation.

As described below and in Note 6, in December 1998 the Company made two
acquisitions. The equity consideration paid to date for these acquisitions
includes the issuance of Series B Preferred Stock convertible into 2,000,000
(subject to stockholder approval the preferred will be convertible into
2,500,000) shares of common stock and the issuance of 62,500 shares of common
stock. Equity consideration paid for these acquisitions is subject to
adjustment upon resolution of certain contingencies as discussed in Note 6.

Preferred Stock

Per the Company's restated certificate of incorporation and as approved by
the Company's stockholders on May 14, 1996, the Board of Directors was given
the authority to issue up to 5,000,000 shares of preferred stock without
obtaining further stockholder approval. The preferred stock can be issued in
series. The rights and preferences of preferred stock are established by the
Company's Board of Directors upon issuance of each series. As of December 31,
1998, the following series of stock were authorized by the Board of Directors.

Series B Convertible Preferred Stock

In connection with the IDX acquisition, the Company issued 500,000 shares
of Series B Convertible Preferred Stock ("Series B"), certain warrants and
promissory notes in the original principal amount of $5.0 million subject to
adjustment in exchange for all the outstanding common and preferred shares of

F-24
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

IDX. (See Note 6 for further information regarding the IDX acquisition). The
shares of Series B stock are convertible at the holders' option at any time at
the then current conversion rate (currently at a 4 to 1 ratio of common stock
to preferred). The shares of Series B will automatically convert into shares of
common stock on the earlier to occur of (a) the first date that the 15 day
average closing sales price of common stock is equal to or greater than $8.00
or (b) 30 days after the later to occur of (i) December 2, 1999 or (ii) the
receipt of any necessary stockholder approval relating to the issuance of the
common stock upon such conversion. The Company has guaranteed a price of $8.00
per share on December 2, 1999, subject to IDX's achievement of certain revenue
and EBITDA objectives. If the market price of the common stock is less than
$8.00 per share on December 2, 1999 and IDX has met its performance objectives,
the Company will issue additional shares of common stock upon conversion of the
Series B stock (subject to stockholder approval) based on the ratio of $8.00 to
the market price (as defined, but not less than $3.3333 per share), but not
more the 3.5 million additional shares of common stock will be issued. The
Series B stock has no stated liquidation preferences, is not redeemable and has
weighted voting rights equal to 25% of the number of common shares into which
it can be converted. The holders of the Series B stock are not entitled to
dividends unless declared by the Board of Directors.

8% Series C Cumulative Convertible Preferred Stock

The Company authorized 275 shares of 8% Series C Cumulative Convertible
Preferred Stock ("Series C"), with a par value of $.001 per share. These shares
can be issued in different series. All series have identical rights,
preferences, privileges and restrictions. The holders of Series C stock are
entitled to receive cumulative annual dividends at 8% of the liquidation price
($0.1 million per share) when declared by the Board of Directors. Dividends
accrue from the issuance date of the stock and are fully cumulative. Cumulative
dividends shall be payable quarterly beginning September 30, 2000 when declared
by the Board of Directors. The terms of the Series C stock permit the holders
to convert the Series C stock into the number of common shares equal to the
face value of the preferred stock divided by 90% of the market price, but with
a minimum conversion price of $4.00 per share and an maximum conversion price
of $6.00 per share, subject to adjustment if the Company issues common stock
for less than the conversion price. If the holder of the Series C stock
converts the Series C stock to common stock, all rights to accrued dividends
shall be waived. If the Company does not achieve certain gross revenue targets
by a specific date, the Company will issue warrants to purchase 5,000 shares of
common stock for each share of Series C stock at an exercise price of $0.01 per
share. The warrants will be issuable and exercisable only if the last reported
sales price of the common stock has not exceeded a price per share equal to
125% of the initial conversion price of the Series C stock to common stock. The
Series C has no voting rights unless the dividend payments are in arrears for
six quarters. Should that occur, the holders of the Series C stock have the
right to elect a director to the Board. The Company must obtain an affirmative
vote representing at least 66 2/3% of the outstanding shares of Series C stock
before the Company can issue any preferred stock which would be senior to or
pari passu with the Series C stock. This condition excludes Series A preferred
stock.

In November 1998, in connection with a settlement with the Company's
largest stockholder (see Note 7), 75 shares of Series C stock were issued to
Mr. Ronald Jensen in exchange for 1,425,000 shares of common stock to resolve
issues relating to the provisions of his share purchase agreement which could
have resulted in claims against the Company. Under the Series C stock
agreement, if at July 1, 1999 the Company did not achieve certain revenue
tests, 5,000 warrants would be issued for each share of Series C stock held by
Mr. Jensen. These warrants would have had an exercise price of $0.01 per share
and would have been issuable and exercisable contingent upon certain stock
prices of the Company's common stock. Mr. Jensen waived all rights to accrued
dividends and warrants upon conversion of the Series C stock into 3,000,000
shares of common stock. See Note 17 for further discussion.

F-25
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Series A Participating Preferred Stock

In February 1997, the Company adopted a rights plan and entered into a
stockholders rights agreement that provides for the issuance of rights for each
share of common stock outstanding on February 28, 1997. Each right represents
the right to purchase one one-hundredth of a share of the Company's Series A
Participating Preferred Stock ("Series A") at a price of $70 per one-hundredth
of a share of Series A, subject to adjustment. All shares issued between the
date of adoption of the Rights Agreement and the distribution date (as defined
in the Rights Agreement) will have the Rights attached to them. The Rights
become exerciseable upon the occurrence of certain defined change of control
triggering events. The Rights will have certain anti-takeover effects, as they
will cause substantial dilution to a person or group that acquires a
substantial interest in the Company without the prior approval of the Company's
Board of Directors.

Employee Stock Option and Appreciation Rights Plan

On December 14, 1995, the Board of Directors adopted the Employee Stock
Option and Appreciation Rights Plan (the "Employee Plan"), expiring December
15, 2005, reserving for issuance 1,000,000 shares of the Company's common
stock. The Employee Plan was amended and restated in its entirety during the
year ended March 31, 1998, including an increase in the number of shares
available for grant to 1,750,000 representing an increase of 750,000 shares.

The Employee Plan provides for grants to key employees, advisors or
consultants to the Company at the discretion of the Compensation Committee of
the Board of Directors, of stock options to purchase common stock of the
Company. The Employee Plan provides for the grant of both "incentive stock
options," as defined in the Internal Revenue Code of 1986, as amended, and
nonqualified stock options. Options that are granted under the Employee Plan
that are incentive stock options may only be granted to employees (including
employee-directors) of the Company.

Stock options granted under the Employee Plan must have an exercise price
equal in value to the fair market value, as defined, of the Company's common
stock on the date of grant. Any options granted under the Employee Plan must be
exercised within ten years of the date they were granted. Under the Employee
Plan, Stock Appreciation Rights ("SAR's") may also be granted in connection
with the granting of an option and may be exercised in lieu of the exercise of
the option. A SAR is exercisable at the same time or times that the related
option is exercisable. The Company will pay the SAR in shares of common stock
equal in value to the excess of the fair market value, at the date of exercise,
of a share of common stock over the exercise price of the related option. The
exercise of a SAR automatically results in the cancellation of the related
option on a share-for-share basis.

During the nine months ended December 31, 1998 and the fiscal years ended
March 31, 1998 and 1997, the Compensation Committee of the Board of Directors
granted options to purchase an aggregate of 996,941, 1,584,629 and 439,600,
respectively, shares of common stock to its employees under the Employee Plan
at exercise prices from $1.469 to $3.813 per share for the nine months ended
December 31, 1998, $2.32 to $3.12 per share for the year ended March 31, 1998
and $5.75 to $9.00 per share for 1997. The employees were also granted SAR's in
tandem with the options granted to them in connection with grants prior to
December 5, 1997.

As of December 31, 1998, options outstanding under this Employee Plan
exceeded the shares available for grant by 390,109 shares. It is management's
intention to request stockholder approval to merge the Director Plan (see
below) into the Employee Plan, thereby permitting shares currently reserved for
issuance under the Director Plan to be used to remedy this deficiency.

Directors Stock Option and Appreciation Rights Plan

On December 14, 1995, the Board of Directors adopted the Directors Stock
Option and Appreciation Rights Plan (the "Director Plan"), expiring December
14, 2005. There are 870,000 shares of the Company's common stock reserved for
issuance under the Director Plan. The Director Plan was

F-26
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

amended and restated in its entirety during the year ended March 31, 1998 so
that it now closely resembles the Employee Plan. In the nine month period ended
December 31, 1998, the Director Plan was amended so that grants of options to
directors are at the discretion of the Board of Directors or the Compensation
Committee. In November 1997 and April 1998, each director (other than members
of the Compensation Committee) was granted an option under the Director Plan,
each to purchase 10,000 shares of common stock, with each option being
effective for five years commencing on April 1, 1998 and 1999, respectively,
and with each option vesting only upon the achievement of certain corporate
economic and financial goals. By December 31, 1998, all of these options,
totaling 120,000 options, were forfeited because not all of the corporate and
financial goals were met. Prior to the amendments to the Director Plan, each
director received an automatic grant of ten year options and a corresponding
SAR to purchase 10,000 shares of common stock on the third Friday in December
in each calendar year. During the nine months ended December 31, 1998 and the
fiscal years ended March 31, 1998 and 1997, the Compensation Committee of the
Board of Directors confirmed the grant of total options (including options with
vesting contingencies, to purchase 240,000, 85,000, and 60,000, respectively,
shares of common stock to its directors pursuant to the Company's Director Plan
at exercise prices of $1.81 to $3.19 per share for the nine month period ended
December 31, 1998, $2.63 to $2.69 per share for the year ended March 31, 1998
and $5.75 per share for 1997. These exercise prices were equal to the fair
market value of the shares on the date of grants. During the nine months ended
December 31, 1998, the Company recorded $184,788 in compensation expense
related to these director warrants.

Warrants

In connection with the issuance of debt, the Board of Directors granted
warrants to purchase an aggregate of 92,000, 949,267 and 466,667 shares of
common stock, respectively, during the nine months ended December 31, 1998 and
the two fiscal years ended March 31, 1998 and 1997, at exercise prices ranging
from $2.00 to $3.03 per share for the nine months ended December 31, 1998,
$0.01 to $6.61 per share for year ended March 31, 1998 and $7.88 to $14.88 for
fiscal 1997. As a result of the 10% stock split in 1996, certain warrants were
increased from 150,000 to 165,000. During the year ended March 31, 1998,
466,667 of the warrants granted above were cancelled as the terms of the
related debt were renegotiated. The fair value of warrants at the grant date
was recorded as unamortized discount against the related debt. These discounts
are being amortized to interest expense over the term of the loans using the
effective interest method. Additional interest expense related to these
warrants for the nine month period ended December 31, 1998 and the year ended
March 31, 1998 was $254,678 and $478,580, respectively. There was no
unamortized interest expense for the year ended March 31, 1997.

In the nine months ended December 31, 1998 and the years ended March 31,
1998 and 1997, the Board of Directors granted warrants to purchase an aggregate
of 2,500, 91,200 and 238,800 shares of common stock, respectively, to
non-affiliates at exercise prices of $2.00 per share for the nine month period
ended December 31, 1998, $2.75 per share for the years ended March 31, 1998 and
$6.88 to $6.98 for 1997. The fair value of these warrants at the date of grant
was recorded based on the underlying transactions. The warrants are exercisable
for periods ranging from 12 to 60 months. During the nine months ended December
31, 1998, 318,000 of the warrants granted above expired.

During the nine months ended December 31, 1998, the Board of Directors
granted warrants to purchase an aggregate of 2,550,000 (2,050,000 until
stockholder approval) shares of common stock to the stockholders or owners of
companies acquired as an element of the purchase price at exercise prices of
$0.01 to $1.63.The warrants to purchase 2,500,000 (2,000,000 until stockholder
approval) shares of common stock are exercisable contingent upon the acquired
company meeting certain revenue and EBITDA objectives twelve months from the
date of acquisition. See Note 6 for further information.

SFAS No. 123, "Accounting for Stock-Based Compensation" requires the
Company to provide pro forma information regarding net income (loss) and net
earnings (loss) per share as if compensation costs for the Company's stock
option plans and other stock awards had been determined in accordance with

F-27
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

fair value based method prescribed in SFAS No. 123. The Company estimates the
fair value of each stock award by using the Black-Scholes option-pricing model
with the following weighted-average assumptions used for grants in the nine
months ended December 31, 1998 and the fiscal years ended March 31, 1998 and
1997, respectively: no expected dividend yields for all periods; expected
volatility of 55%, 55% and 65%; risk-free interest rates of 4.51%, 5.82% and
5.91%; and expected lives of 3.65 years, 2 years and 1.5 years for the Plans
and stock awards.

Under the accounting provisions for SFAS No. 123, the Company's net
earnings (loss) and per earnings (loss) per share would have been decreased by
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
YEARS ENDED
NINE MONTHS ENDED MARCH 31,
DECEMBER 31, ----------------------------------
1998 1998 1997
------------------ ----------------- --------------
<S> <C> <C> <C>
Net Earnings (Loss)
As Reported ............ $ (7,090,192) $ (13,289,910) $ 733,952
Pro Forma .............. $ (7,440,099) $ (13,457,713) $ (801,214)
Earnings (Loss) Per Share
Basic:
As Reported .......... $ (0.40) $ (0.78) $ 0.05
Pro Forma ............ $ (0.42) $ (0.79) $ (0.05)
Diluted:
As Reported .......... $ (0.40) $ (0.78) $ 0.05
Pro Forma ............ $ (0.42) $ (0.79) $ (0.05)

</TABLE>

A summary of the status of the Company's stock option plans and
outstanding warrants as of December 31, 1998 and March 31, 1998 and 1997 and
changes during the nine months and years ending on those dates is presented
below:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1998
---------------------------------- --------------------------------
NUMBER OF WEIGHTED AVERAGE NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------------- ------------------ ------------- ------------------
<S> <C> <C> <C> <C>
Outstanding, beginning of Period . 3,412,489 $ 3.96 1,706,832 $ 6.58
Granted .............................. 4,256,441 $ 0.78 2,710,096 $ 3.47
Expired .............................. (1,037,604) $ 4.13 (986,091) $ 6.87
Exercised ............................ -- -- (18,348) $ 5.75
Outstanding, end of period ............ 6,631,326 $ 1.92 3,412,489 $ 3.96
Exercisable, end of period ............ 1,991,216 $ 3.86 1,875,860 $ 5.02
Weighted average fair value of
options and warrants granted
during the period .................... $ 1.43 $ 1.41

<CAPTION>
MARCH 31,
1997
-------------------------------
NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE
------------- -----------------
<S> <C> <C>
Outstanding, beginning of Period . 1,000,042 $ 5.55
Granted .............................. 849,267 $ 7.64
Expired .............................. (141,725) $ 5.52
Exercised ............................ (752) $ 5.26
Outstanding, end of period ............ 1,706,832 $ 6.58
Exercisable, end of period ............ 1,302,095 $ 6.78
Weighted average fair value of
options and warrants granted
during the period .................... $ 1.85
</TABLE>

Included in the above table are certain options and warrants that are
contingent based on various future performance measures. (See Notes 5 and 11).

F-28
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table summarizes information about stock options and
warrants outstanding at December 31, 1998:

<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
---------------------------- ---------------------------
WEIGHTED WEIGHTED
REMAINING REMAINING
RANGE OF EXERCISE NUMBER CONTRACTUAL NUMBER CONTRACTUAL
PRICE OF SHARES LIFE (YEARS) OF SHARES LIFE (YEARS)
------------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
$ 0.01 2,890,000 0.91 15,000 0.11
$ 1.47-2.03 776,209 4.19 420,599 4.37
$ 2.25-2.88 656,500 4.96 240,000 4.37
$ 3.00-4.50 1,620,000 3.04 627,000 1.40
$ 5.45-6.61 688,617 3.99 688,617 3.99
------------ --------- ---- ------- ----
Total ......... $ 0.01-6.61 6,631,326 2.54 1,991,216 3.75
------------ --------- ---- --------- ----
</TABLE>

12. TAXES ON INCOME

During the year ended March 31, 1998, the Company undertook a study to
simplify its organizational and tax structure and identified potential
international tax issues. In connection with this study, the Company determined
that it had potential tax liabilities and recorded an additional tax provision
of $1.5 million to reserve against liabilities which might arise under the
existing structure. Upon completion of this study in January 1999, the Company
initiated discussions with the Internal Revenue Service related to the U. S.
Federal income tax issues identified by the study and filed with the IRS
returns for the Company for the years ended March 31, 1991 through 1998
reflecting these findings. No additional tax reserve was recorded as of
December 31, 1998 after completion of the study. The eventual outcome of these
discussions and of any other issues cannot be predicted with certainty.

Taxes on income for the nine months ended December 31, 1998 and the years
ended March 31, 1998 and 1997, consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, MARCH 31,
1998 1998 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Current:
Federal .............................. $ -- $ -- $ 70,000
Foreign .............................. -- 140,000 166,000
State ................................ -- -- 12,000
Other ................................ -- 1,500,000 --
---------- ------------ ----------
Total Current ......................... -- 1,640,000 248,000
---------- ------------ ----------
Deferred:
Federal .............................. (416,000) (1,830,000) (584,000)
State ................................ (37,000) (163,000) (52,000)
---------- ------------ ----------
(453,000) (1,993,000) (636,000)
Change in valuation allowance ......... 453,000 1,993,000 636,000
---------- ------------ ----------
Total ................................ $ -- $ 1,640,000 $ 248,000
---------- ------------ ----------

</TABLE>

F-29
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

As of December 31, 1998 and March 31, 1998 and 1997, the net deferred tax
asset recorded and its approximate tax effect consisted of the following:

<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, -------------------------------
1998 1998 1997
--------------- -------------- --------------
<S> <C> <C> <C>
Net operating loss carry-forwards ................ $ 6,041,000 $ 3,496,000 $ 3,036,000
Nondeductible expense accruals ................... 1,525,000 1,295,000 --
Foreign net operating loss carryforwards ......... 260,000 -- --
Other ............................................ 431,000 269,000 31,000
------------ ------------ ------------
8,257,000 5,060,000 3,067,000
Valuation allowance .............................. (8,257,000) (5,060,000) (3,067,000)
------------ ------------ ------------
Net deferred tax asset ........................... $ -- $ -- $ --
------------ ------------ ------------
</TABLE>

The acquisition of IDX in December 1998 included a net deferred tax asset
of $2.7 million. This net deferred tax asset consists primarily of U.S. and
foreign net operating losses. The acquisition also included a valuation
allowance equal to the net deferred tax asset acquired.

For the years ended December 31, 1998 and March 31, 1998 and 1997, a
reconciliation of the United States Federal statutory rate to the effective
rate is shown below:

<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, --------------------------
1998 1998 1997
------------- ------------- ----------
<S> <C> <C> <C>
Federal tax (benefit), computed at statutory rate ......... (34.0)% (34.0)% 34.0%
State tax (benefit), net of federal tax benefit ........... ( 1.0) ( 1.0) 1.0
Effect of foreign operations .............................. 29.0 19.0 (74.0)
Additional taxes .......................................... -- 13.0 --
Change in valuation allowance ............................. 6.0 17.0 62.0
----- ----- -----
Total ..................................................... 0% 14.0% 23.0%
----- ----- -----
</TABLE>

As of December 31, 1998, the Company has net operating loss carryforwards
available of approximately $16.3 million which can offset future years U.S.
taxable income. Such carryforwards expire in various years through 2018 and are
subject to limitation under the Internal Revenue Code of 1986, as amended.

Included in the net operating loss carryforwards are approximately $6.0
million acquired in the IDX acquisition. As a result of the change in
ownership, as defined by Section 382 of the Internal Revenue Code, the net
operating loss carryforwards acquired are limited in use to approximately
$330,000 per year and must be offset only by taxable income generated from IDX.

F-30
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

13. SEGMENT INFORMATION

The Company is engaged in one business segment - Telecommunications
Services. For purposes of allocating revenues by country, the Company uses the
physical location of its customers as its basis.

The following table presents information about the Company by geographic
area:

<TABLE>
<CAPTION>
ASIA
EUROPE PACIFIC
-------------- -----------------
<S> <C> <C>
NINE MONTHS ENDED DECEMBER 31, 1998
Revenue ................................ $ 1,966,765 $ 5,949,077
Operating Loss ......................... $ (482,628) $ (1,460,017)
Identifiable Long Lived Assets $ 5,687,947 $ 4,962,397
YEAR ENDED MARCH 31, 1998
Revenue ................................ $ 3,468,336 $ 10,294,483
Operating Loss ......................... $ (596,900) $ (1,771,679)
Identifiable Long Lived Assets $ 4,880,910 $ 7,169,872
YEAR ENDED MARCH 31, 1997
Revenue ................................ $ 6,169,378 $ 10,574,659
Operating Income (Loss) ................ $ 439,834 $ 753,900
Identifiable Long Lived Assets $ 6,744,909 $ 4,734,010

<CAPTION>
NORTH
AMERICA
(EXCLUDING LATIN
MEXICO) AMERICA OTHER TOTALS
----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
NINE MONTHS ENDED DECEMBER 31, 1998
Revenue ................................ $ 9,009,306 $ 5,243,688 $ 321,806 $ 22,490,642
Operating Loss ......................... $ (2,631,110) $ (1,286,901) $ (78,977) $ (5,939,633)
Identifiable Long Lived Assets $ 11,237,235 $ 1,470,903 $ 923,076 $ 24,281,558
YEAR ENDED MARCH 31, 1998
Revenue ................................ $ 10,061,519 $ 8,248,078 $1,050,351 $ 33,122,767
Operating Loss ......................... $ (1,731,586) $ (1,419,494) $ (180,765) $ (5,700,424)
Identifiable Long Lived Assets $ 8,616,014 $ 1,032,352 $ 997,433 $ 22,696,581
YEAR ENDED MARCH 31, 1997
Revenue ................................ $ 8,220,081 $ 1,486,779 $7,543,478 $ 33,994,375
Operating Income (Loss) ................ $ 586,034 $ 537,797 $ 105,999 $ 2,423,564
Identifiable Long Lived Assets $ 10,417,279 $ 1,219,323 $ 564,165 $ 23,679,686
</TABLE>

For the nine months ended December 31, 1998 and the years ended March 31,
1998 and 1997 revenues from significant customers consisted of the following:

<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, ----------------
1998 1998 1997
------------- ------ -------
<S> <C> <C> <C>
CUSTOMER:
A ......... 19% 18% 15%
B ......... 16% 14% 9%
C ......... 10% 11% 12%

</TABLE>

14. COMMITMENTS AND CONTINGENCIES

Employment Agreement

The Company and certain of its subsidiaries have agreements with certain
key employees expiring at varying times over the next three years. The
Company's remaining aggregate commitment at December 31, 1998 under such
agreements is approximately $1.2 million.

Carrier Arrangements

The Company has entered into agreements with certain long-distance
carriers in the United States and with telephone utilities in various foreign
countries to transmit telephone signals domestically and internationally. The
Company is entirely dependent upon the cooperation of the telephone utilities
with which it has made arrangements for its operational and certain of its
administrative requirements. The Company's arrangements are nonexclusive and
take various forms. Although some of these arrangements are embodied in formal
contracts, a telephone utility could cease to accommodate the Company's
arrangements at any time. The Company does not foresee any threat to existing
arrangements with these utilities, however, depending upon the location of the
telephone utility, such action could have a material adverse affect on the
Company's financial position, operating results or cash flows.

F-31
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Telecommunication Lines

In its normal course of business, the Company enters into agreements for
the use of long distance telecommunication lines. As of December 31, 1998,
future minimum annual payments under such agreements are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31, TOTAL
--------------------------- --------------
<S> <C>
1999 .................... $ 1,705,412
2000 .................... 535,109
2001 .................... 421,728
2002 .................... 70,288
-----------
$ 2,732,537
===========

</TABLE>

Lease Agreements

The Company leases office space and equipment under various operating
leases. As of December 31, 1998, remaining minimum annual rental commitments
under noncancelable operating leases are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31, TOTAL
--------------------------- --------------
<S> <C>
1999 .................... $ 1,230,586
2000 .................... 344,294
2001 .................... 233,377
2002 .................... 176,895
2003 .................... 180,895
-----------
$ 2,166,047
===========

</TABLE>

Rent expense for the periods ended December 31, 1998 and March 31, 1998
and 1997 was approximately $0.5 million, $0.6 million, and $0.4 million,
respectively.

15. GOVERNMENT REGULATIONS

The telecommunications card industry is highly competitive and subject to
extensive government regulations, both in the United States and abroad.
Pursuant to the Federal Communications Act, the Federal Communications
Commission ("FCC") is required to regulate the telecommunications industry in
the United States. Under current FCC policy, telecommunication carriers,
including the Company, who resell the domestic services of other carriers and
who do not own telecommunication facilities of their own, are considered to be
non-dominant and, as a result, are subject to the least rigorous regulation.
Telecommunications activities are also subject to government regulations in
every country throughout the world. The Company has numerous licenses,
agreements, or equipment approvals in foreign countries where operations are
conducted. To date, the Company has not been required to comply or been
notified that it cannot comply with any material international regulations in
order to pursue its existing business activities. There can be no assurances,
however, that in the current United States regulatory environment, including
the present level of FCC regulations, that the Company will continue to be
considered non-dominant and that various foreign governmental authorities will
not seek to assert jurisdiction over the Company's rates or other aspects of
its services. Such changes could have a material adverse affect on the
Company's financial condition, operating results or cash flows.

F-32
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

In certain countries where the Company, through its subsidiary IDX, has
current or planned operations, the Company may not have the necessary
regulatory approvals to conduct all or part of its voice and fax
store-and-forward services. In these jurisdictions, the requirements and level
of telecommunications deregulation is varied, including internet protocol
telephony. Management believes that the degree of active monitoring and
enforcement of such regulation is limited. Statutory provisions for penalties
vary, but could include fines and/or termination of the Company's operations in
the associated jurisdiction. Management believes that the likelihood of
significant penalties or injunctive relief is remote. To date, the Company has
not been required to comply or been notified that it cannot comply with any
material international regulations in order to pursue its existing business
activities. There can be no assurance, however, that regulatory action against
the Company will not occur. Such action could have a material adverse affect on
the Company's financial condition, operating results or cash flows.

The regulation of IP telephony is still evolving. To the Company's,
knowledge, there currently are no domestic laws or regulations that govern
voice communications over the Internet. The FCC is currently considering
whether to impose surcharges or additional regulation upon providers of IP
telephony. In addition, several efforts have been made to enact U.S. federal
legislation that would either regulate or exempt from regulation services
provided over the Internet. State public utility commissions also may retain
intrastate jurisdiction and could initiate proceedings to regulate the
intrastate aspects of IP telephony. A number of countries currently prohibit IP
telephony. Other countries permit but regulate IP telephony. If foreign
governments, Congress, the FCC, or state utility commissions prohibit or
regulate IP telephony, the Company could be subject to a variety of new
regulations or, in certain circumstances, to penalties under foreign or U.S.
law, including without limitation, orders to cease operations or to limit
future operations, loss of licenses or of license opportunities, fines, seizure
of equipment and, in certain foreign jurisdictions, criminal prosecution.

16. FOURTH QUARTER ADJUSTMENTS -- MARCH 31, 1998

The Company recorded in the fourth quarter of the year ended March 31,
1998 certain adjustments relative to warrants issued in connection with debt,
proxy related litigation settlement costs and taxes amounting to an aggregate
of $5.5 million which are discussed in Notes 8, 11 and 12 to the consolidated
financial statements.

17. SUBSEQUENT EVENTS

Financings

Series D Cumulative Convertible Preferred Stock

In January 1999, the Company issued 30 shares of Series D Cumulative
Convertible Preferred Stock ("Series D Preferred") to a private investment firm
for $3.0 million. The holder has agreed to purchase 20 additional shares of
Series D Preferred stock for $2.0 million upon registration of the common stock
issuable upon conversion of this preferred stock. In connection with this
transaction, the Company issued warrants to purchase 112,500 shares of common
stock with an exercise price of $0.01 per share and warrants to purchase 60,000
shares of common stock with an exercise price of $1.60 per share. The Company
will issue additional warrants to purchase 75,000 shares of common stock, with
an exercise price of $0.01 per share and warrants to purchase 40,000 shares of
common stock with an exercise price of $1.60 per share upon the issuance of the
20 additional shares of Series D Preferred stock. The Series D Preferred stock
carries an annual dividend of 8%, payable quarterly beginning December 31,
1999. The shares of Series D Preferred stock are convertible, at the holder's
option, into shares of the Company's common stock any time after April 13, 1999
at a conversion price equal to the lesser of $1.60 or, in the

F-33
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

case of the Company's failure to achieve positive EBITDA or to close a $20
million public offering by the third fiscal quarter of 1999, the market price
just prior to the conversion date. The shares of Series D Preferred stock will
automatically convert into common stock upon the earliest of (i) the first date
on which the market price of the common stock is $5.00 or more per share for
any 20 consecutive trading days, (ii) the date on which 80% or more of the
Series D Preferred stock has been converted into common stock, or (iii) the
date the Company closes a public offering of equity securities at a price of at
least $3.00 per share with gross proceeds of at least $20 million.

As additional consideration, the Company agreed to issue to the investor
for no additional consideration, additional warrants to purchase the number of
shares of common stock equal to $0.3 million (based on the market price of the
common stock on the last trading day prior to June 1, 1999 or July 1, 2000, as
the case may be), or pay $0.3 million in cash, if the Company does not (i)
consummate a specified merger transaction by May 30, 1999, or (ii) achieve, in
the fiscal quarter commencing July 1, 2000, an aggregate amount of gross
revenues equal to or in excess of 200% of the aggregate amount of gross
revenues achieved by the Company in the fiscal quarter ended December 31, 1998.

The shares of Series D Preferred stock must be redeemed if it ceases to be
convertible (which would happen if the number of shares of common stock
issuable upon conversion of the Series D Preferred stock exceeded 19.9% of the
number of shares of common stock outstanding when the Series D Preferred stock
was issued, less shares reserved for issuance under warrants). Redemption is in
cash at a price equal to the liquidation preference of the Series D Preferred
stock at the holder's option or the Company's option 45 days after the Series D
Preferred stock ceases to be convertible. If the Company receives stockholder
approval to increase the number of shares issuable, it will issue the full
amount of common stock upon conversion of the Series D Preferred stock even if
the number of shares exceeds the 19.9% maximum number.

Series E Cumulative Convertible Redeemable Preferred Stock

In February 1999, the Company issued 50 shares of Series E Cumulative
Convertible Redeemable Preferred stock ("Series E Preferred") to an affiliate
of Mr. Ronald Jensen, the Company's largest stockholder, for $5.0 million. The
Series E Preferred carries an annual dividend of 8%, payable quarterly
beginning December 31, 2000. As additional consideration, the Company agreed to
issue to the holder three year warrants to purchase 723,000 shares of common
stock at $2.125 per share and 277,000 shares of common stock at $0.01 per
share.

The Series E Preferred holder may elect to make the shares of Series E
Preferred stock convertible into shares of common stock (rather than
redeemable) at any time after issuance. The Company may elect to make the
shares of Series E Preferred stock are convertible, but only if (i) it has
positive EBITDA for at least one of the first three fiscal quarters of 1999 or
(ii) completes a public offering of equity securities for a price of at least
$3.00 per share and with gross proceeds to the Company of at least $20 million
on or before the end of the third fiscal quarter of 1999. The shares of Series
E Preferred stock will automatically be converted into shares of the Company's
common stock, on the earliest to occur of (x) the first date as of which the
last reported sales price of the Company's common stock on Nasdaq is $5.00 or
more for any 20 consecutive trading days during any period in which the Series
E Preferred stock is outstanding, (y) the date that 80% or more of the Series E
Preferred stock has been converted into common stock, or (z) the Company
completes a public offering of equity securities at a price of at least $3.00
per share and with gross proceeds to the Company of at least $20 million. The
initial conversion price for the Series E Preferred stock is $2.125, subject to
adjustment if the Company issues common stock for less than the conversion
price. The shares of the Series E Preferred stock may be redeemed at a price
equal to the liquidation preference plus accrued dividends in cash or in common
stock, at the Company's option or at the option of any holder, provided that
the holder has not previously exercised

F-34
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

the convertibility option described, at any time after February, 2004. In
connection with a debt placement concluded in April 1999, the Series E
Preferred holder elected to make such shares convertible. Accordingly, such
shares are no longer redeemable. See Note 18 for additional discussion.

Contemporaneous with this financing, the Company agreed to issue 3,000,000
shares of common stock in exchange for the 75 shares of Series C Preferred
(convertible into 1,875,000 shares of common stock on the exchange date) held
by Mr. Jensen. The market value of the 1,125,000 incremental shares of common
stock issued will be recorded in the first calendar quarter of 1999 as a
preferred stock dividend of approximately $2.7 million with a corresponding
credit to paid-in capital.

Stockholder Equity Financing

In January 1999, the Company borrowed $0.2 million from an existing
stockholder due February 4, 1999. The note had a maturity date of the earlier
of (a) 30 days from the date the note was signed, (b) completion of financing
by the Company of not less than $3.0 million, or (c) the completion of the
bridge financing by the Company of not less than $1.0 million. The note carried
a service fee of 1% of the principal. The agreement provided that if the note
was not paid at maturity, the holder would receive 40,000 warrants with an
exercise price of $1.00 and a term of 5 years. The note was junior to all
existing debt. In March 1999 (maturity date), the stockholder agreed to convert
the bridge loan into 125,000 shares of common stock and was granted the 40,000
warrants and an additional 40,000 warrants, exercisable at $1.60 per share with
a term of 5 years. The value of the warrants of $0.09 million will be
recognized as interest expense in the first quarter of fiscal 1999.

Acquisitions

As described in paragraph (2) to Note 3, subsequent to December 31, 1998,
the Company decided to pay the first of the Convertible Subordinated Promissory
Notes due to IDX in common stock.

In February 1999, the Company completed the acquisition of Telekey, Inc.
("Telekey"), for which it paid: (i) $0.1 million at closing; (ii) issued a
promissory note for $0.2 million payable in equal monthly installments over one
year; (iii) issued 1,010,000 shares of Series F Convertible Preferred Stock
("Series F Preferred"); and (iv) agreed to issue at least 505,000 and up to an
additional 1,010,000 shares of Series F Preferred two years from the date of
closing (or upon a change of control or certain events of default if they occur
before the end of two years), subject to Telekey meeting certain revenue and
EBITDA objectives.

Potential Joint Venture

The Company is in the process of negotiating a joint venture arrangement
whereby it would have a 50% ownership interest of certain software technology
related to commercial development of messaging technology. The software
developer's current parent company would retain a 50% ownership interest under
the proposed arrangement. If this transaction is consummated, the Company will
assume its pro

F-35
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

rata share of the software development funding needs for working capital and
payment of outstanding liabilities. The Company's funding requirement under
this proposed arrangement is currently estimated to average $0.2 million per
month through the year ending December 31, 1999.

As of December 31, 1998, the Company had advanced approximately $1.0
million to this software company. Through March 19, 1999, the Company has made
additional advances of $0.5 million. The Company owns a non-exclusive license
for the technology, the value of which is currently estimated by management to
exceed the advances made to date.

In the event that the joint venture transaction does not occur and the
Company is unable to use or sell the licensed technology to generate revenues,
the Company will evaluate the recoverability of these advances.

18. FINANCING COMMITMENT

In April 1999, the Company received a financing commitment of $20.0
million in the form of long-term debt from an affiliate of its largest
stockholder ("Lender"). This financing is subject to stockholder approval; but
under the terms of the Loan and Note Purchase Agreement ("Agreement"), the
Company initially received an unsecured loan ("Loan") of $7.0 million bearing
interest at 8% payable monthly with principal due April 2000. As additional
consideration, the Lender received warrants to purchase 1,500,000 shares of the
Company's common stock at an exercise price of $0.01 per share, of which
500,000 warrants are immediately exercisable and 1,000,000 warrants are
exercisable only in the event that the stockholders do not approve the $20.0
million facility or the Company elects not to draw it down.

Under the Agreement, the Lender also agreed to purchase $20.0 million of
5% Secured Notes ("Notes,") at the Company's request, provided that the Company
obtains stockholder approval to issue the Notes at its next stockholder
meeting, currently planned to occur during the second quarter of 1999. If
stockholder approval is obtained and the Company elects to issue the Notes, the
initial $7.0 million Loan must be repaid from the proceeds. Principal and
interest on the Notes are payable over three years in monthly installments of
$377,000 with a balloon payment of the outstanding balance due on the third
anniversary date. However, the Company may elect to pay up to 50% of the
original principal amount of the Notes in shares of the Company's common stock,
at its option, if: (i) the closing price of the Company's common stock is $8.00
per share for more than 15 consecutive trading days; (ii) the Company completes
a public offering of equity securities at a price of at least $5.00 per share
and with proceeds of at least $30.0 million; or (iii) the Company completes an
offering of securities with proceeds in excess of $100.0 million. These Notes,
if issued, will be secured by substantially all of the Company's existing
operating assets, although the Company can pursue certain additional financing,
including senior debt or lease financing for future capital expenditures and
working capital requirements in furtherance of its growth plan.

As additional consideration for the Notes, if issued, the Lender will
receive warrants to purchase 5,000,000 shares of the Company's common stock at
an exercise price of $1.00 per share.

The Agreement contains certain debt covenants and restrictions by and on
the Company.

F-36
<PAGE>

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE, INC.

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING COST AND
DESCRIPTION OF PERIOD EXPENSES
- -------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Nine months ended December 31, 1998............................................. $1,472,197 $ 789,187
- ----------------------------------------------------------------------------------------------------------

Year ended March 31, 1998 ...................................................... $ 372,988 $1,433,939
- ----------------------------------------------------------------------------------------------------------

Year ended March 31, 1997 ...................................................... $ 625,864 $ 404,410
- ----------------------------------------------------------------------------------------------------------

<CAPTION>
BALANCE AT
END OF
DESCRIPTION DEDUCTIONS PERIOD
- -------------------------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Nine months ended December 31, 1998............................................. $1,274,887 $ 986,497
- ----------------------------------------------------------------------------------------------------------

Year ended March 31, 1998 ...................................................... $ 334,730 $1,472,197
- ----------------------------------------------------------------------------------------------------------

Year ended March 31, 1997 ...................................................... $ 657,286 $ 372,988
- ----------------------------------------------------------------------------------------------------------

</TABLE>

F-37
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
IDX International, Inc.
Reston, Virginia

We have audited the accompanying consolidated balance sheet of IDX
International, Inc. and subsidiaries as of November 30, 1998 and the related
consolidated statements of operations, stockholders' deficit and comprehensive
loss, and cash flows for the eleven-month period then ended. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of IDX
International, Inc. and subsidiaries as of November 30, 1998, and the results
of their operations and their cash flows for the eleven-month period then ended
in conformity with generally accepted accounting principles.

/s/ BDO Seidman, LLP
-----------------------------------
BDO Seidman, LLP

April 28, 1999
Denver, Colorado

F-38
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOVEMBER 30,
1998
<S> <C>
- ---------------------------------------------------------------------------------------------------

ASSETS
Current:
Cash .............................................................................. $ 118,984
Accounts receivable, less allowance of $125,618 for doubtful accounts ............. 706,974
Note receivable (Note 1) .......................................................... 100,000
Inventory ......................................................................... 187,959
Other assets (Note 8) ............................................................. 106,676
- ---------------------------------------------------------------------------------------------------

Total current assets ............................................................... 1,220,593
- ---------------------------------------------------------------------------------------------------

Furniture and equipment, less accumulated depreciation and amortization (Note 2) . 747,577
Other assets:
Equipment for lease, less accumulated depreciation (Note 3) ....................... 203,936
Capitalized software development costs, less accumulated amortization of $20,644 . 23,496
Goodwill, less accumulated amortization of $55,809 (Note 1) ....................... 576,712
Deposits and other assets ......................................................... 172,029
- ---------------------------------------------------------------------------------------------------

Total other assets ................................................................. 976,173
- ---------------------------------------------------------------------------------------------------

$ 2,944,343
- ---------------------------------------------------------------------------------------------------

LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable .................................................................. $ 1,323,602
Accrued liabilities ............................................................... 423,192
Installment obligations under capital lease (Note 4) .............................. 10,973
Deposits .......................................................................... 219,945
Note payable (Note 9) ............................................................. 1,915,400
- ---------------------------------------------------------------------------------------------------

Total liabilities .................................................................. 3,893,112
- ---------------------------------------------------------------------------------------------------

Mandatorily redeemable preferred stock (Notes 5 and 9): Series A Preferred Stock, no
par value, 9,091 shares authorized, issued and outstanding (aggregate liquidation
preference $2,751,327) ............................................................ 2,751,327
Series B Preferred Stock, no par value, 3,821 shares authorized, issued and
outstanding (aggregate liquidation preference $3,164,823) ......................... 3,164,823
- ---------------------------------------------------------------------------------------------------

Total mandatorily redeemable preferred stock ....................................... 5,916,150
- ---------------------------------------------------------------------------------------------------

Commitments and contingencies (Notes 4 and 11)
Stockholders' deficit:
Common stock, no par value, authorized 43,423 shares; issued and outstanding
22,451 shares (Note 9) .......................................................... 1,124,700
Note receivable (Note 6) .......................................................... (399,900)
Accumulated other comprehensive losses ............................................ (35,572)
Accumulated deficit ............................................................... (7,554,147)
- ---------------------------------------------------------------------------------------------------

Total stockholders' deficit ........................................................ (6,864,919)
- ---------------------------------------------------------------------------------------------------

$ 2,944,343
- ---------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements.

F-39
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ELEVEN-MONTH
PERIOD ENDED
NOVEMBER 30,
1998
<S> <C>
- --------------------------------------------------------------------------------------------------

Revenue .......................................................................... $ 2,795,421
Cost of revenue .................................................................. 3,176,142
- --------------------------------------------------------------------------------------------------

Gross loss ....................................................................... (380,721)
Operating expenses:
Selling, general and administrative ............................................. 2,779,185
Depreciation and amortization ................................................... 510,339
Research and development ........................................................ 231,541
- --------------------------------------------------------------------------------------------------

Total operating expenses ......................................................... 3,521,065
- --------------------------------------------------------------------------------------------------

Operating loss ................................................................... (3,901,786)
Other income (expense):
Interest income ................................................................. 20,561
Interest expense ................................................................ (66,541)
Equity in losses of joint ventures (Note 1) ..................................... (24,577)
Gain on sale of subsidiaries (Note 1) ........................................... 439,517
Loss on disposal of furniture and equipment ..................................... (56,334)
Other ........................................................................... 45,573
- --------------------------------------------------------------------------------------------------

Total other income ............................................................... 358,199
- --------------------------------------------------------------------------------------------------

Net loss ......................................................................... $ (3,543,587)
- --------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements.

F-40
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
AND COMPREHENSIVE LOSS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMMON STOCK
ELEVEN-MONTH PERIOD ENDED ----------------------
NOVEMBER 30, 1998 SHARES AMOUNT
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------

Balance, January 1, 1998 ........................................................ 20,500 $ 477,300
Accretion of Series A and B preferred stock (Note 5) ............................. - (302,500)
Common stock agreed to be issued in business acquisition
(Note 1) ........................................................................ 701 550,000
Common stock issued for note receivable (Note 6) ................................. 1,250 399,900
Foreign currency translation adjustment .......................................... - -
Net loss for the eleven-month period ............................................. - -
- ---------------------------------------------------------------------------------------------------------

Balance, November 30, 1998 ...................................................... 22,451 $1,124,700
- ---------------------------------------------------------------------------------------------------------

<CAPTION>
OTHER
ELEVEN-MONTH PERIOD ENDED NOTE COMPREHENSIVE ACCUMULATED
NOVEMBER 30, 1998 RECEIVABLE LOSSES DEFICIT
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------

Balance, January 1, 1998 ........................................................ $ - $ (24,840) $ (4,010,560)
Accretion of Series A and B preferred stock (Note 5) ............................. - - -
Common stock agreed to be issued in business acquisition
(Note 1) ........................................................................ - - -
Common stock issued for note receivable (Note 6) ................................. (399,900) - -
Foreign currency translation adjustment .......................................... - (10,732) -
Net loss for the eleven-month period ............................................. - - (3,543,587)
- ----------------------------------------------------------------------------------------------------------------------------------

Balance, November 30, 1998 ...................................................... $ (399,900) $ (35,572) $ (7,554,147)
- ----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
TOTAL ACCUMULATED
ELEVEN-MONTH PERIOD ENDED STOCKHOLDERS' COMPREHENSIVE
NOVEMBER 30, 1998 DEFICIT LOSS
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------

Balance, January 1, 1998 ........................................................ $ (3,558,100)
Accretion of Series A and B preferred stock (Note 5) ............................. (302,500)
Common stock agreed to be issued in business acquisition
(Note 1) ........................................................................ 550,000
Common stock issued for note receivable (Note 6) ................................. -
Foreign currency translation adjustment .......................................... (10,732) (10,732)
Net loss for the eleven-month period ............................................. (3,543,587) (3,543,587)
- ----------------------------------------------------------------------------------------------------------------------------------

Balance, November 30, 1998 ...................................................... $ (6,864,919) $ (3,554,319)
- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements.

F-41
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

ELEVEN-MONTH PERIOD
ENDED
NOVEMBER 30,
INCREASE (DECREASE) IN CASH 1998
<S> <C>
- ----------------------------------------------------------------------------------------------------------

Operating activities:
Net loss ........................................................................ $ (3,543,587)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization ................................................. 510,339
Equity in losses of joint ventures ............................................ 24,577
Loss on disposal of furniture and equipment ................................... 56,334
Provision for bad debts ....................................................... 147,621
Provision for inventory obsolesence ........................................... 144,203
Gain on sale of subsidiaries .................................................. (439,517)
Changes in operating assets and liabilities:
Accounts receivable .......................................................... (1,033,957)
Inventory .................................................................... (246,542)
Other assets ................................................................. (34,593)
Accounts payable ............................................................. 1,392,373
Accrued liabilities .......................................................... 258,645
Deferred revenue ............................................................. (30,000)
- ----------------------------------------------------------------------------------------------------------

Net cash used in operating activities ............................................ (2,794,104)
- ----------------------------------------------------------------------------------------------------------

Investing activities:
Investment in equipment for lease ............................................... (54,767)
Purchase of furniture and equipment ............................................. (456,612)
Acquisition of business, net of cash acquired ................................... (100,000)
Deposits and other assets ....................................................... (215,853)
- ----------------------------------------------------------------------------------------------------------

Net cash used in investing activities ............................................ (827,232)
- ----------------------------------------------------------------------------------------------------------

Financing activities:
Proceeds from preferred stock subscription receivable ........................... 50,000
Proceeds from long-term borrowings .............................................. 128,488
Increase in minority interest in subsidiary ..................................... 345,720
Proceeds from note payable ...................................................... 1,915,400
Principal payments on capital lease obligations ................................. (6,127)
- ----------------------------------------------------------------------------------------------------------

Net cash provided by financing activities ........................................ 2,433,481
- ----------------------------------------------------------------------------------------------------------

Effect of exchange rate changes on cash .......................................... (29,301)
- ----------------------------------------------------------------------------------------------------------

Net decrease in cash ............................................................. (1,217,156)
Cash, beginning of period ........................................................ 1,336,140
- ----------------------------------------------------------------------------------------------------------

Cash, end of period .............................................................. $ 118,984
- ----------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to consolidated
financial statements.

F-42
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

SUMMARY OF ACCOUNTING POLICIES

BUSINESS

IDX International, Inc. (the "Company") was incorporated on April 17, 1996
(inception) as a Virginia corporation. The Company develops and markets voice
and data store-and-forward network services for transmitting voice, facsimiles
("faxes") and other forms of digitized information utilizing a global network
established by the Company and its international business partners ("IBPs").
The network consists of international private lines, shared access lines and
frame relays (collectively telecommunication lines) connected to PC-based
dedicated access switches ("CyberPosts") which process and route voice and fax
traffic globally over the network.

PRINCIPALS OF CONSOLIDATION

The consolidated financial statements include the accounts of the
Company's United States ("U.S.") and foreign subsidiaries. The Company accounts
for its investment in 50% or less owned joint ventures under the equity method
of accounting. Intercompany transactions and balances have been eliminated in
consolidation.

LIQUIDITY AND CAPITAL RESOURCES

During the eleven-month period ended November 30, 1998, the Company
incurred a net loss of $3.5 million and negative operating cash flow of $2.8
million. At November 30, 1998, the Company had a stockholders' deficit totaling
$6.9 million.

The Company plans to operate in a fashion to generate both increased
revenues and cash flows during 1999. Additionally, in December 1998, the
Company was acquired by Executive Telecard Ltd., d.b.a. eGlobe, Inc. ("eGlobe")
(see Note 9). Management believes that eGlobe will provide the Company with
financial and operational support which, together with existing cash and
anticipated cash flows from operations, should enable the Company to continue
operations through the year ending December 31, 1999.

FOREIGN CURRENCY TRANSLATION

The functional currency of the Company's foreign subsidiaries and joint
ventures is the local currency. All assets and liabilities are translated into
U.S. dollars at current exchange rates as of the balance sheet date. Revenue
and expense items are translated at the average exchange rates prevailing
during the period. Cumulative translation gains and losses are reported as
accumulated other comprehensive losses in the consolidated statement of
stockholders' deficit and are included in comprehensive loss.

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 amounts reported in the consolidated financial
statements and related notes to the consolidated financial statements. Actual
results could differ from those estimates.

REVENUE RECOGNITION AND COST OF SALES

The Company operates and manages certain CyberPosts and licenses the use
of CyberPost equipment and associated software to its IBPs. Under such
licensing agreements, the Company is generally obligated to provide maintenance
and upgrades and IBPs are responsible for the marketing and sale of voice and
data store-and-forward services as well as for the operations and management of
CyberPosts. Certain IBPs are also stockholders of the Company.

F-43
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

SUMMARY OF ACCOUNTING POLICIES - (CONTINUED)

The Company's revenues are generated principally from (i) routing charges
for voice and fax traffic through the network, (ii) licensing and royalty fees
and (iii) system hardware and accessory sales. The Company recognizes fixed
license fees on the straight-line basis over the service period, royalties and
routing charges as services are rendered to the ultimate customer, and system
hardware and accessory sales upon delivery and customer acceptance.

Cost of sales principally consists of telecommunication line charges,
local and international access charges, cost of CyberPost accessories,
maintenance costs, installation and operator training costs and commissions to
CyberPost operators.

Revenue originating from Taiwan, the United States, Belgium and the United
Kingdom approximated 30%, 29%, 17% and 14% of total revenues for the
eleven-month period ended November 30, 1998. Revenue from one customer
approximated 25% of total revenues for such period.

The economic crisis in Asia has had a negative impact on the Company's
revenues and prospects with Asian customers. The Company expects demand for its
services in Asia to increase if and when the affected economies recover. If the
economic crisis in Asia continues, demand for the Company's services could be
further dampened which could result in a significant adverse impact on the
Company's financial condition, results of operations and cash flows.

CASH AND CASH EQUIVALENTS

The Company considers all highly-liquid investments with original
maturities of three months or less to be cash equivalents.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to a
concentration of credit risk consist principally of accounts receivable and
cash. The Company in certain instances requires security deposits from its IBPs
to be applied against future uncollectible accounts receivable, as needed. In
addition, there is an allowance for uncollectible accounts receivable which is
based upon the expected collectibility of accounts receivable. The Company's
cash is placed with financial institutions which at times may exceed federally
insured limits. The Company has not experienced any losses in such cash
balances.

INVENTORY

Inventory primarily consists of computer related supplies for CyberPost
equipment. Inventory is stated at the lower of cost or market using the
first-in, first-out method.

EQUIPMENT FOR LEASE

The Company's investment in equipment for lease is stated at cost, net of
accumulated depreciation. Depreciation is recorded on a straight-line basis
over the equipment's estimated useful life of three years.

FURNITURE AND EQUIPMENT

Furniture and equipment are stated at cost, net of accumulated
depreciation. Depreciation is provided using the straight-line method over the
estimated useful lives of three to seven years. Leasehold improvements are
amortized using the straight-line method over the lesser of the lease term or
the estimated useful life of the related improvement.

GOODWILL

The Company amortizes costs in excess of the fair value of net assets of
business acquired, goodwill, using the straight-line method over seven years.

F-44
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

SUMMARY OF ACCOUNTING POLICIES - (CONTINUED)

SOFTWARE DEVELOPMENT COSTS

Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting
for the costs of Computer Software to be Sold, Leased, or Otherwise Marketed",
requires the capitalization of certain software development costs incurred
subsequent to the date when technological feasibility is established and prior
to the date when the product is generally available for licensing. The Company
defines technological feasibility as being attained at the time a working model
of a software product is completed. The Company has capitalized $44,140 of
software development costs. Capitalized software development costs are
amortized using the greater of the straight-line method over the estimated
economic life of approximately three years or the ratio of current year
revenues by product, to the product's total estimated revenues method.
Amortization expense for the eleven-month period ended November 30, 1998 was
$10,674.

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets subject to the requirements of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of", are evaluated for possible
impairment through review of undiscounted expected future cash flows. If the
sum of undiscounted expected future cash flows is less than the carrying amount
of the asset or if changes in facts and circumstances indicate, an impairment
loss is recognized.

COMPREHENSIVE LOSS

The Company has adopted SFAS No. 130, "Reporting Comprehensive Income".
Comprehensive loss is comprised of net loss and all changes to stockholders'
deficit, except those due to investment by stockholders, changes in paid-in
capital and distributions to stockholders.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred.

INCOME TAXES

The Company provides for income taxes using the asset and liability
approach. The asset and liability approach requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of the
assets and liabilities. A valuation allowance is recorded if, based on the
evidence available, management is unable to determine that it is more likely
than not that some portion or all of the deferred tax asset will be realized.

STOCK BASED COMPENSATION

The Company accounts for stock based compensation to employees in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"). Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"),
provides an alternative accounting method to APB 25 and requires additional pro
forma disclosures. The Company accounts for stock based compensation to
non-employees in accordance with the provisions of SFAS 123.

F-45
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ACQUISITION AND DISPOSITION OF BUSINESS

During 1997 the Company established two wholly-owned foreign subsidiaries,
IDX Taiwan Ltd. ("IDX Taiwan") and IDX Hong Kong Ltd. ("IDX HK"), and one
majority-owned foreign subsidiary, IDX Belgium, N.V. ("IDX Belgium"), to market
the Company's store-and-forward services. Upon the formation of IDX Belgium,
the Company acquired a 90% interest in IDX Belgium in exchange for contributed
capital of $75,600.

During April 1998, IDX Belgium issued additional shares of its common
stock, plus an option to acquire an equal number of its common shares, to a new
investor for approximately $350,000 in cash. Upon issuance of the additional
shares in April 1998, the Company's interest in IDX Belgium was reduced to 75%.

In November 1998, the Company sold its interest in IDX Belgium, IDX Europe
and Marvin for $130,500, consisting of a note receivable for $100,000 and
equipment valued at $30,500. Subsequent to November 30, 1998 the note
receivable was collected in full. The sale of these subsidiaries resulted in a
gain totaling $439,517.

In March 1997, the Company formed a joint venture to market the Company's
services in Panama. The Company contributed $40,000 for a 20% interest in the
joint venture. In September 1998 the operations of this joint venture were
suspended indefinitely. During the eleven-month period ended November 30, 1998,
the Company's share of losses in this joint venture exceeded its original
investment. The loss reflected in the consolidated statement of operations for
this period totaled $13,430. As a result, the investment has no carrying value
in the accompanying consolidated balance sheet.

In August 1997, IDX Taiwan formed a joint venture with Orlida Ltd.
("Orlida"), a Taiwanese company, in order to expand the Company's operations in
Taiwan. The Company contributed CyberPost equipment with a net book value of
$26,000 in exchange for a 33% interest in the joint venture.

On May 8, 1998, the Company acquired all of the stock of Orlida, in
exchange for $100,000 cash and an agreement to issue 700.64 shares of the
Company's common stock, valued at $550,000. Such shares were not issued as of
November 30, 1998, but have been reflected as issued in the accompanying
financial statements. The acquisition was accounted for using the purchase
method of accounting and resulted in the recording of goodwill totaling
$632,521. Orlida's primary business consists of marketing voice and data
store-and-forward services in Taiwan.

The Company's share of loss from Orlida for the period from January 1,
1998 through the date of acquisition totaled $11,147.

F-46
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following summarized unaudited proforma results of operations assumes
the acquisition of Orlida and the dispositions of IDX Belgium, IDX Europe and
Marvin had occurred at the beginning of the period presented. The proforma
financial information may not necessarily reflect the results of operations of
the Company had the acquisition or dispositions of the businesses actually
occurred on January 1, 1998.

<TABLE>
<CAPTION>
ELEVEN-MONTH
PERIOD ENDED
NOVEMBER 30,
1998
---------------
<S> <C>
Revenue .............................................. $ 2,715,000
Net loss ............................................. (3,588,000)

</TABLE>

2. FURNITURE AND EQUIPMENT

Furniture and equipment consisted of the following:

<TABLE>
<CAPTION>
NOVEMBER 30,
1998
-------------
<S> <C>
Equipment .............................................. $ 865,966
Office and computer equipment .......................... 350,185
Leasehold improvements ................................. 33,282
Furniture and fixtures ................................. 18,409
----------
1,267,842
Less accumulated depreciation and amortization ......... 520,265
----------
Furniture and equipment, net ........................... $ 747,577
==========

</TABLE>

Furniture and equipment includes equipment under capital leases with a net
book value of $17,708 at November 30, 1998. Depreciation expense, including
amortization of equipment under capital leases, was $358,313 for the
eleven-month period ended November 30, 1998.

3. EQUIPMENT FOR LEASE

The Company leases CyberPost equipment to IBPs under operating leases,
which are generally for a period of one to five years and contain annual
renewal options. The cost of equipment for lease at November 30, 1998 was
$376,402, and the related accumulated depreciation was $172,466. Depreciation
expense for equipment for lease was $85,543 for the eleven- month period ended
November 30, 1998.

4. COMMITMENTS AND CONTINGENCIES

Telecommunication Lines

In its normal course of business, the Company enters into agreements for
the use of long distance telecommunication lines. Future minimum payments under
such agreements are as follows:

<TABLE>
<CAPTION>
PERIODS ENDING
DECEMBER 31,
---------------
<S> <C>
1998 -- one month ...................................... $ 108,896
1999 -- year ........................................... 1,705,412
2000 -- year ........................................... 535,109
2001 -- year ........................................... 421,728
2002 -- year ........................................... 70,288
----------
Total future minimum telecommunication line payments ... $2,841,433
==========
</TABLE>

F-47
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Leases

The Company leases its U.S. and foreign facilities under noncancellable
operating lease agreements. Rent expense for the eleven-month period ended
November 30, 1998 was $188,145. Future minimum lease payments under
noncancellable operating leases are as follows:

<TABLE>
<CAPTION>
PERIODS ENDING
DECEMBER 31,
---------------
<S> <C>
1998 -- one month ...................................... $ 17,830
1999 -- year ........................................... 247,124
2000 -- year ........................................... 132,730
2001 -- year ........................................... 136,712
2002 -- year ........................................... 140,813
2003 -- year ........................................... 145,038
--------
$820,247
========

</TABLE>

Capital Lease Obligations

Future minimum payments for capital lease obligations are as follows:

<TABLE>
<S> <C>
Total future minimum lease payments due in 1999 ......... $13,209
Less amount representing interest ....................... 2,236
-------
Total obligations under capital lease ................... $10,973
-------

</TABLE>

Interest paid for capital lease obligations during the eleven-month period
ended November 30, 1998 was approximately $2,800.

Subsequent to November 30, 1998, the Company entered into additional
capital lease obligations requiring future minimum payments of approximately
$992,000 through 2001.

Employee Savings Plan

On April 1, 1998, the Company adopted a 401(k) Profit Sharing Plan. All
employees are eligible to participate in the plan and may contribute up to 15%
of their annual compensation. The Company may, at its discretion, match up to
100% of participants' contributions and/or contribute an amount to be allocated
among the participants. As of November 30, 1998, no contributions have been
made to the plan by the Company.

Contingencies

In certain countries where the Company has current or planned operations,
the Company may not have the necessary regulatory approvals to conduct all or
part of its voice and fax store-and-forward services. In these jurisdictions,
the requirements and level of telecommunications' deregulation is varied,
including internet protocol telephony. Management believes that the degree of
active monitoring and enforcement of such regulations is limited. Statutory
provisions for penalties vary, but could include fines and/or termination of
the Company's operations in the associated jurisdiction. To date, the Company
has not been required to comply or been notified that it cannot comply with any
material international regulations in order to pursue its existing business
activities. In consultation with legal counsel, management has concluded that
the likelihood of significant penalties or injunctive relief is remote. There
can be no assurance, however, that regulatory action against the Company will
not occur.

F-48
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

5. MANDATORILY REDEEMABLE PREFERRED STOCK

During 1997, the Company issued 9,091 shares of Series A Preferred Stock
("Series A"), no par value, and 3,821 shares of Series B Preferred Stock
("Series B"), no par value, for cash totaling $2,499,900 and $3,000,000. The
Series A and Series B preferred stock are mandatorily redeemable on January 1,
2002.

The holders of the Series A and B preferred stock are entitled to receive
cumulative dividends equal to 6% of the respective Series A and B liquidation
preference. Accrued unpaid dividends as of November 30, 1998 on the Series A
and B preferred stock totaling $251,427 and $164,823 were recognized as an
increase to the Series A and B stock carrying values.

In the event of a liquidation of the Company or a change in control of the
Company, the Series A and B preferred stock have liquidation preference to
common stock of $275 and $785 per share, plus accrued unpaid dividends.

As of November 30, 1998, the Company has reserved 17,168 shares of common
stock for issuance upon conversion of the Series A and B stock.

On December 3, 1998, the Series A and B stock was redeemed in connection
with the acquisition of the Company (see Note 9).

6. STOCK BASED COMPENSATION

During September 1996, the Board of Directors approved the grant of an
option to purchase 1,250 shares of common stock to an individual who served as
a director and consultant to the Company. The option carries an exercise price
of $320 per share which was greater than the estimated fair value of common
stock on the date of grant and is exercisable at any time during the succeeding
three-year period. On November 13, 1998, the option was exercised in exchange
for a note receivable of $399,900. The note bears interest at LIBOR plus 250
basis points (7.88% at November 30, 1998) and is payable through the cash
proceeds received by the individual from the sale of IDX to eGlobe, as defined
in the note agreement (see Note 9).

During September 1997, the Board of Directors adopted the 1997 Stock
Incentive Plan (the "Incentive Plan"). The Incentive Plan provides for awards
in the form of restricted stock, stock units, options (including incentive
stock options ("ISO"s) and nonstatutory stock options ("NSO"s) or stock
appreciation rights ("SAR"s). Employees, directors, and consultants of the
Company are eligible for grants and restricted shares, stock units, NSOs and
SARs. Only employees of the Company are eligible for ISOs. A total of 4,500
shares of common stock have been reserved for issuance under the Incentive
Plan. To date, no awards have been granted under the Incentive Plan.

Consideration for each award under the Incentive Plan will be established
by the Stock Option Committee of the Board of Directors, but in no event shall
the option price for ISOs be less than 100% of the fair market value of the
stock on the date of grant. Awards will have such terms and be exercisable in
such manner and at such times as the Stock Option Committee may determine.
However, each ISO must expire within a period of not more than ten years from
the date of grant.

7. INCOME TAXES

A reconciliation of the Company's income tax benefit at the Federal
statutory tax rate and income taxes at the Company's effective tax rate
follows:

F-49
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

<TABLE>
<CAPTION>
ELEVEN-MONTH
PERIOD ENDED
NOVEMBER 30,
1998
---------------
<S> <C>
Income tax benefit computed at the Federal statutory rate .. $ 1,205,000
State income tax benefit, net of Federal effect ............ 140,000
Effect of foreign tax rate differences ..................... (52,000)
Other permanent differences ................................ (38,000)
Change in valuation allowance .............................. (1,255,000)
------------
$ --
============

</TABLE>

Temporary differences between the consolidated financial statement
carrying amounts and the tax basis of assets and liabilities that give rise to
the significant portions of deferred income taxes follows:

<TABLE>
<CAPTION>
NOVEMBER 30,
1998
---------------
<S> <C>
Federal and state net operating losses ................... $ 2,281,000
Foreign net operating losses ............................. 254,000
Intangibles .............................................. 162,000
Allowance for doubtful accounts receivable ............... 48,000
Inventory obsolesence reserve ............................ 45,000
Equity investment ........................................ 4,000
Furniture and equipment accumulated depreciation ......... (50,000)
Valuation allowance ...................................... (2,744,000)
------------
$ --
============

</TABLE>

The Company has incurred operating losses and paid no income tax for the
period presented. The income tax benefit from the Company's operating loss
carryforwards and other temporary differences at November 30, 1998 was
approximately $2,744,000. A full valuation allowance has been recorded against
the net deferred tax asset because management currently believes it is more
likely than not that the asset will not be realized.

At November 30, 1998, the Company had net operating loss carryforwards
available for U.S. income tax purposes of approximately $6,000,000 which expire
in the years 2011 to 2018. Net operating loss carryforwards are subject to
review and possible adjustment by the Internal Revenue Service and may be
limited in the event of certain cumulative changes in the ownership interests
of significant stockholders.

8. RELATED PARTY TRANSACTIONS

Related party transactions may not be indicative of transactions
negotiated at arms length.

The Company receives consulting services from two of the Company's
stockholders, who also serve on the Board of Directors. Compensation related to
these services totaled $5,000 for the eleven-month period ended November 30,
1998.

At November 30, 1998, accounts receivable due from related parties and
from officers and employees of the Company totaled $39,204 and are included in
other assets in the accompanying balance sheet.

9. SUBSEQUENT EVENTS

On December 3, 1998, eGlobe acquired 100% of the outstanding shares of the
Company's common and preferred stock in exchange for notes payable totaling $5
million, 500,000 shares of eGlobe Series B Preferred Stock initially valued at
$3.5 million and contingently issuable warrants to acquire 2,500,000

F-50
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

shares of eGlobe's common stock. The purchase price is subject to eGlobe's
stockholder approval, certain working capital adjustments and the preferred
stock and warrants are subject to adjustment if certain financial performance
goals are not achieved by the Company. In addition, certain key management
personnel entered into employment agreements with the Company.

In connection with the sale of the Company, during the period May through
November 1998 eGlobe advanced the Company $1,915,400, bearing interest at 8.5%
and has committed to make additional advances to the Company.

10. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental disclosure of cash flow information and non-cash investing
and financing activities follow:

<TABLE>
<CAPTION>
ELEVEN-MONTH
PERIOD ENDED
NOVEMBER 30,
1998
-------------
<S> <C>
Cash paid for interest ................................................ $ 22,500
Note receivable received on sale of subsidiary interest ............... 100,000
Equipment received on sale of subsidiary interest ..................... 30,500
Common stock agreed to be issued in business acquisition .............. 550,000
Accrued dividends on mandatorily redeemable preferred stock ........... 302,500
Note receivable received in exchange for exercise of stock option ..... 399,900

</TABLE>

11. YEAR 2000 ISSUES (UNAUDITED)

Like other companies, IDX International, Inc. could be adversely affected
if the computer systems the Company or its suppliers or customers use do not
properly process and calculate date-related information and data from the
period surrounding and including January 1, 2000. This is commonly known as the
"Year 2000" issue. Additionally, this issue could impact non-computer systems
and devices such as production equipment, elevators, etc. At this time, because
of the complexities involved in the issue, management cannot provide assurances
that the Year 2000 issue will not have an impact on the Company's operations.

The Company has implemented a plan to modify its business technologies to
be ready for the year 2000 and is in the process of converting critical data
processing systems. The project is expected to be substantially complete by
October 1999 at an approximate cost of $300,000.

F-51
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of IDX International, Inc.

In our opinion, the accompanying consolidated statements of financial
position and the related consolidated statements of operations, of changes in
stockholders' equity (deficit) and of cash flows present fairly, in all
material respects, the financial position of IDX International, Inc. and its
subsidiaries at December 31, 1997 and 1996, and the results of their operations
and their cash flows for the year ended December 31, 1997 and the period from
April 17, 1996 (inception) through December 31, 1996 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 provide a reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP

May 15, 1998
except Note 12, which is as
of September 11, 1998 and
the last paragraph of
Note 7, which is as of
February 12, 1999

F-52
<PAGE>

IDX INTERNATIONAL, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1997
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents ..................................................... $ 19,770 $ 1,336,140
Accounts receivable, less allowance for doubtful accounts, $0 and $82,620. 3,560 148,340
Other accounts receivable ..................................................... 44,260 27,000
Other assets .................................................................. 68,950 89,490
- -------------------------------------------------------------------------------------------------------------

Total current assets ........................................................ 136,540 1,600,970
Equipment for lease, net ....................................................... 130,000 217,400
Furniture and equipment, net ................................................... 150,280 986,550
Capitalized software development costs, net .................................... 44,140 34,170
Other assets ................................................................... -- 159,290
Investment in joint ventures ................................................... -- 39,430
- -------------------------------------------------------------------------------------------------------------

Total assets ................................................................ $ 460,960 $ 3,037,810
- -------------------------------------------------------------------------------------------------------------

LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable .............................................................. $ 88,284 $ 381,290
Accrued liabilities ........................................................... 9,986 326,290
Deferred revenue .............................................................. -- 30,000
Current portion of obligations under capital lease ............................ 14,260 17,100
Deposits ...................................................................... 152,600 268,640
Note payable .................................................................. 200,000 --
- -------------------------------------------------------------------------------------------------------------

Total current liabilities ................................................... 465,130 1,023,320
Obligations under capital lease ................................................ 20,490 8,920
Note payable ................................................................... 250,000 --
- -------------------------------------------------------------------------------------------------------------

Total liabilities ........................................................... 735,620 1,032,240
Commitments and contingencies
Mandatorily redeemable preferred stock:
Series A Preferred Stock, no par value, 9,091 shares authorized, issued
and outstanding (aggregate liquidation preference $2,613,670)............... -- 2,613,670
Series B Preferred Stock, no par value, 3,821 shares authorized, issued
and outstanding (aggregate liquidation preference $3,000,000)............... -- 3,000,000
Series B Preferred Stock subscription receivable ............................ -- (50,000)
- -------------------------------------------------------------------------------------------------------------

Total mandatorily redeemable preferred stock ................................... -- 5,563,670
- -------------------------------------------------------------------------------------------------------------

Stockholders' equity (deficit):
Common stock, no par value, authorized 43,423 shares; issued and
outstanding 20,500 shares ................................................... 591,050 477,300
Cumulative translation adjustment ............................................. (24,840)
Accumulated deficit ........................................................... (865,710) (4,010,560)
- -------------------------------------------------------------------------------------------------------------

Total stockholders' equity (deficit) ........................................... (274,660) (3,558,100)
- -------------------------------------------------------------------------------------------------------------

Total liabilities, mandatorily redeemable preferred stock and stockholders'
equity (deficit) .............................................................. $ 460,960 $ 3,037,810
- -------------------------------------------------------------------------------------------------------------

</TABLE>

F-53
<PAGE>

IDX INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

FOR THE PERIOD
FROM APRIL 17, 1996 FOR THE
(INCEPTION) TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------

Revenue .......................................................................... $ 12,600 $ 568,010
Cost of revenue .................................................................. 11,180 1,359,090
- -------------------------------------------------------------------------------------------------------------------------

Gross profit (loss) .............................................................. 1,420 (791,080)
- -------------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES:
Selling, general and administrative ............................................. 470,690 1,807,900
Depreciation and amortization ................................................... 56,120 276,390
Research and development ........................................................ 338,160 264,440
Total operating expenses ....................................................... 864,970 2,348,730
- -------------------------------------------------------------------------------------------------------------------------

Operating loss ................................................................... (863,550) (3,139,810)
- -------------------------------------------------------------------------------------------------------------------------

Interest (expense) income, net ................................................... (2,160) 13,130
- -------------------------------------------------------------------------------------------------------------------------

Net loss before income taxes ..................................................... (865,710) (3,126,680)
Benefit from income taxes ........................................................ -- --
Minority interest in loss of consolidated subsidiary ............................. -- 8,400
Equity in loss of joint venture .................................................. -- (26,570)
- -------------------------------------------------------------------------------------------------------------------------

Net loss ......................................................................... (865,710) (3,144,850)
Accretion on preferred stock ..................................................... -- 113,750
- -------------------------------------------------------------------------------------------------------------------------

Net loss available to common stockholders ........................................ $ (865,710) $ (3,258,600)
- -------------------------------------------------------------------------------------------------------------------------

Basic and diluted net loss per share ............................................. $ (56.82) $ (158.96)
- -------------------------------------------------------------------------------------------------------------------------

Shares used in computing basic and diluted net loss per share 15,235 20,500
- -------------------------------------------------------------------------------------------------------------------------

</TABLE>

F-54
<PAGE>

IDX INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON SHARES
----------------------
NUMBER AMOUNT
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------

Proceeds from issuance of common
stock ........................................................................... 20,500 $ 452,750
Compensation for non-qualified stock
options ......................................................................... 138,300
Net loss from inception to December
31, 1996 ........................................................................
- ----------------------------------------------------------------------------------------------------------

Balance, December 31, 1996 ....................................................... 20,500 591,050
Accretion of Series A preferred
stock ........................................................................... (113,750)
Foreign currency translation
adjustment ......................................................................
Net loss for the year ended
December 31, 1997 ...............................................................
- ----------------------------------------------------------------------------------------------------------

Balance, December 31, 1997 ....................................................... 20,500 $ 477,300
- ----------------------------------------------------------------------------------------------------------

<CAPTION>
CUMULATIVE TOTAL
ACCUMULATED TRANSLATION STOCKHOLDER'S
DEFICIT ADJUSTMENT EQUITY (DEFICIT)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------

Proceeds from issuance of common
stock ........................................................................... $ 452,750
Compensation for non-qualified stock
options ......................................................................... 138,300
Net loss from inception to December
31, 1996 ........................................................................ $ (865,710) (865,710)
- -----------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1996 ....................................................... (865,710) (274,660)
Accretion of Series A preferred
stock ........................................................................... (113,750)
Foreign currency translation
adjustment ...................................................................... $ (24,840) (24,840)
Net loss for the year ended
December 31, 1997 ............................................................... (3,144,850) (3,144,850)
- -----------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1997 ....................................................... $ (4,010,560) $ (24,840) $ (3,558,100)
- -----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-55
<PAGE>

IDX INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM APRIL 17, 1996 FOR THE
(INCEPTION) TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------

CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss ........................................................................ $ (865,710) $ (3,144,850)
Adjustments to reconcile net loss to net cash used in operating
period activities:
Depreciation and amortization expense ......................................... 56,120 276,390
Provision for doubtful accounts ............................................... -- 82,620
Stock compensation expense .................................................... 138,300 --
Increase in accounts receivable ............................................... (3,560) (227,510)
(Increase) decrease in other accounts receivable .............................. (44,260) 17,260
Increase in other assets ...................................................... (68,950) (43,460)
Increase in accounts payable and accrued liabilities .......................... 98,270 646,370
Increase in deferred revenue .................................................. -- 30,000
Increase in deposits .......................................................... 152,600 82,520
- --------------------------------------------------------------------------------------------------------------------------

Net cash used in operating activities ........................................ (537,190) (2,280,660)
- --------------------------------------------------------------------------------------------------------------------------

CASH FLOWS USED IN INVESTING ACTIVITIES:
Investment in equipment for lease ............................................... (156,000) (129,570)
Purchase of furniture and equipment ............................................. (143,730) (1,043,890)
Investment in capitalized software development costs ............................ (44,140) (4,830)
Investment in other assets ...................................................... -- (126,070)
Investment in joint ventures .................................................... -- (40,000)
- --------------------------------------------------------------------------------------------------------------------------

Net cash used in investing activities ......................................... (343,870) (1,344,360)
- --------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock ....................................... -- 5,449,920
Proceeds from issuance of common stock .......................................... 452,750 --
Proceeds from short-term borrowings ............................................. 200,000 --
Proceeds from long-term borrowings .............................................. 250,000 --
Repayment of short and long-term borrowings ..................................... -- (450,000)
Principal payments on capital lease obligations ................................. (1,920) (16,860)
- --------------------------------------------------------------------------------------------------------------------------

Net cash provided by financing activities ..................................... 900,830 4,983,060
- --------------------------------------------------------------------------------------------------------------------------

Effect of exchange rate changes on cash .......................................... -- (41,670)
- --------------------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents ........................................ 19,770 1,316,370
Cash and cash equivalents, beginning of period ................................... -- 19,770
- --------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period ......................................... $ 19,770 $ 1,336,140
- --------------------------------------------------------------------------------------------------------------------------

</TABLE>

F-56
<PAGE>

IDX INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF OPERATIONS

IDX International, Inc. (the Company) was incorporated on April 17, 1996
(inception) as a Virginia corporation. The Company develops and markets voice
and data store-and-forward network services for transmitting voice, facsimiles
(faxes) and other forms of digitized information utilizing a global network
established by the Company and its international business partners (IBPs). The
network consists of international private lines, shared access lines and frame
relays (collectively telecommunication lines) connected to PC-based dedicated
access switches (CyberPosts) which process and route voice and fax traffic
globally over the network. During the period from inception to December 31,
1996, the Company was a development stage enterprise.

Subsidiaries

During 1997, the Company established two wholly-owned foreign
subsidiaries, IDX Taiwan Ltd. (IDX Taiwan) and IDX Hong Kong Ltd. (IDX HK), and
one majority-owned foreign subsidiary, IDX Belgium, N.V. (IDX Belgium), to
market the Company's store-and-forward services. Upon the formation of IDX
Belgium, the Company acquired a 90% interest in IDX Belgium in exchange for
contributed capital of $75,600, and the minority interest holder acquired a 10%
interest in IDX Belgium, as well as options to acquire an additional 16%
interest, in exchange for contributed capital of $8,400. Under the terms of the
associated Share Option Agreement, the options expire in 2001 and have an
exercise price equal to the initial price per share paid by the parties to the
agreement upon the formation of IDX Belgium, plus a cumulative annual increase
of 3% thereon.

During April 1998, IDX Belgium issued additional shares of its common
stock, plus an option to acquire an equal number of its common shares, to a new
investor in exchange for a $380,000 capital contribution. The option to acquire
additional shares carries a total exercise price of approximately $380,000.
Upon issuance of the additional shares in April 1998, the Company's interest in
IDX Belgium was reduced to 75%.

During January 1998, the Company established one wholly-owned foreign
subsidiary, IDX Singapore Ltd., and two majority-owned foreign subsidiaries,
IDX Europe Services, N.V., and Marvin European Holdings Lmt., to market the
Company's store-and-forward services. Through May 15, 1998, the Company has
contributed funding in the form of capital contributions and/or cash advances
to these subsidiaries in the amount of $51,000, $50,000 and $0, respectively.

Joint Ventures

During the period from inception to December 31, 1996, the Company entered
into three joint venture arrangements to market the Company's voice and data
store-and-forward services. Of those arrangements, two were dissolved prior to
December 31, 1996. The third joint venture has been largely inactive and was
terminated in 1998.

In March 1997, the Company formed another joint venture to market the
Company's services in Panama. The Company contributed $40,000 for a 20%
interest in the joint venture. In August 1997, IDX Taiwan formed a joint
venture with Orlida Ltd. (Orlida), a Taiwanese company, in order to expand the
Company's operations in Taiwan (Note 12). The Company contributed CyberPost
equipment with a net book value of $26,000 in exchange for a 33% interest in
the joint venture.

2. LIQUIDITY AND CAPITAL RESOURCES

The Company's ability to generate sufficient revenues and ultimately
achieve profitable operations remains uncertain. The Company's future prospects
depend upon, among other things, its ability to demonstrate sustained
commercial viability of its service and to obtain sufficient working capital,
both of which raise substantial doubt about the Company's ability to continue
as a going concern. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

F-57
<PAGE>

IDX INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

During the year ended December 31, 1997, the Company incurred a net loss
of $3.1 million and negative operating cash flow of $2.3 million. At December
31, 1997, the Company had a stockholders' net capital deficiency of $3.6
million.

The Company plans to operate in a fashion to generate both increased
revenues and cash flows during 1998. Additionally, in March 1998, management
entered into a Letter of Intent for the sale of the Company to eGlobe, Ltd.
(eGlobe) (Note 12). In the event the sale of the Company is not consummated,
the Company intends to issue additional shares of stock during 1998. Management
believes that should the sale of the Company be completed, eGlobe will provide
the Company with financial and operational support which, together with
existing cash and cash flows from operations, should enable the Company to
continue operations through the year ending December 31, 1998. In the event the
sale is not completed, management believes that the proceeds from other sales
of the Company's stock, together with existing cash and cash flows from
operations, will provide the Company with sufficient financial support to
continue operations through the year ending December 31, 1998. However, there
can be no assurance that the sale of the Company or other sales of the
Company's stock will be completed or that cash flows from operations will be
sufficient to sustain operations through the year ending December 31, 1998.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 amounts reported in the consolidated financial
statements and related notes to financial statements. Actual results could
differ from those estimates.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of
the Company's U.S. and non-U.S subsidiaries. The Company accounts for its
investment in joint ventures under the equity method of accounting.
Intercompany transactions and balances have been eliminated.

Revenue Recognition and Cost of Sales

Revenue originating from Panama, Taiwan, United Kingdom and Philippines
approximated 30%, 25%, 12% and 11% of total revenues for the year ended
December 31, 1997, respectively. Revenue from four customers approximated 30%,
12%, 11% and 11% of total revenues for such period.

F-58
<PAGE>

IDX INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Cash and Cash Equivalents

The Company considers all highly-liquid investments with original
maturities of three months or less to be cash equivalents.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to a
concentration of credit risk consist principally of accounts receivable and
cash equivalents. The Company in certain instances requires security deposits
from its IBP's to be applied against future uncollectible accounts receivable,
as needed. At December 31, 1997, $47,520 of such deposits is presented net
against outstanding accounts receivable. In addition, there is an allowance for
uncollectible accounts receivable which is based upon the expected
collectibility of accounts receivable.

Equipment for Lease

The Company's investment in equipment for lease is stated at cost, net of
accumulated depreciation. Depreciation is recorded on a straight-line basis
over the equipments' estimated useful life of three years.

Furniture and Equipment

Software Development Costs

Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed" (SFAS
86), requires the capitalization of certain software development costs incurred
subsequent to the date when technological feasibility is established and prior
to the date when the product is generally available for licensing. The Company
defines technological feasibility as being attained at the time a working model
of a software product is completed. The Company capitalized $44,140 and $4,740
of software development costs during the period from inception to December 31,
1996 and the year ended December 31, 1997, respectively. Capitalized software
development costs are amortized using the straight-line method over the
estimated economic life of three years. The Company began amortizing
capitalized software development costs during 1997. Amortization expense for
1997 and accumulated amortization at December 31, 1997 was $14,710.

Impairment of Long-Lived Assets

Research and Development

Research and development costs are expensed as incurred.

F-59
<PAGE>

IDX INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Foreign Currency Translation

Income Taxes

The Company provides for income taxes using the asset and liability
approach. The asset and liability approach requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of the
assets and liabilities. A valuation allowance is recorded if, based on the
evidence available, it is more likely than not that some portion or all of the
deferred tax asset will not be realized.

Fair Value of Financial Instruments

The carrying amounts reported in the consolidated statement of position
for cash and cash equivalents, accounts receivable and accounts payable
approximate fair value due to the short maturity of those instruments. Based
upon the offering price of the Series B Preferred Stock, which has similar
features to the Series A Preferred Stock, the estimated fair value of the
Series A Preferred Stock outstanding is $7.1 million. As the Company issued the
Series B Preferred Stock on December 31, 1997, the carrying amount approximates
fair value.

Stock Based Compensation

The Company accounts for stock based compensation to employees in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25). Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123),
provides an alternative accounting method to APB 25 and requires additional pro
forma disclosures. The fair value based compensation expense for stock based
compensation granted to employees during the period from inception to December
31, 1996, measured in accordance with the provisions of SFAS 123, does not
differ significantly from amounts included in net income. The Company accounts
for stock based compensation to non-employees in accordance with the provisions
of SFAS 123. No stock based compensation was granted and no options previously
granted were exercised during 1997.

Earnings Per Share

Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (SFAS 128), which replaces
the presentation of primary earnings per share (EPS) with a presentation of
basic EPS, and requires the dual presentation of basic and diluted EPS on the
face of the statement of operations for entities with complex capital
structures. Prior period EPS has been restated as required by SFAS 128.

Securities which could potentially dilute basic EPS in the future consist
of convertible mandatorily redeemable preferred stock and common stock options
and were not included in the computation of diluted EPS because to do so would
have been anti-dilutive for the periods presented.

New Accounting Standard

In June 1997, Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (SFAS 130) was issued, which establishes
standards for reporting and disclosure of comprehensive income and its
components (revenues, expenses, gains and losses) in a full set of

F-60
<PAGE>

IDX INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

general-purpose financial statements. SFAS 130, which is effective for fiscal
years beginning after December 15, 1997, requires reclassification of financial
statements for earlier periods to be provided for comparative purposes. The
Company anticipates that implementation of the provisions of SFAS 130 will not
have a significant impact on the Company's existing disclosures.

4. FURNITURE AND EQUIPMENT

Furniture and equipment is comprised of the following amounts at December
31:

<TABLE>
<CAPTION>
1996 1997
------------ --------------
<S> <C> <C>
Equipment ............................................... $ 158,400 $ 1,016,650
Office and computer equipment ........................... 19,490 119,070
Furniture and fixtures .................................. 1,100 46,840
Leasehold improvements .................................. 1,410 31,510
--------- -----------
Furniture and equipment, at cost ....................... 180,400 1,214,070
Less accumulated depreciation and amortization .......... (30,120) (227,520)
--------- -----------
Furniture and equipment, net ............................ $ 150,280 $ 986,550
========= ===========

</TABLE>

Equipment under capital leases with a net book value of $30,610 and
$31,615 at December 31, 1996 and 1997, respectively, are included in equipment.
Depreciation expense, including amortization of equipment under capital leases,
was $30,120 and $197,400 for the period from inception to December 31, 1996 and
for the year ended December 31, 1997, respectively.

5. EQUIPMENT FOR LEASE

The Company leases CyberPost equipment to IBPs under operating leases,
which are generally for a period of one to five years and contain annual
renewal options. The cost of equipment for lease at December 31, 1996 and 1997
was $156,000 and $307,680, respectively, and the related accumulated
depreciation was $26,000 and $90,280, respectively. Depreciation expense for
equipment for lease was $26,000 and $64,280 for the period from inception to
December 31, 1996 and for the year ended December 31, 1997, respectively.

6. DEBT

At December 31, 1996 short-term borrowings consisted of a $200,000 note
payable due to Telecommunications Development Corporation and long-term
borrowings consisted of a $250,000 note payable due to InteliSys, Inc., both of
which are parties related to the Company (Note 11). The notes bear interest at
8% and 0%, respectively, and were fully repaid by the Company in January 1997
and October 1997, respectively.

Interest expense for the period from inception through December 31, 1996
and for the year ended December 31, 1997 was $3,000 and $4,800, respectively.
Interest expense during the periods presented does not include imputed interest
in connection with the non-interest bearing note payable as such amounts are
insignificant.

7. COMMITMENTS AND CONTINGENCIES

During the period from inception to December 31, 1996, InteliSys entered
into long distance telecommunication agreements and capital lease obligations
described below. During April 1997, InteliSys announced its decision to
discontinue its own operations and the Company assumed certain contractual
agreements currently held by InteliSys for leased facilities, office equipment
and telecommunication lines utilized by the Company.

F-61
<PAGE>

IDX INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Telecommunication Lines

In its normal course of business, the Company enters into agreements for
the use of long distance telecommunication lines. Future minimum payments under
such agreements are approximately as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31:
-------------------------
<S> <C>
1998 ........................................................ $ 1,641,000
1999 ........................................................ 1,262,000
2000 ........................................................ 40,000
-----------
Total future minimum telecommunication line payments ........ $ 2,943,000
===========

</TABLE>

Leases

Total rent expense for U.S. office facilities shared by the Company and
InteliSys for the period from inception through December 31, 1996 and for the
three month period ended March 31, 1997 was $53,000 and $23,230, respectively.
Of this total, lease expense related to the Company's operations based on space
utilized during such periods was $21,000 and $13,940, respectively. Total rent
expense incurred by the Company for the period from inception to December 31,
1996 and for the year ended December 31, 1997 was $21,000 and $107,755,
respectively. Future minimum lease commitments at December 31, 1997 are
$212,000, 68,000, and 44,000 for 1998, 1999 and 2000, respectively. The
Company's U.S. office facility lease expires on December 31, 1998, and is
renewable at the option of the Company (Note 12).

Capital Lease Obligations

The Company acquired $36,690 and $8,520 of equipment under capital lease
obligations during the period from inception to December 31, 1996 and the year
ended December 31, 1997, respectively. Interest paid for capital lease
obligations during the period was approximately $400 and $3,210, respectively.
Future payments for the capital leases are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31:
-------------------------
<S> <C>
1998 ........................................................ $ 20,350
1999 ........................................................ 10,660
---------
Total future minimum lease payments ......................... 31,010
Less amount representing interest ........................... (4,990)
---------
26,020
Less current principal maturities of obligation under capital
lease ...................................................... (17,100)
---------
Long-term lease obligation .................................. $ 8,920
=========

</TABLE>

Contingencies

F-62
<PAGE>

IDX INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Company's operations in the associated jurisdiction. In consultation with legal
counsel, management has concluded that the likelihood of significant penalties
or injunctive relief is remote. There can be no assurance, however, that
regulatory action against the Company will not occur.

8. MANDATORILY REDEEMABLE PREFERRRED STOCK

During 1997, the Company amended its Articles of Incorporation to
authorize the issuance of 9,091 shares of Series A Preferred Stock (Series A),
no par value, and 3,821 shares of Series B Preferred Stock (Series B), no par
value.

In January 1997 and May 1997, the Company sold 3,636 and 5,455 shares of
Series A stock, respectively, in which the Company received total proceeds of
$2.5 million.

In September 1997, the Company entered into a Letter of Intent for the
sale of 3,821 shares of Series B stock for $3.0 million. Prior to the close of
the transaction, the Company received from the purchaser of the Series B stock
advances totaling $2.95 million. Upon closing of the transaction in December
1997, such advances were applied against the $3 million. The remaining $50,000
was received in February 1998.

In preference to holders of common stock, holders of Series A and B stock
are entitled to receive cumulative dividends equal to 6% of the respective
Series A and B liquidation preference. Accrued unpaid dividends as of December
31, 1997 on the Series A stock in the amount of $113,750 were recognized as an
increase to the Series A stock carrying value.

In the event of a liquidation of the Company or a change in control of the
Company, Series A and B stock have liquidation preference to common stock of
$275 and $785 per share, respectively, plus accrued unpaid dividends
(liquidation preference). After the satisfaction of the liquidation preference,
the remaining assets of the Company will be distributed to the holders of
common stock on a pro rata basis.

During the period from January 1999 through December 2001, the Company may
redeem all, but not less than all, of the Series A and B stock outstanding for
an amount equal to the liquidation preference as of such date. On January 1,
2002, the Company is required to redeem all outstanding shares of Series A and
B stock then outstanding for an amount equal to the Series A and B liquidation
preference on such date.

Through December 2001, at the option of the holder, each share of Series A
and B stock is convertible into one share of common stock. The conversion rate
is subject to adjustment in certain circumstances, such as, but not limited to,
if prior to January 1, 1999, the Company issues common stock for less than $275
and $785 per share, respectively, or issues additional shares of Series A and B
stock with a conversion rate greater than the effective conversion rate on such
date.

Notwithstanding the foregoing, each outstanding share of Series A and B
Stock will automatically convert into common stock immediately preceding the
closing of a qualified public offering, as defined.

Certain matters require the majority or supermajority approval of Series A
and B stockholders. On all other matters, holders of Series A and B stock have
an equal number of votes per share, on an as converted basis, as to holders of
common stock.

As of December 31, 1997, the Company has reserved 17,168 shares of common
stock for issuance upon conversion of the Series A and B stock.

9. STOCK BASED COMPENSATION

During June 1996, the Board of Directors approved the grant of options to
purchase 1,250 and 500 shares of common stock to an officer and a consultant of
the Company, respectively, for an exercise price below fair market value. In
connection with the grant, the Company recognized $98,800 and $39,500 of
compensation and consulting expense, respectively, during the period from
inception to December 31, 1996.

F-63
<PAGE>

IDX INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

During September 1997, the Board of Directors adopted the 1997 Stock
Incentive Plan (the Incentive Plan). The Incentive Plan provides for awards in
the form of restricted stock, stock units, options (including incentive stock
options (ISOs) and nonstatutory stock options (NSOs)) or stock appreciation
rights (SARs). Employees, directors, and consultants of the Company are
eligible for grants of restricted shares, stock units, NSOs and SARs. Only
employees of the Company are eligible for ISOs. A total of 4,500 shares of
common stock have been reserved for issuance under the Incentive Plan. No
awards have been granted under the Incentive Plan to date.

10. INCOME TAXES

The Company has incurred operating losses and paid no U.S. income tax for
the periods presented. The income tax benefit from the Company's operating loss
carryforwards and other temporary differences at December 31, 1996 and 1997 was
approximately $329,000 and $1.5 million, respectively, and have been recognized
as a deferred tax asset. A full valuation allowance has been recorded against
the deferred tax asset because management currently believes it is more likely
than not that the asset will not be realized.

At December 31, 1997, the Company had net operating loss carryforwards
available for U.S. income tax purposes of $2.7 million which expire in 2011 and
2012. Net operating loss carryforwards are subject to review and possible
adjustment by the Internal Revenue Service and may be limited in the event of
certain cumulative changes in the ownership interests of significant
stockholders over a three-year period in excess of 50%.

11. RELATED PARTY TRANSACTIONS

Related party transactions may not be indicative of transactions
negotiated at arms-length.

InteliSys

Management and the majority stockholder of the Company also manage and own
InteliSys, a computer hardware distributor. Prior to the Company's inception,
InteliSys funded the development of the Company's CyberPost technology. This
technology was assigned to the Company in exchange for a $250,000 note payable
to InteliSys (Note 6), which approximates the costs incurred in developing the
technology. Subsequent to the Company's inception and through March 31, 1997,
the Company and InteliSys shared certain office facilities, furniture, office
equipment and personnel. During the period from inception to December 31, 1996,
the Company purchased from InteliSys approximately $202,000 of equipment. In
connection with InteliSys' discontinued operations, during October 1997 the
Company acquired substantially all of the furniture and equipment of InteliSys
for $75,000.

The costs of these functions, services and goods have been directly
charged and/or allocated to the Company using methods management believes are
reasonable; primarily specific identification or percentage of respective
square footage utilized and/or labor hours incurred.

F-64
<PAGE>

IDX INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Consulting Services

The Company receives consulting services from two of the Company's
stockholders, who also serve on the Board of Directors. For the period from
inception to December 31, 1996 and for the year ended December 31, 1997,
compensation related to these services in cash and stock totaled $67,000 and
$80,000, respectively.

At December 31, 1996 and 1997, accounts receivable due from related
parties, including amounts included in other accounts receivable due from
officers and employees of the Company, were $43,000 and $32,200, respectively.

During October 1997, the Company appointed the President of Teleplus, Inc.
(Teleplus), a service provider to the Company, as the President of IDX HK.
During the period from October to December 1997, while the individual served
concurrently as President of both entities, the Company procured services from
Teleplus in the amount of $31,350. During December 1997, the individual
resigned as President of IDX HK.

12. SUBSEQUENT EVENTS

Acquisition of the Company

On March 20, 1998, the Company entered into a Letter of Intent for the
sale of the Company to eGlobe. Under the Letter of Intent, eGlobe will acquire
100% of the outstanding shares of the Company's common and preferred stock in
exchange for cash, eGlobe Series B Preferred Stock and warrants to acquire
shares of eGlobe's common stock. Prior to the consummation of the transaction,
key management personnel will be required to execute employment agreements.

In connection with the above planned sale of the Company, eGlobe advanced
the Company $1.1 million, bearing interest at 8.5%, and has committed to make
additional advances prior to the closing of the sale of the Company. In the
event the sale of the Company to eGlobe is not completed, principle and accrued
interest outstanding are payable to eGlobe at the earlier of (i) the date on
which the Company has raised additional financing of $2 million or (ii) twelve
months from the date it is determined not to complete the sale.

Acquisition of Significant Customer

On May 8, 1998, certain of the Company's shareholders acquired all of the
stock of Orlida, in exchange for $100,000 cash and 700.64 shares of the
Company's common stock, valued at $550,000. The Company in turn has committed
to acquire from the aforementioned shareholders 100% of Orlida's stock in
exchange for $100,000 and 700.64 shares of the Company's common stock. Orlida's
primary business consists of marketing voice and data store-and-forward
services in Taiwan and, prior to its proposed acquisition by the Company,
Orlida contracted with the Company to route all of its traffic through the
Company's network. In addition, Orlida is a party to joint venture with the
Company (Note 1).

On May 11, 1998, the Company entered into a loan agreement with Orlida
whereby the Company agreed to lend Orlida up to $100,000, bearing an annual
interest rate of 8.5%. Principle and accrued interest outstanding are payable
to Company at the earlier of (i) the date of the closing of the proposed
acquisition of Orlida by the Company or (ii) May 11, 1999.

Lease Commitment

On April 23, 1998, the Company entered into a Letter of Intent for a seven
year office facility lease to replace the Company's current office facility
lease which expires on December 31, 1998. The estimated annual future minimum
commitment under the proposed lease is $140,000.

F-65
<PAGE>

IDX INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Employee Savings Plan

On April 1, 1998, the Company adopted a 401(k) Profit Sharing Plan. All
employees are eligible to participate in the plan. The Company may, at its
discretion, match up to 100% of participants' contributions and/or contribute
an amount to be allocated among the participants.

F-66
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders
TeleKey, Inc.
Travelers Teleservices, Inc.
Atlanta, Georgia

We have audited the accompanying combined consolidated balance sheets of
TeleKey, Inc. and subsidiary and Travelers Teleservices, Inc. as of December
31, 1998 and 1997 and the related statements of operations, stockholders'
deficit, and cash flows for the years then ended. These financial statements
are the responsibility of the Companies' management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the combined consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
TeleKey, Inc. and subsidiary and Travelers Teleservices, Inc. as of December
31, 1998 and 1997, and the results of their operations and their cash flows for
the years then ended in conformity with generally accepted accounting
principles.

/s/ BDO Seidman, LLP
-----------------------------------
BDO Seidman, LLP

Denver, Colorado
March 26, 1999

F-67
<PAGE>

TELEKEY, INC. AND SUBSIDIARY AND
TRAVELERS TELESERVICES, INC.

COMBINED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1998 1997
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------

ASSETS
CURRENT:
Cash ............................................................................ $ 49,462 $ 89,985
Restricted cash ................................................................. 50,000 50,000
Accounts receivable, less allowance of $7,500 and $48,142 for
doubtful accounts ............................................................. 73,062 32,470
Inventory ....................................................................... 120,094 92,261
Prepaid expenses and other assets ............................................... 64,352 25,435
- -------------------------------------------------------------------------------------------------------------------

Total current assets ............................................................. 356,970 290,151
- -------------------------------------------------------------------------------------------------------------------

Furniture and equipment, less accumulated depreciation (Note 2). 496,825 482,045
Goodwill, less accumulated amortization of $11,822 (Note 1)....................... 236,435 --
- -------------------------------------------------------------------------------------------------------------------

$ 1,090,230 $ 772,196
- -------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable ................................................................ $ 115,466 $ 192,115
Accrued liabilities:
Telecom taxes ................................................................... 710,926 552,361
Payroll ......................................................................... 84,955 147,493
Credit card charge backs ........................................................ 20,000 75,000
Other ........................................................................... 30,000 --
Deferred revenues ............................................................... 633,374 948,376
Line of credit (Note 4) ......................................................... 500,000 450,000
Current portion of obligation under capital lease (Note 3) ...................... 14,269 12,422
- -------------------------------------------------------------------------------------------------------------------

Total current liabilities ........................................................ 2,108,990 2,377,767
Obligation under capital lease, net of current portion (Note 3) .................. 50,100 64,502
Note payable (Note 1) ............................................................ 453,817 --
- -------------------------------------------------------------------------------------------------------------------

Total liabilities ................................................................ 2,612,907 2,442,269
- -------------------------------------------------------------------------------------------------------------------

Minority Interest (Note 1) ....................................................... -- 746,819
Commitments and contingencies (Notes 3, 7 and 10)
Stockholders' deficit (Note 8):
Common stock, no par value - 100,000 shares authorized, 3,000
issued and outstanding ........................................................ 783,757 177,757
Common stock, no par value - 1,000 shares authorized, 300 issued
and outstanding ............................................................... 3 --
Accumulated deficit ............................................................. (2,306,437) (2,594,649)
- -------------------------------------------------------------------------------------------------------------------

Total stockholders' deficit ...................................................... (1,522,677) (2,416,892)
- -------------------------------------------------------------------------------------------------------------------

$ 1,090,230 $ 772,196
- -------------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to combined
consolidated financial statements.

F-68
<PAGE>

TELEKEY, INC. AND SUBSIDIARY AND
TRAVELERS TELESERVICES, INC.

COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1998 1997
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------

Revenues:
Service (Note 6) ................................................................ $4,606,587 $ 5,649,981
Other ........................................................................... 98,891 53,074
- -------------------------------------------------------------------------------------------------------------------

Total revenues ................................................................... 4,705,478 5,703,055
Cost of services ................................................................. 1,294,429 2,303,985
- -------------------------------------------------------------------------------------------------------------------

Gross margin ..................................................................... 3,411,049 3,399,070
Operating expenses:
Selling and marketing ........................................................... 1,144,728 2,490,506
General and administrative ...................................................... 1,665,973 2,296,896
Depreciation and amortization ................................................... 191,814 117,203
Excise tax adjustment (Note 5) .................................................. -- (259,232)
- -------------------------------------------------------------------------------------------------------------------

Total operating expenses ......................................................... 3,002,515 4,645,373
Operating income (loss) .......................................................... 408,534 (1,246,303)
Other income (expense):
Interest income ................................................................. 5,450 12,258
Interest expense ................................................................ (67,031) (10,983)
- -------------------------------------------------------------------------------------------------------------------

Total other income (expense) ..................................................... (61,581) 1,275
Income (loss) before minority interest in (income) loss of
subsidiary ...................................................................... 346,953 (1,245,028)
Minority interest in (income) loss of subsidiary ................................. (58,741) 248,814
- -------------------------------------------------------------------------------------------------------------------

Net income (loss) ................................................................ $ 288,212 $ (996,214)
- -------------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to combined
consolidated financial statements.

F-69
<PAGE>

TELEKEY, INC. AND SUBSIDIARY
AND TRAVELERS TELESERVICES, INC.

COMBINED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TRAVELERS
--------------------------------------
TELESERVICES,
TELEKEY, INC. INC.
-------------------- -----------------
COMMON STOCK COMMON STOCK
-------------------- -----------------
YEARS ENDED DECEMBER 31, 1997 AND 1998 SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------

Balance, January 1, 1997 ......................................................... 3,000 $174,757 -- $--
Capital contribution ............................................................ -- 3,000 -- --
Net loss ........................................................................ -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1997 ....................................................... 3,000 177,757 -- --
Issuance of common stock ........................................................ -- -- 300 3
Capital contribution ............................................................ -- 6,000 -- --
Capital contribution for acquisition of ITC's
20% interest in TeleKey, L.L.C. (Note 1) ....................................... -- 600,000 -- --
Net income ...................................................................... -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1998 ...................................................... 3,000 $783,757 300 $ 3
- -------------------------------------------------------------------------------------------------------------------------

<CAPTION>
TRAVELERS
---------------------------------
TOTAL
ACCUMULATED STOCKHOLDERS'
YEARS ENDED DECEMBER 31, 1997 AND 1998 DEFICIT DEFICIT
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------

Balance, January 1, 1997 ......................................................... $ (1,598,435) $ (1,423,678)
Capital contribution ............................................................ -- 3,000
Net loss ........................................................................ (996,214) (996,214)
- ---------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1997 ....................................................... (2,594,649) (2,416,892)
Issuance of common stock ........................................................ -- 3
Capital contribution ............................................................ -- 6,000
Capital contribution for acquisition of ITC's
20% interest in TeleKey, L.L.C. (Note 1) ....................................... -- 600,000
Net income ...................................................................... 288,212 288,212
- ---------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1998 ...................................................... $ (2,306,437) $ (1,522,677)
- ---------------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to combined
consolidated financial statements.

F-70
<PAGE>

TELEKEY, INC. AND SUBSIDIARY AND
TRAVELERS TELESERVICES, INC.

COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
INCREASE (DECREASE) IN CASH 1998 1997
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES:
Net income (loss) ............................................................... $ 288,212 $ (996,214)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities: Depreciation and
amortization .................................................................. 191,814 117,203
Minority interest in income (loss) of subsidiary ................................ 58,741 (248,814)
Changes in operating assets and liabilities:
Accounts receivable ........................................................... (40,592) 123,796
Inventory ..................................................................... (27,833) 42,335
Prepaid expenses and other assets ............................................. (38,917) 8,223
Accounts payable .............................................................. (76,649) 34,609
Accrued liabilities ........................................................... 71,027 227,279
Deferred revenues ............................................................. (315,002) 296,697
- -----------------------------------------------------------------------------------------------------------------

Net cash provided by (used in) operating activities .............................. 110,801 (394,886)
- -----------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
Purchase of furniture and equipment ............................................. (194,772) (256,110)
Acquisition of minority interest ................................................ (600,000) --
- -----------------------------------------------------------------------------------------------------------------

Net cash used in investing activities ............................................ (794,772) (256,110)
- -----------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
Proceeds from issuance of common stock .......................................... 3 --
Proceeds under line of credit ................................................... 525,000 450,000
Payments on line of credit ...................................................... (475,000) --
Capital contributions ........................................................... 606,000 3,000
Collection of contributions receivable .......................................... -- 80,264
Change in restricted cash ....................................................... -- (4,752)
Principal payments on capital lease obligation .................................. (12,555) (2,896)
- -----------------------------------------------------------------------------------------------------------------

Net cash provided by financing activities ........................................ 643,448 525,616
- -----------------------------------------------------------------------------------------------------------------

Net decrease in cash ............................................................. (40,523) (125,380)
Cash, beginning of year .......................................................... 89,985 215,365
- -----------------------------------------------------------------------------------------------------------------

Cash, end of year ................................................................ $ 49,462 $ 89,985
- -----------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying summary of accounting policies and notes to combined
consolidated financial statements.

F-71
<PAGE>

TELEKEY, INC. AND SUBSIDIARY AND
TRAVELERS TELESERVICES, INC.

SUMMARY OF ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

The combined consolidated financial statements include the accounts of
TeleKey, Inc. and its 100% owned subsidiary, TeleKey, L.L.C. (80% owned through
August 24, 1998, see Note 1) and Travelers Teleservices, Inc. an entity with
common ownership (collectively the "Companies"). TeleKey, L.L.C. sells prepaid
or "debit" telephone cards, providing domestic and international long-distance
telephone service from destinations throughout the United States and Canada.
Travelers Teleservices, Inc. was created in 1998 to provide credit card
processing services for TeleKey, L.L.C.

PRINCIPALS OF CONSOLIDATION AND COMBINATION

All significant intercompany transactions and balances have been
eliminated in combination and consolidation.

LIQUIDITY AND CAPITAL RESOURCES

The Companies' viability is dependent on their ability to generate
sufficient revenues and to limit selling and marketing and general and
administration expenses.

In 1998, the Companies curtailed their growth, significantly reducing
their operating expenses, and returned to profitability.

The Companies plan to operate in a fashion to generate both increased
revenues and cash flows during 1999. Additionally, in February 1999, the
Companies were acquired by Executive TeleCard, Ltd. d.b.a. eGlobe, Inc.
("eGlobe") (see Note 8). Management believes that eGlobe will provide the
Companies with financial and operational support, if necessary, which together
with existing cash and anticipated cash flows from operations, should enable
the Companies to continue operations through the year ended December 31, 1999.

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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the reporting
period. Actual results could differ from those estimates.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Companies to a
concentration of credit risk consist primarily of cash and accounts receivable.
The Companies maintain cash balances, which at times may exceed federally
insured limits. The Companies have not experienced any losses in their cash
balances. Concentrations of credit risk with respect to accounts receivable are
generally limited due to customers who are dispersed across geographic areas.
The Companies maintain an allowance for potential losses based on management's
analysis of possible uncollectible accounts.

CASH AND CASH EQUIVALENTS

The Companies consider all investments with a maturity of three months or
less to be cash and cash equivalents.

RESTRICTED CASH

The Companies' credit card processing company requires that cash balances
be deposited with the processor in order to ensure that any disputed claims by
the credit card customers can be readily settled.

F-72
<PAGE>

TELEKEY, INC. AND SUBSIDIARY AND
TRAVELERS TELESERVICES, INC.

SUMMARY OF ACCOUNTING POLICIES - (CONTINUED)

INVENTORY

Inventory consists of phone cards and is stated at the lower of cost or
market. Cost is determined principally under the average cost method.

FURNITURE AND EQUIPMENT

Furniture and equipment are stated at cost. Expenditures for renewals and
improvements are capitalized in the furniture and equipment accounts.
Replacements, maintenance, and repairs which do not improve or extend the lives
of the respective assets are expensed as incurred. Depreciation is calculated
using the straight-line method over the estimated useful lives of the related
assets, which is five years for all assets. Upon the retirement or sale of
assets, the costs of such assets and the related accumulated depreciation are
removed from the accounts and the gain or loss, if any, is credited or charged
to other income in the accompanying combined consolidated statements of
operations.

GOODWILL

The Companies amortize costs in excess of the fair value of net assets
acquired, goodwill using the straight-line method over seven years.

LONG-LIVED ASSETS

Management periodically evaluates carrying values of long-lived assets
including furniture and equipment and goodwill, to determine whether events and
circumstances indicate that these assets have been impaired. An asset is
considered impaired when undiscounted cash flows to be realized from such asset
are less than its carrying value. In that event, a loss is determined based on
the amount the carrying value exceeds the fair market value of such assets.
Management believes that the long-lived assets in the accompanying combined
consolidated balance sheets are appropriately valued.

REVENUE RECOGNITION AND DEFERRED REVENUES

Revenues from debit cards are recognized as the cards are used and the
long-distance telephone service is provided. Payments received in advance for
debit cards are recorded in the accompanying balance sheets as deferred
revenue. These revenues are recognized when the related service is provided,
generally over the 12 months following receipt of payment. The prepaid cards
generally expire 12 months after the date of sale or last use, whichever occurs
later. Unused amounts that expire are referred to as breakage and are recorded
as revenues at the date of expiration.

Direct costs associated with these revenues are also recognized when the
related services are provided or expire. Payments related to unrecognized
revenues are included as a reduction to the deferred revenue account.

COST OF SERVICES

Cost of services includes all expenses incurred in providing long-distance
services, including long-distance carrier costs. Also included in cost of
services are the card manufacturing costs, which are recorded as the related
cards are sold and relieved from inventory at a weighted average cost.

ADVERTISING EXPENSES

The Companies expense the production costs of advertising at the time
incurred. Advertising expenses amounted to approximately $204,000 and $853,000
for the years ended December 31, 1998 and 1997, and are included in selling and
marketing in the accompanying combined consolidated statements of operations.

F-73
<PAGE>

TELEKEY, INC. AND SUBSIDIARY AND
TRAVELERS TELESERVICES, INC.

SUMMARY OF ACCOUNTING POLICIES - (CONTINUED)

INCOME TAXES

TeleKey, Inc. and Travelers Teleservices, Inc. are "S" Corporations and
TeleKey, L.L.C. is a limited liability company, all of which are not subject to
federal and state income taxes. The taxable income or loss of the Companies are
included in the federal and state income tax returns of their owners.
Accordingly, no provision for income taxes has been reflected in the
accompanying combined consolidated financial statements.

EQUITY BASED COMPENSATION

The Companies account for equity based compensation to employees in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"). Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"),
provides an alternative accounting method to APB 25 and requires additional pro
forma disclosures.

F-74
<PAGE>

TELEKEY, INC. AND SUBSIDIARY AND
TRAVELERS TELESERVICES, INC.

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

1. ACQUISITION OF BUSINESS INTEREST

On August 24, 1998, TeleKey, Inc. acquired the remaining 20% interest in
TeleKey, L.L.C. held by ITC Service Company ("ITC") for $1,053,817, consisting
of $600,000 in cash, contributed to TeleKey, Inc. by its stockholders, and a
$453,817 note payable, which resulted in the recording of goodwill totaling
$248,257. Under the terms of the note agreement, interest is payable quarterly
at 10% and principal is due December 31, 2000 or at the date in which there is
a change in control, as defined in the note agreement, of TeleKey, Inc. which
results in cash consideration to TeleKey, Inc. or its stockholders. The note is
personally collateralized by 6,051 shares of ITC Holding Company, Inc.'s (ITC's
ultimate parent corporation) common stock held in the aggregate by the
stockholders' of TeleKey, Inc.

2. FURNITURE AND EQUIPMENT

Furniture and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Computer and telephone equipment ......... $794,946 $653,776
Furniture and fixtures ................... 68,062 68,062
Machinery and equipment .................. 67,082 25,435
Software ................................. 11,955 --
-------- --------
942,045 747,273
Less accumulated depreciation ............ 445,220 265,228
-------- --------
Furniture and equipment .................. $496,825 $482,045
-------- --------
</TABLE>

Equipment under capital lease with a net book value of $64,364 and $76,924
at December 31, 1998 and 1997 is included in computer and telephone equipment
(see Note 3). Depreciation expense of equipment under capital lease was $15,960
and $1,330 for the years ended December 31, 1998 and 1997.

3. COMMITMENTS

Telecommunication Lines

In its normal course of business, TeleKey, L.L.C. enters into agreements
for the use of long distance telecommunication lines. Future minimum payments
under such agreements in 1999 total $6,800.

Leases

The Companies lease their office facilities under a noncancellable
operating lease agreement. Rent expense for each of the years ended December
31, 1998 and 1997 was approximately $46,000.

Future minimum lease payments under the noncancellable operating lease are
as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
---------------------------
<S> <C>
1999 .................... $46,000
2000 .................... 46,000
2001 .................... 7,000
-------
$99,000
-------

</TABLE>

F-75
<PAGE>

TELEKEY, INC. AND SUBSIDIARY AND
TRAVELERS TELESERVICES, INC.

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Employee Savings Plan

TeleKey, L.L.C. has a simple IRA plan. Under the plan, all employees are
eligible to participate immediately, as there are no eligibility period
requirements. Employees who contribute are vested immediately, and the plan
allows for TeleKey, L.L.C. to match employee contributions dollar for dollar
subject to the lesser of 3% of an employee's salary or $6,000. The Company made
no contributions to the simple IRA plan during 1997 and $17,700 was contributed
to the plan during 1998.

Capital Lease Obligation

TeleKey, L.L.C. leases certain computer hardware under a noncancellable
capital lease obligation.

Future minimum payments for the capital lease obligation are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
-------------------------
<S> <C>
1999 ........................................................... $21,726
2000 ........................................................... 21,726
2001 ........................................................... 21,726
2002 ........................................................... 17,130
-------
Total future minimum lease payments ............................ 82,308
Less amount representing interest .............................. 17,939
-------
64,369
Less current portion ........................................... 14,269
-------
Obligation under capital lease, net of current portion ......... $50,100
-------

</TABLE>

Interest paid for the capital lease obligation during the years ended December
31, 1998 and 1997 was approximately $9,100 and $2,500.

4. LINE OF CREDIT

TeleKey, L.L.C. has a $1,000,000 line of credit to facilitate operational
financing needs. The line of credit is personally guaranteed by certain members
of TeleKey, L.L.C. and is due on demand. Interest is payable quarterly at a
variable rate based on the bank's rate (8.25% at December 31, 1998). Borrowings
under this facility totaled $500,000 and $450,000 at December 31, 1998 and
1997. The line of credit extends through October 29, 1999.

5. GAIN ON EXCISE TAX ADJUSTMENT

As a result of the Taxpayer Relief Act of 1997, the Internal Revenue
Service ("IRS") determined that the 3% Federal Communication Commerce Tax on
prepaid telephone cards be remitted for periods after October 5, 1997. As a
result of the IRS determination, an excise tax adjustment for amounts accrued
prior to October 5, 1997, totaling $259,232 was recognized in 1997.

6. SIGNIFICANT CUSTOMERS

In 1998, the Companies recognized approximately 27% of total revenues from
two international exchange program groups. In 1997, these customers represent
approximately 30% of the Companies' total revenues.

7. EMPLOYEE APPRECIATION RIGHTS PLAN

On January 30, 1997, TeleKey, L.L.C. adopted the TeleKey, L.L.C. Employee
Appreciation Rights Plan, which authorizes the board to grant eligible key
individuals certain rights to receive cash payments or, at the option of
TeleKey, L.L.C.'s management, other securities equal to a specified percentage
of the

F-76
<PAGE>

TELEKEY, INC. AND SUBSIDIARY AND
TRAVELERS TELESERVICES, INC.

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

appreciation of the value of the common interests of TeleKey, L.L.C. between
the date the appreciation right is granted and the date the right is realized.
Unless otherwise specified in the individual appreciation right grant, 50% of
the rights will vest on the second anniversary of the grant date, with an
additional 25% vesting on each of the next two anniversaries of the grant date.
Payment of the appreciation rights is contingent upon the consummation of a
realization event, as defined in the employee appreciation rights plan. Upon
employee termination, TeleKey, L.L.C. shall have the option to purchase all of
the vested rights at a price equal to the difference in the fair market value
on the purchase date and the grant date. Three employees were awarded rights
under the plan in 1997. Under the plan, a realization event had not occurred
and accordingly, no compensation expense was recognized in 1998 and 1997.

8. SUBSEQUENT EVENT

On February 12, 1999, eGlobe acquired 100% of the outstanding shares of
the Companies' common stock in exchange for $125,000 in cash, $150,000 in notes
payable, 1,010,000 shares of eGlobe Series F Preferred Stock valued at
$4,040,000 and an additional 505,000 shares up to a maximum of 1,010,000 shares
of contingently issuable eGlobe Series F Preferred Stock. The additional shares
of Preferred Stock are issuable if certain financial performance goals are
achieved by the Companies. In addition, certain key management personnel
entered into employment agreements with eGlobe.

9. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental information to the combined consolidated statements of cash
flows and non cash investing and financial activities are as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Cash paid for interest ........................... $67,000 $11,000
Assets acquired under capital lease obligation ... -- 79,820

</TABLE>

10. YEAR 2000 ISSUES (UNAUDITED)

The Companies could be adversely affected if their computer systems or the
computer systems their suppliers or customers use do not properly process and
calculate date-related information and data from the period surrounding and
including January 1, 2000. This is commonly known as the "Year 2000" issue.
Additionally, this issue could impact non-computer systems and devices such as
production equipment, elevators, etc. At this time, because of the complexities
involved in the issue, management cannot provide assurances that the Year 2000
issue will not have an impact on the Companies' operations.

The Companies have implemented a plan to modify their business
technologies to be ready for the year 2000 and have converted critical data
processing systems. The project was completed in February 1999 and resulted in
minimal cost to the Companies. The Companies do not expect this effort to have
a significant effect on operations.

F-77

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
issuance and distribution of the securities being registered hereby, other than
underwriting discounts and commissions. All amounts are estimated.

Blue Sky Fees and Expenses.................... $[ ]
-------
Accounting Fees and Expenses.................. $[ ]
-------
Legal Fees and Expenses....................... $[ ]
-------
Printing and Engraving Expenses............... $[ ]
-------
Total......................................... $[ ]
-------

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the Delaware corporation law, a corporation may
indemnify its directors, officers, employees and agents and its former
directors, officers, employees and agents and those who serve, at the
corporation's request, in such capacities with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in non derivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The Delaware
Corporation Law provides, however, that such person must have acted in good
faith and in a manner such person reasonably believed to be in (or not) the best
interests of the corporation and, in the case of a criminal action, such person
must have had no reasonable cause to believe his or her conduct was unlawful. In
addition, the Delaware corporation law does not permit indemnification in an
action or suit by or in the right of the corporation, where such person has been
adjudged liable to the corporation, unless, and only to the extent that, a court
determines that such person fairly and reasonably is entitled to indemnity for
costs the court deems proper in light of liability adjudication. Indemnity is
mandatory to the extent a claim, issue or matter has been successfully defended.
Our Restated Charter contains provisions that provide that no director of eGlobe
shall be liable for breach of fiduciary duty as a director except for (1) any
breach of the director's duty of loyalty to eGlobe or our stockholders; (2) acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (3) liability under Section 174 of the Delaware
Corporation Law; or (4) any transaction from which the director derived an
improper personal benefit. Our Restated Certificate of Incorporation and our
Bylaws contain provisions that further provide for the indemnification of
directors and officers to the fullest extent permitted by the Delaware
Corporation Law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During the three year period ended April 30, 1999, we offered and sold the
following equity securities that were not registered under the Securities Act:

1. On June 13, 1996, we issued warrants to purchase 50,000 shares of our
common stock at an exercise price of $6.00 per share to a lender in
connection with its $500,000 loan to us. The warrant is exercisable at
anytime until June 13, 1999.

II-1
<PAGE>

2. On June 27, 1996, we issued options to purchase 100,000 shares of our
common stock at an exercise price of $14.88 per share to a lender in
connection with its $6.0 million loan to us. The option is exercisable at
anytime until December 31, 2001. On June 27, 1997, the warrants were
repriced to $6.61.

3. On August 5, 1996, we issued 212,657 shares of common stock as a dividend
on our common stock to holders of record on June 14, 1996. The dividend
effected a 10% common stock split declared by our Board of Directors on May
21, 1996.

4. On November 7, 1996, we issued detachable warrants to purchase 66,667
shares of our common stock at an exercise price of $7.78 per share to a
lender in connection with its $4.0 million loan to us. The option is
exercisable at anytime until December 31, 2001. On June 27, 1997, the
warrants were repriced to $6.61.

5. On November 22, 1996, we issued warrants to purchase 238,800 shares of our
common stock at an exercise price of $6.875 per share to a public relations
consultant in exchange for services rendered to us. The warrant is
exercisable at anytime until May 22, 1998.

6. On April 24, 1997, we issued warrants to purchase 50,000 shares of our
common stock at an exercise price of $6.00 per share to a lender in
connection with an extension of its $500,000 loan to us. The warrant is
exercisable at anytime until April 24, 2000.

7. On May 23, 1997, we issued warrants to purchase 79,200 shares of our common
stock at an exercise price of $6.983 per share to a public relations
consultant in exchange for services rendered to us. The warrant is
exercisable at anytime until November 23, 1998.

8. On June 10, 1997, we concluded a private placement of $7.5 million with an
accredited investor pursuant to which we sold 1,425,000 shares of our
common stock. We used the proceeds of such private placement to reduce an
outstanding term loan and for working capital expenses incurred in the
ordinary course of business.

9. On June 27, 1997, we issued warrants to purchase 125,000 shares of our
common stock at an exercise price of $6.61 per share to a lender in
connection with an extension of its $6.0 million loan to us. The warrant is
exercisable at anytime until August 13, 2006.

10. On January 1, 1998, we issued warrants to purchase 15,000 shares of our
common stock at an exercise price of $.01 per share to a lender in
connection with an extension of its $6.0 million loan to us. The warrant is
exercisable at anytime until February 18, 2007.

11. On January 1, 1998, we issued warrants to purchase 12,000 shares of our
common stock at an exercise price of $2.75 per share to a public relations
consultant in exchange for services rendered to us. The warrant is
exercisable at anytime until January 1, 1999.

12. On February 23, 1998, we issued warrants to purchase 500,000 shares of our
common stock at an exercise price of $3.03 per share to a lender in
connection with its $7.5 million loan to us. The warrant is exercisable at
anytime until February 23, 2001.

13. On June 18, 1998, we issued to an existing stockholder in connection with
his $1 million loan to eGlobe warrants to purchase 67,000 shares of our
common stock at an exercise price of $3.03125 per share, and we repriced to
$3.75 and extended existing warrants for 55,000 shares of common stock.
Subsequent to December 31, 1998, the exercise price of the 122,000 warrants
was lowered to $1.5125 per share and the expiration dates were extended
through January 31, 2002.

II-2

<PAGE>

14. On July 9, 1998, we issued 28,700 shares of our common stock to an existing
stockholder in connection with a price guarantee relating to the securities
litigation.

15. On September 1, 1998, we issued a warrant to purchase 25,000 shares of our
common stock at an exercise price of $2.00 per share to a private investor
in connection with his $250,000 loan to a subsidiary of ours. The warrant
is exercisable at any time until September 1, 2003. We advanced the
proceeds to a software company for development of unified messaging
software. We are negotiating a joint venture arrangement whereby we will
share 50% ownership interest of certain software technology related to
commercial development of messaging technology.

16. On September 2, 1998, we issued a warrant to purchase 2,500 shares of our
common stock at an exercise price of $2.00 per share to an investment firm
in exchange for services rendered to us. The warrant is exercisable at
anytime until September 1, 2003.

17. On December 2, 1998, we issued (a) 500,000 shares of Series B Preferred
Stock, which are convertible into up to 2,500,000 shares (2,000,000 shares
until stockholder approval is obtained) of common stock, subject to
adjustment as described below, (b) the IDX Warrants, subject to IDX's
achievement of certain revenue and EBITDA objectives, at an exercise price
of $.001 per share, if stockholder approval is obtained, and (c) $5.4
million, which amount is subject to decrease, in interest bearing
convertible subordinated promissory notes in exchange for all of the stock
of IDX.

18. On December 28, 1998, we exchanged Mr. Jensen's holding of 1,425,000 shares
of common stock for 75 shares of Series C Preferred Stock convertible into
1,875,000 shares of common stock at such date based on the terms of the
Series C Preferred Stock. On February 16, 1999, we exchanged the
outstanding shares of Series C Preferred Stock for 3,000,000 shares of our
common stock.

19. On December 31, 1998, we issued an aggregate of 62,500 shares of our common
stock and a warrant to purchase 50,000 shares of our common stock at an
exercise price of $1.63 per share along with other consideration of $2.1
million, $1.1 million, subject to adjustment, in exchange for all of the
stock of UCI. In addition, we agreed to issue an additional 62,500 shares
of common stock on February 1, 2000 subject to adjustment based on UCI
meeting certain revenue targets. We also agreed to issue additional shares
of common stock if the market price of our common stock on February 1, 2000
is less than $8.00 per share, subject to adjustment, based on UCI meeting
its revenue targets.

20. On January 12, 1999, we concluded a private placement of $3 million with an
institutional investor pursuant to which we sold 30 shares of our Series D
Preferred Stock and granted warrants to purchase (a) 112,500 shares of our
common stock at an exercise price of $.01 per share and (b) 60,000 shares
of our common stock at an exercise price of $1.60 per share. We used the
proceeds of such private placement for general corporate purposes and/or
working capital expenses incurred in the ordinary course of business.

21. On February 12, 1999, we issued 1,010,000 shares of our Series F Preferred
Stock, and paid $125,000 in cash and $150,000 in promissory notes in
exchange for all of the stock of Telekey. In addition, we agreed to issue
at least 505,000 and up to 1,010,000 shares of our Series F Preferred Stock
two years later, subject to Telekey's meeting certain revenue and EBITDA
tests.

22. On February 16, 1999, we concluded a private placement of $5 million with
Vintage Products Ltd. pursuant to which we sold 50 shares of our Series E
Preferred Stock and granted warrants to purchase (a) 723,000 shares of our
common stock at an exercise price of $2.125

II-3

<PAGE>

per share and (b) 277,000 shares of our common stock at an exercise price
of $.01 per share. We used the proceeds of such private placement for
general corporate purposes and/or working capital expenses incurred in the
ordinary course of business.

23. On March 23, 1999, we issued 431,728 shares of our common stock and granted
warrants to purchase 43,174 shares of our common stock at an exercise price
of $.01 per share to the former IDX stockholders in payment of the first
convertible subordinated promissory note in the original principal amount
of $1,000,000 issued in connection with our acquisition of IDX.

24. On March 31, 1999, we issued 125,000 shares of our common stock and granted
warrants to purchase (a) 40,000 shares of our common stock at an exercise
price of $1.00 per share and (b) 40,000 shares of our common stock at an
exercise price of $1.60 per share to an existing stockholder in payment of
a promissory note in the original principal amount of $200,000.

25. On April 9, 1999, we granted warrants to purchase 1,500,000 shares of our
common stock at an exercise price of $.01 per share to EXTL Investors LLC
in connection with a $7 million loan to our wholly owned subsidiary, eGlobe
Financing Corporation.

26. See "Executive Compensation" for information regarding the grant of options
to purchase shares of common stock to some of our employees under our 1995
Employee Stock Option and Appreciation Rights Plan as partial consideration
for the execution of employment, confidentiality and non-competition
agreements and to our directors under the Director Stock Option Plan as
consideration for services provided.

II-4

<PAGE>

Each issuance of securities described above was made in reliance on the
exemption from registration provided by Section 4(2) or Regulation S of the
Securities Act as a transaction by an issuer not involving any public offering.
The recipients of securities in each such transaction represented their
intention to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates issued in such transactions. All
recipients had adequate access, through their relationships with eGlobe, to
information about us.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a) 1. The financial statements are included in Part II, Item 8 beginning at
Page F-1:

2. FINANCIAL STATEMENT SCHEDULE

Schedule II Valuation and Qualifying Accounts

EXHIBITS:

2.1 Agreement and Plan of Merger, dated June 10, 1998, by and among
Executive TeleCard, Ltd., IDX International, Inc., EXTEL Merger Sub
No. 1, Inc. and the stockholders of IDX International, Inc.
(Incorporated by reference to Exhibit 2.1 in Current Report on Form
8-K of Executive TeleCard, Ltd., dated June 24, 1998).

2.2 Consent and Extension, dated August 27, 1998, by and among Executive
TeleCard, Ltd., IDX International, Inc., EXTEL Merger Sub No. 1,
Inc. and Jeffey Gee, as representative of the stockholders of IDX
International, Inc. (Incorporated by reference to Exhibit 2.2 in
Current Report on Form 8-K of Executive TeleCard, Ltd., dated
December 17, 1998).

2.3 Amendment No. 2 to Agreement and Plan of Merger, dated October __,
1998, by and among Executive TeleCard, Ltd., IDX International,
Inc., EXTEL Merger Sub No. 1, Inc. and the stockholders of IDX
International, Inc. (Incorporated by reference to Exhibit 2.3 in
Current Report on Form 8-K of Executive TeleCard, Ltd., dated
December 17, 1998).

2.4 Agreement and Plan of Acquisition, dated September 30, 1998, by and
among Executive TeleCard, Ltd., UCI Tele Networks, Ltd. and United
Communications International LLC (Incorporated by reference to
Exhibit 2.4 in Annual Report on Form 10-K of Executive Telecard,
Ltd., for the period ended December 31, 1998).

2.5 Agreement and Plan of Merger, dated February 3, 1999, by and among
Executive TeleCard, Ltd., Telekey, Inc., eGlobe Merger Sub No. 2,
Inc. and the stockholders of Telekey, Inc. (Incorporated by
reference to Exhibit 2.1 in Current Report on Form 8-K of Executive
TeleCard, Ltd., dated March 1, 1999).

3.1 Restated Certificate of Incorporation as amended July 26, 1996 and
August 29, 1996 (Incorporated by reference to Exhibit 3.1 in
Quarterly Report on Form 10-Q of Executive TeleCard, Ltd., for the
period ended September 30, 1996).

3.2 Certificate of Correction to Certificate of Amendment to the
Restated Certificate of Incorporation, dated July 31, 1998
(Incorporated by reference to Exhibit 3 in Quarterly Report on Form
10-Q of Executive TeleCard, Ltd., for the period ended June 30,
1998).

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3.3 Amended and Restated Bylaws (Incorporated by reference to Exhibit
3.4 in Annual Report on Form 10-K of Executive TeleCard, Ltd., for
the fiscal year ended March 31, 1998).

3.4 Amendment to Bylaws (Incorporated by reference to Exhibit 3.4 in
Annual Report on Form 10-K of Executive Telecard, Ltd., for the
period ended December 31, 1998).

4.1 Rights Agreement, dated as of February 18, 1997, between Executive
TeleCard, Ltd. and American Stock Transfer & Trust Company, which
includes the form of Certificate of Designations setting forth the
terms of the Series A Participating Preference Stock of Executive
TeleCard, Ltd. as Exhibit A, the form of right certificate as
Exhibit B and the Summary of Rights to Purchase Preference Shares as
Exhibit C (Incorporated by reference to Exhibit 1 in Registration
Statement on Form 8-A of Executive TeleCard, Ltd., dated February
26, 1997).

4.2 Form of Letter from the Board of Directors of Executive TeleCard,
Ltd. to Stockholders mailed with copies of the Summary of Rights
(Incorporated by reference to Exhibit 2 in Registration Statement on
Form 8-A of Executive TeleCard, Ltd., dated February 26, 1997).

4.3 Certificate of Designations, Rights and Preferences of Series B
Convertible Preferred Stock of Executive TeleCard, Ltd.
(Incorporated by reference to Exhibit 4.1 in Current Report on Form
8-K of Executive TeleCard, Ltd., dated December 17, 1998).

4.4 Form of Warrant by and between Executive TeleCard, Ltd. and each of
the stockholders of IDX International, Inc. (Incorporated by
reference to Exhibit 4.2 in Current Report on Form 8-K of Executive
TeleCard, Ltd., dated June 24, 1998).

4.5 Forms of Convertible Subordinated Promissory Notes payable to the
stockholders of IDX International, Inc. in the aggregate principal
amount of $5,000,000 (Incorporated by reference to Exhibit 4.3 in
Current Report on Form 8-K of Executive TeleCard, Ltd., dated
December 17, 1998).

4.6 Form of Convertible Subordinated Promissory Note payable to the
preferred stockholders of IDX International, Inc. in the aggregate
principal amount of $418,024 (Incorporated by reference to Exhibit
4.4 in Current Report on Form 8-K of Executive TeleCard, Ltd., dated
December 17, 1998).

4.7 Forms of Promissory Notes payable to United Communications
International LLC in the aggregate principal amount of $2,025,000
(Incorporated by reference to Exhibit 4.7 in Annual Report on Form
10-K of Executive Telecard, Ltd., for the period ended December 31,
1998).

4.8 Forms of Warrant to purchase shares of common stock of Executive
TeleCard, Ltd. (Incorporated by reference to Exhibit 4.8 in Annual
Report on Form 10-K of Executive Telecard, Ltd., for the period
ended December 31, 1998).

4.9 Certificate of Designations, Rights and Preferences of 8% Series C
Cumulative Convertible Preferred Stock of Executive TeleCard, Ltd.
(Incorporated by reference to Exhibit 4.9 in Annual Report on Form
10-K of Executive Telecard, Ltd., for the period ended December 31,
1998).

4.10 Certificate of Designations, Rights and Preferences of 8% Series D
Cumulative Convertible Preferred Stock of Executive TeleCard, Ltd.
and Certificate of Correction of Series D Preferred Stock
Certificate of Designations (Incorporated by reference to Exhibit
4.10 in Annual Report on Form 10-K of Executive Telecard, Ltd., for
the period ended December 31, 1998).

4.11 Certificate of Designations, Rights and Preferences of 8% Series E
Cumulative Convertible Redeemable Preferred Stock of Executive
TeleCard, Ltd. (Incorporated

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<PAGE>

by reference to Exhibit 4.11 in Annual Report on Form 10-K of
Executive Telecard, Ltd., for the period ended December 31, 1998).

4.12 Certificate of Designations, Rights and Preferences of Series F
Convertible Preferred Stock of Executive TeleCard, Ltd.,
(Incorporated by reference to Exhibit 4.1 in Current Report on Form
8-K of Executive TeleCard, Ltd., dated March 1, 1999).

4.13 Compensation Agreement, dated September 2, 1998, between Executive
TeleCard, Ltd., C-Soft Acquisition Corp. and Brookshire Securities
Corp., providing a warrant to purchase 2,500 shares of common stock
of Executive TeleCard, Ltd. (Incorporated by reference to Exhibit
4.13 in Annual Report on Form 10-K of Executive Telecard, Ltd., for
the period ended December 31, 1998).

4.14 Agreement, dated June 18, 1998, by and between Executive TeleCard,
Ltd. and Seymour Gordon (Incorporated by reference to Exhibit 4.14
in Annual Report on Form 10-K of Executive Telecard, Ltd., for the
period ended December 31, 1998).

4.15 Promissory Note in the original principal amount of $1,000,000 dated
June 18, 1998, between Executive TeleCard, Ltd. and Seymour Gordon
(Incorporated by reference to Exhibit 4.15 in Annual Report on Form
10-K of Executive Telecard, Ltd., for the period ended December 31,
1998).

4.16 Warrant to purchase 500,000 shares of common stock of Executive
TeleCard, Ltd., dated February 23, 1998, issued to IDT Corporation
(Incorporated by reference to Exhibit 10.15 in Annual Report on Form
10-K of Executive TeleCard, Ltd., for the fiscal year ended March
31, 1998).

4.17 Promissory Note of C-Soft Acquisition Corp., as maker, and Executive
TeleCard, Ltd., as guarantor, payable to Dr. J. Soni in the original
principal amount of $250,000, dated September 1, 1998, providing a
warrant to purchase 25,000 shares of common stock of Executive
TeleCard, Ltd. (Incorporated by reference to Exhibit 4.17 in Annual
Report on Form 10-K of Executive Telecard, Ltd., for the period
ended December 31, 1998).

4.18 Form of Warrant to purchase 1,500,000 shares of common stock of
Executive TeleCard, Ltd. issued to EXTL Investors LLC. (Incorporated
by reference to Exhibit 4.18 in Annual Report on Form 10-K of
Executive Telecard, Ltd., for the period ended December 31, 1998).

5 Opinion of Hogan & Hartson L.L.P.*

10.1 Agreement between Executive TeleCard S.A. (Switzerland) and Telstra
Corporation Limited (Australia) for Enhancement of Telecom Australia
Calling Card, dated August 3, 1993 (Incorporated by reference to
Exhibit 10.12 in Form 10-K of Executive TeleCard, Ltd. for the
fiscal year ended March 31, 1996). This Agreement is subject to a
grant of confidential treatment filed separately with the U.S.
Securities and Exchange Commission.

10.2 Promissory Note and Stock Option Agreement between Executive
TeleCard, Ltd. and World Wide Export, Ltd., dated February 28, 1996
(Incorporated by reference to Exhibit 10.20 in Form 10-K of
Executive TeleCard, Ltd., for the fiscal year ended March 31, 1996).

10.3 Promissory Note and Stock Option Agreement between Executive
TeleCard, Ltd. and Seymour Gordon, dated February 28, 1996
(Incorporated by reference to Exhibit 10.21 in Form 10-K of
Executive TeleCard, Ltd., for the fiscal year ended March 31, 1996).

10.4 Promissory Note and Stock Option Agreement between Executive
TeleCard, Ltd. and Network Data Systems, Limited, dated June 27,
1996 (Incorporated by reference to

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<PAGE>

Exhibit 10.2 in Quarterly Report on Form 10-Q of Executive TeleCard,
Ltd., for the period ended June 30, 1996).

10.5 Settlement Agreement, dated April 2, 1998, between Executive
TeleCard, Ltd. and parties to In re: Executive TeleCard, Ltd.
Securities Litigation, Case No. 94 Civ. 7846 (CLB), U.S.D.C.,
S.D.N.Y. (Incorporated by reference to Exhibit 10.8 in Annual Report
on Form 10-K of Executive TeleCard, Ltd., for the fiscal year ended
March 31, 1998).

10.6 1995 Employee Stock Option and Appreciation Rights Plan, as amended
and restated (Incorporated by reference to Exhibit 10.9 in Annual
Report on Form 10-K of Executive TeleCard, Ltd., for the fiscal year
ended March 31, 1998).

10.7 1995 Directors Stock Option and Appreciation Rights Plan, as amended
and restated. (Incorporated by reference to Exhibit 10.10 in Annual
Report on Form 10-K of Executive TeleCard, Ltd., for the fiscal year
ended March 31, 1998).

10.8 Employment Agreement for Christopher J. Vizas, dated December 5,
1997 (Incorporated by reference to Exhibit 10 in Quarterly Report on
Form 10-Q of Executive TeleCard, Ltd., for the period ended December
31, 1997).

10.9 Employment Agreement for Colin Smith, dated February 1, 1998
(Incorporated by reference to Exhibit 10.12 in Annual Report on Form
10-K of Executive TeleCard, Ltd., for the fiscal year ended March
31, 1998).

10.10 Employment Agreement for Hsin Yen, as Chief Executive Officer of IDX
International, Inc., dated December 2, 1998 (Incorporated by
reference to Exhibit 10.10 in Annual Report on Form 10-K of
Executive Telecard, Ltd., for the period ended December 31, 1998).

10.11 Promissory Note, dated February 23, 1998, between Executive
TeleCard, Ltd. and IDT Corporation (Incorporated by reference to
Exhibit 10.14 in Annual Report on Form 10-K of Executive TeleCard,
Ltd. for the fiscal year ended March 31, 1998).

10.12 Contract of Services, dated January 5, 1995, between Executive
TeleCard, Ltd. and Telefonos de Mexico, S.A. de C.V. (Incorporated
by reference to Exhibit 10.19 in Annual Report on Form 10-K/A of
Executive TeleCard, Ltd., for the fiscal year ended March 31, 1998).

10.13 Modification Agreement, dated as of June 17, 1996, by and between
Executive TeleCard, Ltd. and Telefonos de Mexico, S.A. de C.V.
(Incorporated by reference to Exhibit 10.20 in Annual Report on Form
10-K/A of Executive TeleCard, Ltd. for the fiscal year ended March
31, 1998).

10.14 Agreement (Facility Lease) dated December 1, 1998 by and between
Swiftcall Equipment and Services (USA) Inc. and Executive TeleCard,
Ltd. (Incorporated by reference to Exhibit 10.14 in Annual Report on
Form 10-K of Executive Telecard, Ltd., for the period ended December
31, 1998).

10.15 Form of Promissory Note payable to the former stockholders of
Telekey, Inc. in the aggregate principal amount of $150,000.
(Incorporated by reference to Exhibit 4.2 in Current Report on Form
8-K of Executive TeleCard, Ltd., dated March 1, 1999).

10.16 Loan and Note Purchase Agreement, dated April 9, 1999, between EXTL
Investors LLC, eGlobe Financing Corporation and Executive TeleCard,
Ltd. (Incorporated by reference to Exhibit 10.16 in Annual Report on
Form 10-K of Executive Telecard, Ltd., for the period ended December
31, 1998).

10.17 Form of Promissory Note in the original principal amount of
$7,000,000, dated April 9, 1999, of eGlobe Financing Corporation
payable to EXTL Investors LLC.

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<PAGE>

(Incorporated by reference to Exhibit 10.17 in Annual Report on Form
10-K of Executive Telecard, Ltd., for the period ended December 31,
1998).

10.18 Subscription Agreement, dated April 9, 1999, between Executive
TeleCard, Ltd. and eGlobe Financing Corporation (Incorporated by
reference to Exhibit 10.18 in Annual Report on Form 10-K of
Executive Telecard, Ltd., for the period ended December 31, 1998).

21 Subsidiaries of Executive TeleCard, Ltd. (Incorporated by reference
to Exhibit 21 in Annual Report on Form 10-K of Executive Telecard,
Ltd., for the period ended December 31, 1998).

23.1 Consent of BDO Seidman, LLP.

23.2 Consent of PricewaterhouseCoopers, LLP.

27 Financial Data Schedule (Incorporated by reference to Exhibit 27 in
Annual Report on Form 10-K of Executive Telecard, Ltd., for the
period ended December 31, 1998).

99.1 Section 214 Authorization for Executive TeleCard, Ltd. (Incorporated
by reference to Exhibit 10.5 in Form S-1 Registration Statement of
Executive TeleCard, Ltd. (No. 33-25572)).

99.2 Assignment of Section 214 Authorization for IDX International, Inc.
(Incorporated by reference to Exhibit 99.2 in Annual Report on Form
10-K of Executive Telecard, Ltd., for the period ended December 31,
1998).

- ----------------
* To be filed subsequently as an amendment.

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ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)3 of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.

(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the General Corporation Law of the State of Delaware, the
Restated Certificate of Incorporation, as amended, or the Amended and Restated
Bylaws of registrant, indemnification agreements entered into between registrant
and its officers and directors, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant 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, the registrant 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 Act and will be governed by the final adjudication of
such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act, the Company has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-1 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Washington,
D.C., on this 11th day of May, 1999.

EXECUTIVE TELECARD, LTD.
D/B/A EGLOBE

By: /s/ Christopher J. Vizas, II
-----------------------------
Christopher J. Vizas, II
Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Christopher J. Vizas, II, John E. Koonce, III and
Anne E. Haas jointly and severally, each in his own capacity, his true and
lawful attorneys-in-fact, with full power of substitution, for him and his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and any
registration statement relating to the same offering as this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents with full power and
authority to do so and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact, or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons, in the capacities indicated
below, on this 11th day of May, 1999.

SIGNATURES TITLE

/s/ Christopher J. Vizas, II
- ------------------------------ Chairman, Chief Executive Officer and Director
Christopher J. Vizas, II (Principal Executive Officer)

/s/ John E. Koonce, III
- ------------------------------ Chief Financial Officer and Director
John E. Koonce, III (Principal Financial Officer)

/s/ Anne E. Haas
- ------------------------------ Controller and Treasurer
Anne E. Haas (Principal Accounting Officer)

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/s/ Edward J. Gerrity
- ------------------------------ Director
Edward J. Gerrity

/s/ Martin L. Samuels
- ------------------------------ Director
Martin L. Samuels

/s/ Anthony Balinger
- ------------------------------ Director
Anthony Balinger

/s/ David W. Warnes
- ------------------------------ Director
David W. Warnes

- ------------------------------ Director
Donald H. Sledge

- ------------------------------ Director
Richard A. Krinsley

/s/ James O. Howard
- ------------------------------ Director
James O. Howard

- ------------------------------ Director
Hsin Yen

- ------------------------------ Director
Richard Chiang

II-12

EXHIBIT 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Executive TeleCard, Ltd.
d/b/a eGlobe, Inc.
Denver, Colorado

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated March 19, 1999, except for Note 18,
which is as of April 10, 1999 relating to the consolidated financial statements
and schedule of Executive TeleCard, Inc. and subsidiaries, which is contained in
that Prospectus.

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated April 28, 1999 relating to the
consolidated financial statements of IDX International, Inc. and subsidiaries,
which is contained in that Prospectus.

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated March 26, 1999 relating to the
combined consolidated financial statements of Telekey, Inc. and subsidiary and
Travelers Teleservices, Inc., which is contained in that Prospectus.

We also consent to the reference to us under the caption "Experts" in the
Prospectus.

/s/ BDO Seidman, LLP

Denver, Colorado
May 10, 1999

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 15, 1998 except Note 12, which is as of September 11, 1998
and the last paragraph of Note 7, which is as of February 12, 1999 relating to
the financial statements of IDX International, Inc., which appear in such
Registration Statement. We also consent to the references to us under the
headings "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

McLean, Virginia
May 11, 1999