SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K
                                 CURRENT REPORT
                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

    Date of Report (Date of                                 Commission File
   earliest event reported):                                    Number:
        March 23, 2000                                          1-10210

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

              DELAWARE                                          13-3486421
  (State or other jurisdiction of                             (IRS Employer
           incorporation)                                 Identification Number)

                         1250 24th Street, NW, Suite 725
                             Washington, D.C. 20037
               (Address of principal executive offices) (Zip Code)

              Registrant's telephone number, including area code:
                                 (202) 822-8981

          (Former name or former address, if changed since last report)

                                       NA

<PAGE>


                                                                    eGLOBE, INC.
--------------------------------------------------------------------------------

ITEM 5.  OTHER EVENTS

Effective  March 23,  2000,  pursuant  to an  Agreement  and Plan of Merger (the
"Merger")  entered  into on December  16, 1999,  a  wholly-owned  subsidiary  of
eGlobe,  Inc.  (the  "Company" or  "eGlobe"),  merged with and into Trans Global
Communications,  Inc.  ("Trans  Global")  with Trans  Global  continuing  as the
surviving corporation and becoming a wholly-owned subsidiary of the Company. The
Merger provided for the issuance of 40,000,000  shares of eGlobe common stock in
exchange for all of the outstanding common stock of Trans Global. The Merger has
been accounted for as a pooling of interests.

The Company's consolidated financial statements have been retroactively restated
as of December 31, 1999 and  December  31, 1998 and for the year ended  December
31, 1999,  the nine months ended  December 31, 1998 and the year ended March 31,
1998, to reflect the consummation of the Merger.  The supplemental  consolidated
financial  statements  included  herein give  retroactive  effect to the Merger,
which was accounted for using the pooling of interests method. As a result,  the
financial position,  results of operations, and statements of comprehensive loss
and cash flows are  presented as if Trans Global had been  consolidated  for all
periods  presented.  The supplemental  consolidated  statements of stockholders'
equity  reflect the  accounts of the  Company as if the common  stock  issued in
connection  with the  Merger  had been  issued  for all  periods  presented.  As
required  by  generally  accepted   accounting   principles,   the  supplemental
consolidated   financial   statements  will  become  the  historical   financial
statements  of the Company upon  issuance of the  financial  statements  for the
period that includes the consummation of the Merger.

In the supplemental consolidated balance sheets, the balance sheets of eGlobe as
of December 31, 1999 and 1998 have been  combined  with those of Trans Global as
of December  31, 1999 and 1998.  The  supplemental  consolidated  statements  of
operations,  supplemental  consolidated  statements of cash flows,  supplemental
consolidated  statements of stockholders'  equity and supplemental  consolidated
statements of comprehensive loss combine the results of the Company for the year
ended  December 31, 1999 and the nine months ended  December 31, 1998 with those
of Trans Global for the same periods. The supplemental consolidated statement of
operations,  supplemental  consolidated  statement  of cash flows,  supplemental
consolidated  statement of stockholders'  equity and  supplemental  consolidated
statement of  comprehensive  loss for the year ended March 31, 1998 combines the
results of the Company  for the year ended March 31, 1998 with  results of Trans
Global for the year ended December 31, 1997.


                                       2
<PAGE>

Trans  Global's  net income for the three  months  ended March 31, 1998 has been
reflected in the supplemental consolidated statements of stockholders' equity as
an adjustment to accumulated  deficit. The cash activity during the three months
ended March 31, 1998 has been reflected as an adjustment in the year ended March
31,  1998  supplemental  consolidated  statement  of cash  flows.  There were no
seasonal trends in operations during the three months ended March 31, 1998.

The supplemental consolidated financial statements, including the notes thereto,
should  be  read in  conjunction  with  the  Company's  historical  consolidated
financial  statements  included  in its Annual  Report on Form 10-K for the year
ended December 31, 1999 and the financial statements of Trans Global included in
the Company's Current Report on Form 8-K/A filed on May 22, 2000.

The following is the Company's Management's Discussion and Analysis of Financial
Condition  and  Results of  Operations  relating to the  Company's  supplemental
consolidated financial statements set forth in Item 7 below.


                                       3
<PAGE>

                                                                    eGlobe, Inc.
--------------------------------------------------------------------------------

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.

The Management's  Discussion and Analysis of Financial  Condition and Results of
Operations  which  follows  is  reflective  of  the  supplemental   consolidated
financial statements referred to above.

GENERAL

During  1998  and 1999 we have  restructured  and  refocused  our  business  and
implemented  a new,  broader  services  strategy.  A  fundamental  part  of that
strategy  has been to actively  acquire  companies  which add new  services  and
technology which assist us in achieving our goal of becoming a premier outsource
provider of  applications  that globally  connect the telephone to the internet.
Most of the services and  technologies  needed to achieve our goal were acquired
through acquisitions.  As a result of the restructuring and the acquisitions, we
believe  that we are  reaching  our  goal  and can now  offer  services  such as
Internet protocol transmission services,  telephone portal and unified messaging
services.  We provide our global  outsourced  services  primarily to national or
former national telecommunications companies, to competitive telephone companies
in liberalized markets and to Internet service providers.

Beginning in December 1998 and throughout 1999, we completed eight  acquisitions
and in the first quarter of 2000 we completed a merger with Trans Global,  which
was  accounted  for using the pooling of interests  method.  As a result of this
merger,  all financial  information and Management's  Discussion and Analysis of
Financial  Condition  and Results of  Operations  have been  restated to include
Trans Global for all periods  presented.  The following  highlights  significant
business events for the Company primarily as a result of these acquisitions.

     o    In 1998 and 1999,  we  extended  our global  technology  platforms  to
          enable us to offer  multiple  products  that allow one to utilize  the
          internet through a telephone,  including IP voice and fax capabilities
          and unified messaging products and services.

     o    In 1998, we made two principal  investments  in technology to allow us
          to achieve  our  vision - the  acquisition  of IDX for our  underlying
          voice over the Internet  technology and the investment in a technology
          license  for  our  unified  messaging  service.   (see  discussion  of
          Connectsoft below).


                                       4
<PAGE>

     o    We changed our  year-end to a calendar  year-end,  beginning  with the
          nine month period ended December 31, 1998.

     o    To gain greater  control over the  development of the  technology,  we
          acquired  a  unified   messaging   technology   company,   Connectsoft
          Communications (now Vogo) in mid-1999.

     o    In 1999, we acquired  companies that added a network operating center,
          switches and call center  operations needed to expand our business and
          to offer the highest quality services to our customers.

     o    We acquired a specialty calling card business in early 1999.

     o    We  acquired  operations  in late 1999 that  allowed  us to expand our
          voice  over  Internet  protocol  operations  into Latin  American.  We
          acquired satellite  transponder space,  uplink and downlink facilities
          and  key  relationships  with  several  major  carriers  within  Latin
          America.

     o    Our merger with Trans  Global at the end of March 2000 has provided us
          with  significant  network,  revenues,  key  relationships  within the
          Caribbean  and the  Middle  East,  and a number of new  members of our
          senior  management  team.  The March  2000  Trans  Global  merger  was
          accounted  for as a pooling of interests  and  therefore the financial
          information  discussed  has been  restated  to combine  our  financial
          information with Trans Global's.

As a result of the acquisitions,  we now have the following  business  segments:
Network Services,  Customer Care, Retail Services and Enhanced Services. Network
Services  includes our  facilities-based,  direct  connection and resale network
with voice, fax and data termination  capabilities,  our Internet protocol voice
and fax capabilities and our toll free services.  Enhanced  Services consists of
global  IP-based  enhanced  services  including,  unified  messaging,  telephone
portal,  our clearing and settlement  services and our combined IVR (Interactive
Voice  Response) and IDR  (Interactive  Data  Response)  services and our legacy
global  card  services  enhancement  business.  Customer  Care,  consists of our
state-of-the-art  calling  center  for  eGlobe  services  and  other  customers,
including  customer care for a number of e-commerce  companies.  Retail Services
primarily  consists of our domestic  long-distance and Internet service provider
business  acquired  as part of the  Coast  acquisition.  All of  Trans  Global's
operations were in the Network Services segment.

The extensive acquisition activity,  the addition of new lines of business,  the
organic growth of these new lines, the change in year-end, the change in revenue
and expense mix, rate changes and the raising of new financing  discussed  below
have caused our  financial  information  to no longer be comparable to the prior
periods.  The  following  table  reflects  the  acquisitions  and the  merger in
chronological  order,  by  acquisition  date.  This  table also  identifies  the
acquisitions  and  merger  with a  segment  or  segments  and  provides  revenue
comparisons, after the elimination of inter-segment revenues, for the year ended
December 31, 1999 as compared to the nine month  period ended  December 31, 1998
and to the year ended March 31, 1998.


                                       5
<PAGE>
<TABLE>
<CAPTION>

                                                                     REVENUE
                                                    ------------ ------------ -------------
                                                                    FOR THE
                                                    FOR THE YEAR  NINE MONTHS  FOR THE YEAR
                                                        ENDED        ENDED        ENDED
      (IN THOUSANDS)          DATE OF     BUSINESS  DECEMBER 31, DECEMBER 31,    MARCH 31,  DESCRIPTION OF
       COMPANY NAME         TRANSACTION    SEGMENT      1999         1998          1998     SERVICES
       ------------         -----------    -------      ----         ----          ----     --------
<S>                         <C>          <C>        <C>             <C>          <C>           <C>
eGlobe-Card Services        Legacy       Enhanced   $  16,840       $21,360      $31,819       Pre Paid and Global
                                                                                               Post Paid Card Services

Executive TeleCard, Inc.    Legacy       Retail           394           553        1,304       Domestic long-distance
   (TeleCall)                                                                                  services

IDX International, Inc.     Dec.-98      Network        15,522          578           --       Internet protocol
                                                                                               transmission services

UCI                         Dec.-98      Enhanced           --           --           --       Development stage
                                                                                               company in
                                                                                               Mediterranean region

Telekey, Inc.               Feb.-99      Enhanced         2,968          --           --       Specialty calling card
                                                                                               services

Connectsoft (Vogo)          June-99      Enhanced           125          --           --       Global unified
                                                                                               messaging, telephone
                                                                                               portal services and a
                                                                                               technology license for
                                                                                               unified messaging
                                                                                               technology

Swiftcall                   July-99      Network             --          --           --       Network operating
                                                                                               center

iGlobe, Inc.                August-99    Network          3,608          --           --       Latin American Internet
                                                                                               protocol transmission
                                                                                               operations

Oasis Reservations          Sept.-99     Customer         1,637          --           --       Support services and
  Services (ORS)                         Care                                                  call center

Interactive Media           Dec.-99      Enhanced           133          --           --       Interactive voice and
  Works (IMW)                                                                                  Internet services

Coast International, Inc.   Dec.-99      Retail             607          --           --       Enhanced long-distance
                                                                                               services

                                                                                               Facilities-based, direct
Trans Global                                                                                   connection and resale
Communications, Inc.        March-00     Network        100,114      67,929       46,473       network
                                                      ---------    --------     --------

Total Revenue for the
   period                                             $ 141,948    $ 90,420     $ 79,596
                                                      =========    ========     ========
</TABLE>

For a detailed discussion of each acquisition and segment information, see Notes
4 and 12 to the Supplemental Consolidated Financial Statements.


                                       6
<PAGE>

We also completed  several debt and equity  financings during 1999 from which we
received  approximately $48.0 million in gross proceeds. In addition we received
approximately  $0.8  million from the  exercise of options and  warrants.  These
proceeds,  which total  approximately  $48.8  million were used to pay off debt,
further invest in the growth of the businesses, pay down outstanding liabilities
and provide other support for ongoing operations.  See further discussion of the
various debt  financings in Note 5, "Notes Payables and Long-Term Debt" and Note
7, "Related  Party  Transactions"  to the  Supplemental  Consolidated  Financial
Statements.  For  further  discussion  of the  various  equity  financings,  the
exercise of options and  warrants  and  purchase of common  stock by an existing
investor, see Note 10, "Stockholders'  Equity" to the Supplemental  Consolidated
Financial  Statements.  In January  2000,  we completed a $15.0  million  equity
financing  with Rose Glen and in March  2000 we  completed  $4.0  million  of an
additional  $10.0 million in equity  financing  with Rose Glen. We have received
$19.0 million of the total financing. The remaining balance of the $10.0 million
Rose  Glen  financing  will be  made  available  upon  the  registration  of the
underlying  stock.  See  Note  16,  "Subsequent   Events"  to  the  Supplemental
Consolidated Financial Statements.

OVERVIEW

We incurred a net loss of $55.1 million,  $6.0 million and $11.3 million for the
year ended  December 31, 1999,  the nine months ended  December 31, 1998 and the
year ended March 31, 1998,  respectively,  of which $29.1 million,  $6.9 million
and $16.0 million is attributable to the following charges to income:

<TABLE>
<CAPTION>
                                                                                    (NINE MONTHS)
                                                                       DECEMBER 31,  DECEMBER 31,  MARCH 31,
                                                                           1999         1998          1998
                                                                           ----         ----          ----
<S>                                                                       <C>            <C>        <C>
         Additional allowance for doubtful accounts                       $ 2.5          $1.0       $ 1.6
         Amortization of goodwill and other intangibles
            (primarily related to acquisitions)                             7.1           0.2         0.2
         Deferred compensation to employees of acquired
            companies                                                       1.5           0.4          --
         Depreciation and amortization                                      8.4           3.2         3.3
         Interest expense net of the amortization
           of debt discounts related to debt                                2.5           0.7         1.3
         Amortization of debt discounts                                     5.2           0.3         0.5
         Loss on early retirement of debt                                   1.9            --          --
         Settlement costs                                                    --           1.0          --
         Proxy-related litigation settlement costs                           --           0.1         3.9
         Corporate realignment costs                                         --            --         3.1
         Additional provision for taxes on income                            --            --         1.5
         Other items                                                         --            --         0.6
                                                                          -----          ----       -----
                           Total                                          $29.1          $6.9       $16.0
                                                                          =====          ====       =====
</TABLE>


                                       7
<PAGE>

After deducting  these items,  the loss for the year ended December 31, 1999 was
$26.0 million,  compared to net income of $0.9 million for the nine months ended
December  31,  1998 and net income of $4.7  million for the year ended March 31,
1998.

The principal  factors for the losses  incurred for the year ended  December 31,
1999 are: (1) the  incurrence of upfront costs to build out capacity to meet our
anticipated  growth relating  primarily to the traffic that will result from the
Trans  Global   merger,   (2)  increased   competition   in  the   international
telecommunications  market,  (3) a change in pricing by Trans  Global's  primary
supplier during 1999 which increased costs and drove margins down, (4) the costs
of integrating  our  acquisitions,  (5) headcount  increases,  and (6) legal and
administrative   charges   principally   incurred  to  support  the  acquisition
operations.

REVENUE

During 1999,  14% of our revenue was generated  from  Enhanced  Services and 84%
from Network  Services.  The  predominant  contributors to revenue for 1999 were
card enhancement  services in Enhanced Services and voice and data over Internet
protocol transport and facilities-based, direct connection and resale network in
Network  Services.  Most of our  Enhanced  Services  revenue is  generated  from
providing  various card  services to customers  under  contracted  terms who are
charged on a per call basis. Certain new offerings such as unified messaging and
telephone portal and the interactive  voice and Internet protocol services often
have monthly  subscriber  charges in addition to per  transaction  charges.  The
transaction charge for service is on a per call basis,  determined  primarily by
minutes of use and  originating  and  terminating  points of call.  The charging
structure for Network Services transmissions revenues are based on the number of
minutes used upon the  completion of a call.  However,  some  contracts call for
monthly  minimums to be paid for the monthly services to be provided and limited
recurring  revenues  for  monthly  service  fees for  circuit  capacity  and for
co-location/switch partitioning services. Non-recurring charges to customers for
Network  Services  vary with the amount of minutes  utilized  and the country of
termination.  In prior  years we also  generated  revenue  from  other  sources,
generally  sales of billing  and  platform  systems  and  non-recurring  special
projects.

For the year ended  December 31, 1999,  Network  Services and Enhanced  Services
were the  principal  contributors  to  revenue.  However,  the card  enhancement
services element of the Enhanced Services segment has declined while the unified
messaging and telephone  portal services have begun to realize initial  revenues
to offset this decline.

COST

The  principal  component  of the cost of  revenue  is  transmission  costs  and
termination  charges by other U.S. and foreign  carriers to originate,  carry or
terminate  calls.  Transmission  expenses  are largely  fixed  monthly  payments
associated with capacity on domestic and international facilities and associated
switch  expenses.  Termination  expenses  consist  of  variable  cost per minute
charges paid to domestic and  international  carriers to terminate long distance
traffic. Traffic under resale arrangements is typically obtained on a


                                       8
<PAGE>

variable,  per minute and short term basis  which  could  subject the Company to
unanticipated price increases and potential service  cancellations.  We continue
to pursue  strategies  for reducing  costs of  transmissions.  These  strategies
include purchasing underlying capacity, increasing minutes to generate economies
of  scale,   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 includes cost effective provisioning of our own IP
trunks.

Other  components of operating  costs are selling 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, which include goodwill and
intangibles arising principally from our acquisitions, over their useful lives.

RESULTS OF OPERATIONS

FOR THE YEAR ENDED  DECEMBER  31, 1999  COMPARED TO THE NINE MONTH  PERIOD ENDED
DECEMBER 31, 1998 AND THE YEAR ENDED MARCH 31, 1998

REVENUE.  Our revenues for 1999 have  increased to $141.9 million as compared to
$90.4  million for the nine months ended  December 31,  1998.  This  increase in
revenue  represents a 18% increase in revenues  when  compared on an  annualized
basis with the prior period, with Network Services ($119.2 million) and Enhanced
Services ($20.1 million) being the primary business segments contributing to the
increase.  Our  revenues  increased  to $90.4  million for the nine months ended
December  31,  1998 as  compared  to $79.6  million for the year ended March 31,
1998. When annualized for comparative purposes, we experienced a 51% increase in
revenue  for the nine  months  ended  December  31, 1998 as compared to the year
ended March 31,  1998.  The increase in revenue for 1999 as compared to the nine
months ended December 31, 1998 was primarily  attributable  to the growth in the
Network  Services  segments.  The growth in Network Services (from $68.5 million
for the nine months ended December 31, 1998 to $119.2 million for the year ended
December 31, 1999) can be principally attributed to the additions related to the
revenues of the IDX and iGlobe  acquisitions  and  increased  revenues for Trans
Global of $32.2  million.  The growth in Trans Global revenue from $67.9 million
for the nine  months  ended  December  31,  1998 to  $100.4  for the year  ended
December  31,  1999,   was  primarily  due  to  the  addition  of  over  15  new
wholesale-carrier  customers,  which  increased the number of customers to 40 at
December 31, 1999 as compared to  approximately  26 at December  31,  1998.  The
demand for  minutes  increased  at Trans  Global to  approximately  307  million
minutes at  December  31,  1999 from  approximately  228  million  minutes as of
December  31,  1998 as a result of  decreasing  prices.  This  increase in Trans
Global  revenue  approximates  an 11%  improvement in revenue (as annualized for
1998) or approximately a $10.0 million increase in revenue.  Also, $19.0 million
of the  increase  in  Network  Services  revenues  was due to  expansion  of the
facilities-based,  direct  connection and resale and Internet networks which are
now in 30 countries.  Other  increases in 1999 revenues  included  approximately
$3.0 million  attributable  to Telekey  which was acquired in February  1999 and
$1.6 million attributable


                                       9
<PAGE>

to our call  center  operations  which  were  acquired  in  September  1999.  As
anticipated by management,  unified  messaging and telephone portal services did
not generate  material  revenues  during the two month period  subsequent to the
initial commercial launch of the service in October 1999.

The increase in revenues for the nine months ended December 31, 1998 as compared
to the year ended  March 31,  1998 was  primarily  due to the  increase in Trans
Global  revenues of $21.5 million ($44.1 million on an annualized  basis).  This
increase was due primarily to the addition of new  customers,  market growth and
an increased demand for services from existing clients.

Offsetting  a portion of the  increase in the 1999  revenue was a decline in the
card enhancement services revenue of 41% for the year ended December 31, 1999 as
compared to the nine month period ended  December 31, 1998 (as  annualized)  and
10% for the nine month  period  ended  December 31, 1998 as compared to the year
ended March 31, 1998 (as annualized).  The decline in the card services business
resulted  directly from a combination of a precipitous  decline in global prices
over 1999 and a series of management  policy decisions that removed us from most
aspects of the prepaid card business in North  America.  These  decisions led to
the  migration  of  customers  off our  platforms  and a decline in minutes  and
associated revenue as a result of contract  modifications to strengthen services
and control.

GROSS PROFIT.  For the year ended December 31, 1999, the nine month period ended
December  31,  1998,  and the year ended March 31,  1998,  gross profit was $5.0
million (representing less than 4% of sales), $16.5 million (representing 18% of
sales),  and  $20.8  million  (representing  26%  of  sales),  respectively.  An
anticipated increase in the cost of revenue related to leases of capacity in the
Network  Services  segment and other up-front  costs  necessary to implement new
routes and services were the key elements behind this margin decline in 1999. In
addition,  margins  were driven  down in 1999 by  increased  competition  in the
wholesale  telecommunications  markets and as the direct result of several major
carriers  demanding  lower prices.  Trans  Global's  circuit  costs  incurred in
transmitting  telecommunication services increased in 1999 by approximately $2.0
million  due to the  expansion  of its  international  network in Europe and the
Middle  East.  As long as the IP voice  network  of  Network  Services  is being
expanded with new routes and services  being added,  such up-front costs will be
incurred. It is also expected that costs to build out the network to accommodate
the anticipated  threefold  increase in traffic  resulting from the Trans Global
merger and the need to build out routes for Latin  America to grow iGlobe routes
and services  will  contribute  negatively  to gross  margins  through the first
quarter of 2000.  Also  included in the  difference  between the margins for the
year ended December 31, 1999, as compared to prior  periods,  are costs incurred
primarily  in the first  quarter of 1999 due to pricing  decisions  which led to
large negative margins in some card services  contracts.  During the nine months
ended  December  31,  1998 as compared  to the year ended  March 31,  1998,  the
reduction  in gross margin  percentage  was  primarily  due to the effect of the
increasingly  competitive  environment for international  wholesale services. We
believe margins will improve as we more  efficiently fill our routes and realize
the benefits of additional owned capacity through the Trans Global merger.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative  expenses totaled $35.0 million,  $16.3 million and $17.3 million
for the year ended  December 31, 1999,  the nine months ended  December 31, 1998
and the year ended March 31,  1998,  respectively.  Included in these costs is a
$2.5  million  provision  for  doubtful  accounts  compared  to a  $1.0  million
provision  for the nine  months  ended  December  31,  1998  and a $1.6  million
provision for the year ended March 31, 1998. Excluding these


                                       10
<PAGE>

charges,  other  selling,  general  and  administrative  expenses,   principally
salaries  and related  expenses are  averaging  $8.1 million per quarter for the
year ended December 31, 1999, $5.1 million per quarter for the nine months ended
December  31,  1998 and $4.0  million  per  quarter for the year ended March 31,
1998.  The  principal  factors for the  increase in the 1999 and 1998  quarterly
average sales,  general and administrative costs were increases in headcount and
the related occupancy costs associated with the increase in headcount. Headcount
was 314 at December  31,  1999,  235 at  December  31, 1998 and 164 at March 31,
1998.  Most of the  increase  in 1999 was  related to the  acquisition  activity
through  which  approximately  95 employees  were added (before  adjustment  for
terminations/departures).  Most of these were added in the third quarter of 1999
related  to  the  iGlobe  (33  employees)   and  ORS  (3  full-time   employees)
acquisitions  and the fourth quarter of 1999 related to the Coast (59 employees)
acquisition. As included in the totals above, Trans Global's headcount was 38 at
December  31, 1999,  33 as of December 31, 1998 and 19 as of March 31, 1998.  As
the  operations of these  acquired  companies are  integrated,  these costs as a
percentage of revenue are expected to continue to decrease.

SETTLEMENT  COSTS.  As  described  in  Note 7 to the  Supplemental  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  Supplemental  Consolidated  Statement of Operations in
the quarter ended September 30, 1998.

CORPORATE  REALIGNMENT  COSTS. We incurred various  realignment costs during the
fiscal 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.  We did not  incur  realignment  costs  during  the nine  months  ended
December 31, 1998 nor for the year ended December 31, 1999.

DEFERRED COMPENSATION.  These non-cash charges totaled $1.5 million for the year
ended  December 31, 1999 and $0.4 million for the nine months ended December 31,
1998. This expense relates to stock allocated to employees of acquired companies
by  their  former  owners  out of  acquisition  consideration  paid by us.  Such
transactions, adopted by the acquired companies prior to acquisition, require us
to record the market value of the stock  issuable to employees as of the date of
acquisition as compensation expense with a corresponding credit to stockholders'
equity and to continue to record the effect of subsequent  changes in the market
price  of the  issuable  stock  until  actual  issuance.  Accordingly,  deferred
compensation  in future  reporting  periods will be reported based on changes in
the  market  price  of  our  common  stock.  See  Note  4  to  the  Supplemental
Consolidated   Financial   Statements  for  further   discussion  of  subsequent
renegotiations of certain of these issuances.


                                       11
<PAGE>

DEPRECIATION AND AMORTIZATION EXPENSE. These expenses increased to $15.5 million
from $3.4  million and $3.5 million for the year ended  December  31, 1999,  the
nine  months  ended  December  31,  1998  and the year  ended  March  31,  1998,
respectively.  The increase is principally due to  amortization  charges of $7.1
million  related  to  goodwill  and  other   intangibles   associated  with  the
acquisitions  completed  since December 1, 1998. The balance of the increase was
primarily  attributable  to increases in the fixed assets of acquired  companies
and Trans Global.

PROXY RELATED  LITIGATION  EXPENSE.  During the nine month period ended December
31, 1998,  we incurred  $0.1  million in 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 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  related  to our  obligation  under the  Stipulation  of
Settlement to issue  additional  stock if the market price of our stock was less
than $10.00 per share during the defined periods.  We had 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.  In March 2000,  that  condition was satisfied and we
have no further  obligations  under the  Stipulation of  Settlement.  All shares
required to be issued under the  settlement  agreement  were issued to the class
action  litigants  and we have  no  further  obligations  under  the  settlement
agreement.

Additionally, we settled with another stockholder related to the same securities
class  action in May 1988 and issued that  stockholder  28,700  shares of common
stock  at the  market  price  at the  date of  settlement  for a total  value of
$81,000.

INTEREST  EXPENSE.  Interest  expense  totaled  $7.7  million for the year ended
December  31,  1999 as compared  to $1.0  million and $1.8  million for the nine
months ended December 31, 1998 and the year ended March 31, 1998,  respectively.
The increase was primarily due to amortization of the debt discounts  related to
the value of the warrants  associated with  acquisitions and financings,  and in
part due to an increase in debt.

OTHER EXPENSE.  We recorded a foreign currency  transaction loss of $0.1 million
during the year ended  December  31, 1999,  $0.1 million  during the nine months
ended  December 31, 1998 and $0.4 million for the year ended March 31, 1998. The
losses for all periods arose from foreign currency cash and accounts  receivable
balances we maintained during the period in which the U.S. dollar  strengthened.
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.


                                       12
<PAGE>

INTEREST  INCOME.  Interest  income  totaled  $0.7  million  for the year  ended
December  31,  1999 as compared  to $0.5  million and $0.2  million for the nine
month  period ended  December  31, 1998 and the year ended March 31,  1998.  The
increase period to period is primarily due to higher interest income earned as a
result of the increased sales revenue and from cash received from various equity
and debt financings.

TAXES  (BENEFIT)  ON INCOME.  A tax benefit of  approximately  $1.0  million was
recorded for the year ended December 31, 1999 due to the operating loss incurred
by  Trans  Global  that  will be  carried  back to prior  years  as a  deduction
resulting in a federal income tax refund. This refund is expected to be received
during the second  quarter of 2000.  For the nine months ended December 31, 1998
and for the year ended March 31,  1998,  we  recorded a $0.6  million and a $2.0
million provision for income taxes, respectively. These provisions were based on
Trans Global having  operating  income in both periods  resulting in current tax
provisions.  Also,  we recorded an  additional  provision of $1.5 million in the
year ended March 31, 1998 based on the initial results of a restructuring study,
which identified  potential  international tax issues.  Settlements and payments
made with various tax  jurisdictions  have  decreased  our  estimated  remaining
liabilities  to $0.6 million as of December  31, 1999.  We continue to work with
various jurisdictions to settle outstanding tax obligations for prior years.

LOSS ON EARLY  RETIREMENT  OF DEBT. In August 1999, we repaid $4.0 million under
the $20.0  million  notes with EXTL  Investors  by issuing 40 shares of Series J
Preferred  Stock.  At the date of the exchange,  the carrying  value of the $4.0
million notes, net of the unamortized  discount of approximately  $1.9 million ,
was  approximately  $2.1  million.  The excess of the fair value of the Series J
Preferred  Stock of $4.0 million  over the  carrying  value of the notes of $1.9
million was recorded as an extraordinary loss on early retirement of debt during
1999.

LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA

As we continue  our  aggressive  growth plan into the year 2000 and we intend to
pursue that plan into the foreseeable future, it will require large cash demands
and  aggressive  cash  management.  In meeting  our  objectives,  we have raised
significant  financing  through a combination  of issuances of preferred  stock,
proceeds  from the  exercise of warrants  and  options  and a  significant  debt
placement with one of our major  stockholders.  Cash and cash  equivalents  were
$2.7 million at December 31, 1999 compared to $4.0 million at December 31, 1998.
Short-term  investments  were $1.5  million at December  31, 1999 as compared to
$12.3 million at December 31, 1998. The decrease in cash and cash equivalents of
$1.3 million and decrease in short-term investments of $10.8 million in 1999 was
primarily  due  to  growing  cash  and  investment  needs  as a  result  of  the
acquisition  activity  during the year and due to fixed asset purchases of $12.3
million  associated  with  the  expansion  and  development  of  Trans  Global's
international  network.  Accounts receivable,  net, increased by $4.9 million to
$15.1  million at December  31, 1999 from $10.2  million at December  31,  1998,
mainly due to increased  revenues and the  extension of credit to new  wholesale
carrier  customers.  Accounts payable and accrued expenses totaled $53.6 million
at  December  31,  1999 (as  compared to $36.8  million at  December  31,  1998)
resulting principally from


                                       13
<PAGE>

liabilities assumed through  acquisitions for which the outstanding  balances as
of the year ended December 31, 1999 approximate $14.8 million. In addition,  the
increase  was in part due to  deferrals  of  payments to certain  vendors.  Cash
outflows from operating  activities for the year ended December 31, 1999 totaled
$23.7  million,  as compared to cash inflows of $14.1 million for the nine month
period ended  December 31, 1998.  This  decrease was due primarily to our growth
through  acquisitions  and the  effect  that  the  acquisition  activity  had on
operating  losses,  resulting in overall lower gross margins and higher  selling
general and  administrative  expenses.  Also,  we  experienced  lower margins in
wholesale  transmission  services and in some card services as discussed earlier
in "Results of Operations".

There was a net working capital deficiency of $44.7 million at December 31, 1999
compared to a deficiency of $25.5 million at December 31, 1998.

Cash outflows for investing  activities  during the year ended December 31, 1999
totaled $5.7 million, which was $9.3 million less than the cash outflows for the
nine months  ended  December 31, 1998.  This  decrease was due  primarily to net
purchases of short-term  investments  of $5.0 million in 1998 as compared to net
sales of these  investments  of $10.8  million in 1999 and no 1999  advances  to
non-affiliates  subsequently  acquired as compared to 1998. These decreases were
offset by higher  1999  purchases  of  property  and  equipment  and by our 1999
purchases  of  Telekey,  Connectsoft,  Swiftcall,  iGlobe,  ORS and Coast  which
required  approximately  $2.8 million,  as compared to $2.2 million  required to
purchase IDX in 1998. See Note 4, "Business  Acquisitions"  to the  Supplemental
Consolidated   Financial   Statements  for  further  discussion   regarding  the
acquisitions.

Cash generated from financing  activities  totaled $28.1 million during the year
ended  December  31,  1999  compared to less than $0.1  million  during the nine
months ended December 31, 1998. This increase of $28.0 million was primarily due
to our  receiving  a  financing  commitment  of  $20.0  million  in the  form of
long-term debt with our largest stockholder ("Lender").  Under this arrangement,
we  initially  received an  unsecured  loan of $7.0  million  until  stockholder
approval  was  received.  Upon  stockholder  approval  in June 1999,  the Lender
purchased  $20.0  million in secured notes with which we repaid the initial $7.0
million  loan.  Under this  agreement,  we could borrow up to $20.0 million with
monthly  principal and interest  payment of $377,000  with a balloon  payment of
$8.6 million due in June 2002. Also, under the agreement, the Lender provided an
accounts  receivable  revolver credit note  ("Revolver") for an amount up to the
lesser of (1) 50% of eligible  receivables  (as  defined)  or (2) the  aggregate
amount of principal that has been repaid to date.  Principal and interest on the
Revolver  are payable on the earliest to occur of (i) the third  anniversary  of
the  agreement,  June  30,  2002,  or (ii) the date of  closing  of a  Qualified
Offering as defined in the  agreement.  In August 1999 we agreed to issue to the
Lender 40 shares of Series J Preferred  Stock as  prepayment  of $4.0 million of
the  outstanding  $20.0  million.  The exchange was finalized in November  1999.
Pursuant to the  exchange  agreement,  the $4.0 million is not subject to redraw
under the Revolver.  As of December 31, 1999, we have drawn down $1.2 million on
the Revolver.


                                       14
<PAGE>

We also  received  proceeds  of $0.8  million  from the  exercise of options and
warrants,  $12.7 million in proceeds from  equity-based  financings of preferred
stock and $0.3 million from the sale of common stock. Additionally, Trans Global
entered into a financing agreement with a telecommunications  vendor to fund the
purchase of switch  hardware and software for a total of $3.3 million payable in
36 monthly  payments of $0.1 million  through  June 2002.  These  proceeds  were
offset  by  principal  payments  of $18.2  million  on notes  payable  primarily
consisting  of the payment of $7.0 million on the  unsecured  loan, as discussed
earlier,   and  payment  of  $7.5  million  on  an  unsecured   note  due  to  a
telecommunications  company. In addition,  we have made payments of $0.9 million
on various capital leases. See Notes 5, "Notes Payable and Long-Term Debt" and 7
"Related  Party  Transactions"  to  the  Supplemental   Consolidated   Financial
Statement for further discussion.

In the nine month  period  ended  December  31,  1998,  in  addition to the $2.2
million paid in connection  with the  acquisition of IDX, the Company  purchased
property and equipment of approximately $5.0 million and made other investments,
principally  net  purchases of  short-term  investments  by Trans Global of $6.7
million and advances  totaling $1.0 million to Connectsoft prior to acquisition.
The  property  and  equipment  expenditures  were  principally  for upgrades and
additions to the global  network of operating  platforms.  Cash  generated  from
financing activities totaled less than $0.1 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 was payable in December 1999
and subsequently  extended to April 2000 offset by payments on capital leases of
$0.2 million and payments on notes of $0.7 million.

On an operating level, we are continuing to renegotiate our relationship with an
entity that was formerly one of our largest customers.  As of December 31, 1999,
7.7% of our net accounts receivable of $15.1 million was due from this entity to
which  extended  credit  terms  have been  granted.  The new  arrangement,  once
finalized, will establish payment terms and sales growth, which will assure more
effective and timely collection of receivables from the customer and will permit
renewed growth in the customer's business.  This arrangement will also assist in
the collection of certain amounts due to us under the extended credit terms.

On December 14, 1999,  Trans Global entered into an agreement  with AT&T,  Trans
Global's largest supplier, regarding the payment of various past due 1999 switch
and circuit costs.  Pursuant to that  agreement,  Trans Global has agreed to pay
AT&T  approximately  $13.8 million in  consecutive  monthly  installments  at 9%
interest through January 1, 2001. As of December 31, 1999, the remaining balance
due to AT&T was $13.5 million.  As part of the agreement with AT&T, Trans Global
entered into a security agreement (Security  Agreement) granting AT&T a security
interest in certain  fixed assets owned by Trans Global as of December 14, 1999.
As of April 6,  2000,  Trans  Global  has not paid  $1.5  million  of  scheduled
payments that were due in April 2000.  Trans Global is currently in  discussions
with AT&T  regarding  alternative  options  for  settlement  of the  outstanding
obligation.  There  can be no  assurances  that  Trans  Global  will  be able to
satisfactorily  resolve this matter. Should this not be resolved and should AT&T
take possession of the assets held as security, Trans Global believes that their
business will not be adversely impacted. There is no guarantee that Trans Global
and  therefore  our business  will not have its  operations  affected  adversely
should a satisfactory resolution between the parties not be reached.

CURRENT FUNDING REQUIREMENTS

Current  funds  will not  permit  us to  achieve  the  growth,  both  short  and
long-term,  that  management is targeting.  That growth will require  additional
capital.  The plan under which we are currently  operating requires  substantial
additional  funding  from April 2000  through  the end of the year 2000 of up to
$48.0 million.  We anticipate  that this capital will come from a combination of
financings  that  could  consist of debt,  private  equity,  a public  follow-on
offering,  or a line of credit  facility  during the year,  with the possibility
that the amount of  financing  could be  diminished  by secured  equipment-based
financings.


                                       15
<PAGE>

Even if we meet our projections for becoming EBITDA  (Earnings  Before Interest,
Taxes,  Depreciation and Amortization)  positive at the end of third quarter  of
2000, we will still have capital  requirements through December 2000. We need to
fund the pre-existing liabilities and notes payable obligations and the purchase
of capital  equipment,  along with financing our growths plans to meet the needs
of our announced acquisition program.

For the first  quarter of 2000, we have met our initial cash  requirements  from
(1)  proceeds  from the exercise of options and  warrants of $2.4  million,  (2)
proceeds of $0.5 million from the sale of Series N Preferred Stock, (3) proceeds
of $15.0 million from the sale of Series P Convertible  Preferred Stock, and (4)
proceeds of $4.0 million from the sale of Series Q Convertible  Preferred Stock.
These capital transactions are discussed below.

     o    During January 2000 and thereafter, we received proceeds totaling $2.4
          million,  from the  exercise of various  options and  warrants.  These
          exercises  occurred  primarily as a result of the  improvement  in our
          stock  price  during  the  month  of  January  2000  and as  sustained
          thereafter.

     o    In January 2000, we received  proceeds of  approximately  $0.5 million
          from the sale of Series N Preferred  Stock.  See Note 16,  "Subsequent
          Events" to the  Supplemental  Consolidated  Financial  Statements  for
          further discussion.

     o    On January 27, 2000,  we received  proceeds of $15.0  million from the
          sale of Series P Convertible Preferred Stock. See Note 16, "Subsequent
          Events" to the  Supplemental  Consolidated  Financial  Statements  for
          further discussion.

     o    On March 17, 2000, we received  proceeds of $4.0 million from the sale
          of Series Q Convertible  Preferred  Stock. We will receive an addition
          $6.0 million in proceeds  immediately  upon the  effectiveness  of the
          registration of the common stock underlying this Preferred Stock.

In addition to the firm commitments discussed previously, we are proceeding with
other financing opportunities,  which have not been finalized. We have a variety
of opportunities in both the debt and equity market to raise the necessary funds
which we need to achieve our growth plan through the end of the year 2000.

The Company  anticipates that increased sales in the  international  market with
higher margins will reduce its net working capital  deficiency and contribute to
its funding requirements during the remainder of 2000. However, the Company will
be required to borrow or raise  additional  capital in order to meet its funding
requirements through December 31, 2000.


                                       16
<PAGE>

There is a risk that we will not reach  breakeven as projected and will continue
to incur operating  losses.  If this occurs and should we be unsuccessful in our
efforts to raise  additional  funds to cover such losses,  then our growth plans
would have to be sharply curtailed and our business would be adversely affected.

TAXES. During 1998, we undertook a study to simplify eGlobe's 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
findings.  The IRS has  accepted  our returns and has decided not to audit these
returns.  We have paid all taxes  associated with these returns and all interest
invoiced by the IRS to date.  Neither the final  outcome of this  process or the
outcome of any other issues can be predicted with certainty.

As of December  31,  1999,  we have  recorded a net  deferred tax asset of $26.5
million and have  approximately  $57.7 million U.S. and $2.0 million foreign 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 U.S. and foreign tax provisions.  The U.S. carryforwards
expire in various  years  through 2019 and are subject to  limitation  under the
Internal  Revenue  Code of 1986,  as amended.  The foreign  net  operating  loss
carryforwards  expire in various  years  through  2004 and are  subject to local
limitations on use.


                                       17
<PAGE>

A receivable for a federal income tax refund of  approximately  $1.0 million was
recorded as of December 31, 1999  relating to Trans  Global's  loss  carrybacks.
This refund is expected to be received  during the second  quarter of 2000.  See
Note 11, "Taxes  (Benefit) on Income  (Loss)" to the  Supplemental  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 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, as extended by SFAS No. 137, is effective for
fiscal years beginning after June 15, 2000 and is currently not applicable to us
because we do not enter into hedging or derivative transactions.


                                       18
<PAGE>

                                                                    eGLOBE, INC.
                                      ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS
                         INDEX TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS

         The following are the supplemental  consolidated  financial  statements
         and exhibits of eGlobe,  Inc. and subsidiaries  which are filed as part
         of this report:

<TABLE>
<CAPTION>
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS:
<S>                                                                                                       <C>
         Report of Independent Certified Public Accountants                                               F-2

         Report of Independent Auditors                                                                   F-3

         Supplemental Consolidated Balance Sheets as of December 31, 1999 and 1998                        F-4 - F-5

         Supplemental Consolidated Statements of Operations for the Year Ended
           December 31, 1999, the Nine Months Ended December 31, 1998 and the
           Year Ended March 31, 1998                                                                      F-6 - F-7

         Supplemental Consolidated Statements of Stockholders' Equity for the Year
           Ended December 31, 1999, the Nine Months Ended December 31, 1998
           and the Year Ended March 31, 1998                                                              F-8 - F-9

         Supplemental Consolidated Statements of Comprehensive Loss for the Year
           Ended December 31, 1999, the Nine Months Ended December 31, 1998
           and the Year Ended March 31, 1998                                                              F-10

         Supplemental Consolidated Statements of Cash Flows for the Year Ended
           December 31, 1999, the Nine Months Ended December 31, 1998 and the
           Year Ended March 31, 1998                                                                      F-11

         Summary of Accounting Policies                                                                   F-12 - F-26

         Notes to Supplemental Consolidated Financial Statements                                          F-27 - F-101

SUPPLEMENTAL SCHEDULE -

         II - Valuation and Qualifying Accounts                                                           F-102

All other  schedules  are omitted  because the  required  information  is either
inapplicable  or  is  included  in  the  supplemental   consolidated   financial
statements or the notes thereto.

Exhibit 23.1      Consent of Independent Certified Public Accountants

Exhibit 23.2      Consent of Independent Auditors
</TABLE>


                                      F-1
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
eGlobe, Inc.
Washington, D.C.

We have audited the  accompanying  supplemental  consolidated  balance sheets of
eGlobe,  Inc. and  subsidiaries as of December 31, 1999 and 1998 and the related
supplemental  consolidated  statements  of  operations,   stockholders'  equity,
comprehensive loss and cash flows for the year ended December 31, 1999, the nine
months  ended  December  31,  1998  and the  year  ended  March  31,  1998.  The
supplemental  consolidated  financial  statements give retroactive effect to the
merger of eGlobe, Inc. and Trans Global Communications,  Inc. on March 23, 2000,
which has been  accounted  for as a pooling of  interests  as  described  in the
Summary  of  Accounting  Policies  to the  supplemental  consolidated  financial
statements.  These financial  statements and schedule are the  responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial  statements  based  on our  audits.  We did not  audit  the  financial
statements of Trans Global  Communications,  Inc.,  which  financial  statements
reflect total assets of approximately $27,988,000 and $28,087,000 as of December
31,  1999  and  1998,   respectively,   and  total  revenues  of   approximately
$100,445,000,  $85,119,000 and $46,473,000 for each of three years in the period
ended December 31, 1999,  respectively.  Those financial statements were audited
by another  auditor  whose  report has been  furnished  to us, and our  opinion,
insofar as it relates to the amounts  included for Trans Global  Communications,
Inc., is based solely on the report of the other auditor.

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 and the report of the other  auditor  provide a reasonable  basis for our
opinion.

In our  opinion,  based on our audits and the report of the other  auditor,  the
supplemental consolidated financial statements referred to above present fairly,
in  all  material  respects,   the  financial  position  of  eGlobe,   Inc.  and
subsidiaries at December 31, 1999 and 1998, and the results of their  operations
and their cash flows for the year ended December 31, 1999, the nine months ended
December  31, 1998 and the year ended March 31, 1998,  after giving  retroactive
effect to the merger referred to above,  in conformity  with generally  accepted
accounting principles.


                                            /s/ BDO SEIDMAN, LLP


March 24, 2000, except for Notes 10 and 18,
which  are as of April 6, 2000
Denver, Colorado


                                      F-2
<PAGE>

                         Report of Independent Auditors

Board of Directors
Trans Global Communications, Inc.
New York, New York

We have audited the consolidated balance sheets of Trans Global  Communications,
Inc.  and  subsidiaries  as of  December  31,  1999 and  1998,  and the  related
consolidated  statements of operations,  stockholders' equity (deficit) and cash
flows for each of the three years in the period ended  December 31, 1999.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of the
Company at December  31, 1999 and 1998,  and the  consolidated  results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States.

                                            /s/ Ernst & Young LLP

February 25, 2000
New York, New York

                                      F-3
<PAGE>


                                                                    eGLOBE, INC.
                                        SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,                                                           1999                     1998
----------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                      <C>
ASSETS (Notes 7 and 13)
CURRENT:
   Cash and cash equivalents                                           $  2,659,000             $ 4,031,000
   Restricted cash                                                          158,000                 101,000
   Short-term investments                                                        --              11,167,000
   Restricted short-term investments                                      1,492,000               1,131,000
   Accounts receivable, less
        allowance of $3,206,000 and
        $1,216,000 for doubtful accounts                                 15,142,000              10,226,000
   Other receivables                                                      1,406,000                 651,000
   Prepaid expenses                                                       1,584,000               1,628,000
   Other current assets                                                     639,000                 245,000
----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                     23,080,000              29,180,000

PROPERTY AND EQUIPMENT,
   net of accumulated depreciation
   and amortization (Notes 1, 5 and 13)                                  42,078,000              20,198,000

GOODWILL, net of accumulated amortization
   of $1,572,000 and $140,000 (Note 4)                                   24,904,000              11,865,000

OTHER INTANGIBLE ASSETS,
   net of accumulated amortization
   of $6,466,000 and $786,000 (Note 2)                                   21,674,000                 241,000

OTHER:

   Advances to non-affiliate, subsequently
        acquired (Note 4)                                                        --                 971,000
   Deposits                                                               1,659,000                 519,000
   Other assets                                                             400,000               1,405,000
----------------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS                                                        2,059,000               2,895,000
================================================================================================================
TOTAL ASSETS                                                           $113,795,000             $64,379,000
================================================================================================================
</TABLE>
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements.


                                      F-4
<PAGE>

                                                                    eGLOBE, INC.
                            SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,                                                          1999                   1998
----------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                    <C>
 LIABILITIES, MINORITY INTEREST, REDEEMABLE COMMON STOCK AND
 STOCKHOLDERS' EQUITY
 CURRENT:

     Accounts payable (Note 13)                                            $41,558,000            $ 29,913,000
     Accrued expenses (Note 3)                                              10,992,000               6,915,000
     Income taxes payable (Note 11)                                            560,000               1,915,000
     Notes payable and current maturities of long-
        term debt (Note 5)                                                   7,868,000              13,685,000
     Notes payable and current maturities of long-
        term debt-related parties (Note 7)                                   4,676,000               1,154,000
     Deferred revenue                                                        1,331,000                 486,000
     Other liabilities                                                         797,000                 567,000
----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                                   67,782,000              54,635,000
ACCOUNTS PAYABLE - LONG-TERM (Note 13)                                       1,000,000                       -
LONG-TERM DEBT, net of current maturities (Note 5)                           5,194,000               1,237,000
LONG-TERM DEBT - RELATED PARTIES, net of current
     maturities (Note 7)                                                     8,301,000                       -
----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                           82,277,000              55,872,000
----------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
     (Notes 3, 4, 9, 10, 11, 13, 14 and 16)
MINORITY INTEREST (Note 4)                                                   2,800,000                      --
REDEEMABLE COMMON STOCK (Note 7)                                               700,000                      --
STOCKHOLDERS' EQUITY (Note 10):
     Preferred stock, all series, $.001 par value,
        10,000,000 and 5,000,000 shares
        authorized, 1,927,791 and 500,075 shares
        outstanding                                                              2,000                   1,000
     Common stock, $.001 par value, 100,000,000
         Shares authorized, 69,580,604 and 56,362,966
         Shares outstanding                                                     70,000                  56,000
     Stock to be issued                                                      2,624,000                      --
     Notes receivable                                                       (1,210,000)                     --
     Additional paid-in capital                                            106,718,000              34,117,000
     Accumulated deficit                                                   (80,682,000)            (25,578,000)
     Accumulated other comprehensive income (loss)                             496,000                 (89,000)
----------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                                  28,018,000               8,507,000
================================================================================================================
TOTAL LIABILITIES, MINORITY INTEREST,
    REDEEMABLE COMMON STOCK AND STOCKHOLDERS'
    EQUITY                                                                $113,795,000             $64,379,000
================================================================================================================
</TABLE>
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements.


                                      F-5
<PAGE>

                                                                    eGLOBE, INC.
                              SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                 YEAR               NINE MONTHS             YEAR
                                                                 ENDED                  ENDED               ENDED
                                                              DECEMBER 31,          DECEMBER 31,           MARCH 31,
                                                                  1999                 1998                 1998
---------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                  <C>                   <C>
REVENUE  (Note 12)                                           $141,948,000         $  90,420,000         $ 79,596,000

COST OF REVENUE                                               136,941,000            73,929,000           58,751,000
---------------------------------------------------------------------------------------------------------------------
GROSS PROFIT                                                    5,007,000            16,491,000           20,845,000
---------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
    Selling, general and administrative                        34,967,000            16,333,000           17,255,000
    Deferred compensation related to
        acquisitions (Note 4)                                   1,485,000               420,000                   --
    Depreciation and amortization                               8,356,000             3,196,000            3,342,000
    Amortization of goodwill and other
        intangible assets                                       7,112,000               201,000              186,000
    Settlement costs (Note 7)                                          --               996,000                   --
    Corporate realignment expense (Note 3)                             --                    --            3,139,000
---------------------------------------------------------------------------------------------------------------------
TOTAL COSTS AND EXPENSES                                       51,920,000            21,146,000           23,922,000
---------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS                                          (46,913,000)           (4,655,000)          (3,077,000)
---------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
      Interest expense                                         (7,733,000)           (1,039,000)          (1,818,000)
      Interest income                                             686,000               482,000              247,000
      Foreign currency transaction loss                           (99,000)             (131,000)            (410,000)
      Minority interest in income (Note 4)                        (78,000)                   --                   --
      Proxy related litigation expense (Note 8)                        --              (119,000)          (3,901,000)
      Other income (expense), net                                 (28,000)               82,000             (337,000)
---------------------------------------------------------------------------------------------------------------------
TOTAL OTHER EXPENSE                                            (7,252,000)             (725,000)          (6,219,000)
---------------------------------------------------------------------------------------------------------------------
LOSS BEFORE TAXES (BENEFIT) ON INCOME AND
      EXTRAORDINARY ITEM                                      (54,165,000)           (5,380,000)          (9,296,000)

TAXES (BENEFIT) ON INCOME (LOSS) (Note 11)                       (962,000)              578,000            1,961,000
=====================================================================================================================
NET LOSS BEFORE EXTRAORDINARY ITEM                            (53,203,000)           (5,958,000)         (11,257,000)
=====================================================================================================================
</TABLE>


                                      F-6
<PAGE>

                                                                    eGLOBE, INC.
                  SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                        YEAR            NINE MONTHS             YEAR
                                                                        ENDED              ENDED                ENDED
                                                                     DECEMBER 31,       DECEMBER 31,           MARCH 31,
                                                                        1999                1998                 1998
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                   <C>                <C>
LOSS ON EARLY RETIREMENT OF DEBT (Note 7)                            (1,901,000)                  --                   --
--------------------------------------------------------------------------------------------------------------------------
NET LOSS                                                            (55,104,000)          (5,958,000)         (11,257,000)

PREFERRED STOCK DIVIDENDS (Note 10)                                 (11,930,000)                  --                   --
--------------------------------------------------------------------------------------------------------------------------
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS                       $(67,034,000)         $(5,958,000)       $ (11,257,000)
--------------------------------------------------------------------------------------------------------------------------
NET LOSS PER SHARE (BASIC AND DILUTED) (Note 6):

      Net loss before extraordinary item                           $      (1.08)         $     (0.10)       $       (0.20)
      Loss on early retirement of debt                                    (0.03)                  --                   --
--------------------------------------------------------------------------------------------------------------------------
      NET LOSS PER SHARE (Note 6)                                  $      (1.11)         $     (0.10)       $       (0.20)
==========================================================================================================================
      WEIGHTED AVERAGE SHARES OUTSTANDING (Note 6)                   60,610,548           57,736,654           57,082,495
==========================================================================================================================
</TABLE>
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements.


                                      F-7
<PAGE>
                                                                    eGLOBE, INC.
                    SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
   FOR THE YEAR ENDED DECEMBER 31, 1999, THE NINE MONTHS ENDED DECEMBER 31, 1998
                                               AND THE YEAR ENDED MARCH 31, 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                              PREFERRED STOCK            COMMON STOCK                                   ADDITIONAL
                                              ---------------            ------------       STOCK TO BE      NOTES       PAID- IN
                                            SHARES      AMOUNT       SHARES      AMOUNT       ISSUED      RECEIVABLE     CAPITAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>           <C>        <C>          <C>          <C>            <C>        <C>
BALANCE AT BEGINNING OF PERIOD                --       $  --      55,861,240   $ 56,000     $       --     $     --   $16,190,000
Stock issued in lieu of cash payments         --          --          42,178         --             --           --       244,000
Stock issued in connection with
  private placement, net (Notes 7 and 10)     --          --       1,425,000      1,000             --           --     7,481,000
Stock to be issued (Note 8)                   --          --              --         --      3,500,000           --            --
Exercise of stock appreciation rights         --          --          18,348         --             --           --       138,000
Issuance of warrants to purchase
  stock (Note 10)                             --          --              --         --             --           --     1,136,000
Foreign currency translation adjustment       --          --              --         --             --           --            --
Net loss for the year                         --          --              --         --             --           --            --
Trans Global net income for the three
     months ended March 31, 1998              --          --              --         --             --           --            --
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1998                       --          --      57,346,766     57,000      3,500,000           --    25,189,000
Stock issued in connection with
  litigation settlement (Note 8)              --          --          28,700         --             --           --        81,000
Stock issued to common
  escrow (Note 8)                             --          --         350,000         --     (3,500,000)          --     3,500,000
Issuance of warrants to purchase stock
  (Note 7)                                    --          --              --         --             --           --       328,000
Stock issued in connection with
  acquisitions (Notes 4 and  10)         500,000       1,000          62,500         --             --           --     3,601,000
Exchange of common stock for Series C
  Preferred Stock (Notes 7 and 10)            75          --      (1,425,000)    (1,000)            --           --       998,000
Deferred compensation costs   (Note 4)        --          --              --         --             --           --       420,000
Foreign currency translation adjustment       --          --              --         --             --           --            --
Net loss for the period                       --          --              --         --             --           --            --
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998               500,075       1,000      56,362,966     56,000             --           --    34,117,000
====================================================================================================================================

<CAPTION>
                                                          ACCUMULATED
                                                             OTHER            TOTAL
                                          ACCUMULATED    COMPREHENSIVE    STOCKHOLDERS
                                            DEFICIT       INCOME (LOSS)       EQUITY
---------------------------------------------------------------------------------------
<S>                                      <C>                 <C>           <C>
BALANCE AT BEGINNING OF PERIOD           $ (8,779,000)       $  82,000     $7,549,000
Stock issued in lieu of cash payments              --               --        244,000
Stock issued in connection with
  private placement, net (Notes 7 and 10)          --               --      7,482,000
Stock to be issued (Note 8)                        --               --      3,500,000
Exercise of stock appreciation rights              --               --        138,000
Issuance of warrants to purchase
  stock (Note 10)                                  --               --      1,136,000
Foreign currency translation adjustment            --          (50,000)       (50,000)
Net loss for the year                     (11,257,000)              --    (11,257,000)
Trans Global net income for the three
     months ended March 31, 1998              416,000               --        416,000
-------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1998                   (19,620,000)          32,000      9,158,000
Stock issued in connection with
  litigation settlement (Note 8)                   --               --         81,000
Stock issued to common
  escrow (Note 8)                                  --               --             --
Issuance of warrants to purchase stock
  (Note 7)                                         --               --        328,000
Stock issued in connection with
  acquisitions (Notes 4 and 10)                    --               --      3,602,000
Exchange of common stock for Series C
  Preferred Stock (Notes 7 and 10)                 --               --        997,000
Deferred compensation costs   (Note 4)             --               --        420,000
Foreign currency translation adjustment            --         (121,000)      (121,000)
Net loss for the period                    (5,958,000)              --     (5,958,000)
-------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                (25,578,000)         (89,000)     8,507,000
=====================================================================================
</TABLE>

                                      F-8
<PAGE>

                                                                    eGLOBE, INC.
                    SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
   FOR THE YEAR ENDED DECEMBER 31, 1999, THE NINE MONTHS ENDED DECEMBER 31, 1998
                                   AND THE YEAR ENDED MARCH 31, 1998 (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                         PREFERRED STOCK         COMMON STOCK
                                                         ---------------         ------------       STOCK TO BE   NOTES
                                                         SHARES     AMOUNT     SHARES     AMOUNT      ISSUED    RECEIVABLE
------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>          <C>     <C>           <C>       <C>        <C>
BALANCE, DECEMBER 31, 1998                                500,075    $1,000  56,362,966    $56,000   $      --  $       --
Issuance of warrants to purchase stock (Notes 4, 5,
  7 and 10)                                                    --        --          --         --          --          --
Stock issued in connection with acquisitions, net of
  $135,000 premium amortization (Note 4)                1,026,101     1,000   1,161,755      1,000          --          --
Stock to be issued in connection with acquisitions
  (Note 4)                                                     --        --          --         --   2,624,000          --
Stock issued in connection with debt repayments, net
  of cost of $40,000 (Notes 5 and 7)                           40        --     697,328      1,000          --          --
Stock issued in connection with private placements,
  net of costs of $2,084,000 (Note 10)                      2,770        --     160,257         --          --          --
Value of beneficial conversion feature on Preferred
  Stocks and debt, net of unamoritized portion of
  $1,085,000 (Notes 7 and 10)                                  --        --          --         --          --          --
Value of increase in conversion feature of Series B
  Preferred (Note 4)                                           --        --          --         --          --          --
Exchange of Series C Preferred for common  stock,
  net of dividend of $2,215,000 and costs of
  $118,000 (Note 7)                                           (75)       --   3,000,000      3,000          --          --
Exchange of Series G Preferred  for
  Series K Preferred (Note 4 and 10)                           30        --          --         --          --          --
Exchange of Series B Preferred and Notes for Series H
  and I Preferred, net of dividends of $4,600,000 and
  $18,000 (Note 4)                                        400,000        --          --         --          --          --
Deferred compensation costs  (Notes 4 and 10)                  --        --          --         --          --          --
Exercise of stock options and warrants (Note 10)               --        --   1,638,163      2,000          --  (1,210,000)
Conversion of Series D and N  Preferred into common
  stock, including coversion of dividends of
  $240,000 (Note 10)                                       (1,150)       --   1,544,662      2,000          --          --
Stock to be issued for dividends                               --        --          --         --          --          --
Cumulative Preferred Stock dividends                           --        --          --         --          --          --
Amortization of discounts (premium) on Preferred
Stocks                                                         --        --          --         --          --          --
Other issuances and registration costs                         --        --   5,015,473      5,000          --          --
Foreign currency translation adjustment                        --        --          --         --          --          --
Net loss for the year                                          --        --          --         --          --          --
------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                              1,927,791   $ 2,000  69,580,604    $70,000  $2,624,000 $(1,210,000)
==============================================================================================================================
</TABLE>
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements


<PAGE>


<TABLE>
<CAPTION>
                                                                                    ACCUMULATED
                                                        ADDITIONAL                      OTHER         TOTAL
                                                         PAID-IN     ACCUMULATED   COMPREHENSIVE   STOCKHOLDERS'
                                                          CAPITAL       DEFICIT     INCOME (LOSS)      EQUITY
-----------------------------------------------------------------------------------------------------------------
<S>                                                      <C>          <C>            <C>          <C>
BALANCE, DECEMBER 31, 1998                              $34,117,000   $(25,578,000)  $ (89,000)   $   8,507,000
Issuance of warrants to purchase stock (Notes 4, 5,
  7 and 10)                                              18,474,000             --          --       18,474,000
Stock issued in connection with acquisitions, net of
  $135,000 premium amortization (Note 4)                 28,788,000             --          --       28,790,000
Stock to be issued in connection with acquisitions
  (Note 4)                                                       --             --          --        2,624,000
Stock issued in connection with debt repayments, net
  of cost of $40,000 (Notes 5 and 7)                      5,615,000             --          --        5,616,000
Stock issued in connection with private placements,
  net of costs of $2,084,000 (Note 10)                   10,836,000             --          --       10,836,000
Value of beneficial conversion feature on Preferred
  Stocks and debt, net of unamoritized portion of
  $1,085,000 (Notes 7 and 10)                               835,000             --          --          835,000
Value of increase in conversion feature of Series B
  Preferred (Note 4)                                      1,485,000             --          --        1,485,000
Exchange of Series C Preferred for common  stock,
  net of dividend of $2,215,000 and costs of
  $118,000 (Note 7)                                        (121,000)            --          --         (118,000)
Exchange of Series G Preferred  for
  Series K Preferred (Note 4 and 10)                      3,000,000             --          --        3,000,000
Exchange of Series B Preferred and Notes for Series H
  and I Preferred, net of dividends of $4,600,000 and
  $18,000 (Note 4)                                        3,982,000             --          --        3,982,000
Deferred compensation costs  (Notes 4 and 10)             1,485,000             --          --        1,485,000
Exercise of stock options and warrants (Note 10)          1,990,000             --          --          782,000
Conversion of Series D and N  Preferred into common
  stock, including coversion of dividends of
  $240,000 (Note 10)                                        238,000             --          --          240,000
Stock to be issued for dividends                          1,043,000             --          --        1,043,000
Cumulative Preferred Stock dividends                     (2,300,000)            --          --       (2,300,000)
Amortization of discounts (premium) on Preferred
Stocks                                                   (2,797,000)            --          --       (2,797,000)
Other issuances and registration costs                       48,000             --          --           53,000
Foreign currency translation adjustment                          --             --     585,000          585,000
Net loss for the year                                            --    (55,104,000)         --      (55,104,000)
----------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                             $106,718,000   $(80,682,000)   $496,000     $ 28,018,000
================================================================================================================
</TABLE>


                                      F-9
<PAGE>

                                                                    eGLOBE, INC.
                      SUPPLEMENTAL CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
   FOR THE YEAR ENDED DECEMBER 31, 1999, THE NINE MONTHS ENDED DECEMBER 31, 1998
                                               AND THE YEAR ENDED MARCH 31, 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                               YEAR              NINE MONTHS             YEAR
                                                                              ENDED                 ENDED                ENDED
                                                                            DECEMBER 31,         DECEMBER 31,          MARCH 31,
                                                                              1999                  1998                  1998
                                                                         -----------------------------------------------------------
<S>                                                                      <C>                     <C>                 <C>
NET LOSS                                                                 $ (55,104,000)          $(5,958,000)        $ (11,257,000)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS                                       585,000              (121,000)              (50,000)
                                                                         ===========================================================
COMPREHENSIVE NET LOSS                                                   $ (54,519,000)          $(6,079,000)        $ (11,307,000)
                                                                         ===========================================================
</TABLE>

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


                                      F-10
<PAGE>
                                                                    eGLOBE, INC.
                              SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                             YEAR            NINE MONTHS             YEAR
                                                                            ENDED               ENDED                ENDED
                                                                         DECEMBER 31,        DECEMBER 31,          MARCH 31,
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            1999                 1998                 1998
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                   <C>                  <C>
OPERATING ACTIVITIES:
  Net loss                                                             $(55,104,000)         $ (5,958,000)        $(11,257,000)
  Adjustments to reconcile net loss to cash
      Provided by (used in) operating activities:

      Depreciation and amortization                                      15,468,000             3,397,000            3,528,000
      Provision for bad debts                                             2,528,000             1,018,000            1,564,000
      Non-cash interest expense                                             889,000                    --                   --
      Minority interest in income                                            78,000                    --                   --
      Settlement costs (Note 7)                                                  --               996,000                   --
      Common stock issued in lieu of cash payments                               --                    --              144,000
      Issuance of options and warrants for services (Note 10)               181,000               190,000              220,000
      Compensation costs related to acquisitions (Note 4)                 1,485,000               420,000                   --
      Amortization of debt discounts (Notes 5 and 7)                      5,182,000               255,000              479,000
      Proxy related litigation expense  (Note 8)                                --                 81,000            3,500,000
      Loss on early retirement of debt (Note 7)                           1,901,000                    --                   --
      Other, net                                                                 --               (57,000)             281,000
      Changes in operating assets and liabilities (net of changes
         from acquisitions - Note 4):
         Accounts receivable                                             (5,445,000)           (1,202,000)          (1,716,000)
         Other receivables                                                 (755,000)             (350,000)            (159,000)
         Prepaid expenses                                                   946,000              (216,000)            (206,000)
         Other current assets                                               (37,000)             (611,000)            (351,000)
         Other assets                                                       303,000               407,000              (10,000)
         Accounts payable                                                10,750,000            14,447,000            5,011,000
         Income tax payable                                                (815,000)              (90,000)           1,500,000
         Accrued expenses                                                (1,193,000)            1,035,000            2,635,000
         Deferred revenue                                                  (153,000)              311,000               19,000
         Other liabilities                                                   87,000                26,000              (89,000)
-------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                         (23,704,000)           14,099,000            5,093,000
-------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
  Purchases of property and equipment                                   (13,203,000)           (5,044,000)          (6,131,000)
    Net sales (purchases) of short-term investments                      10,806,000            (6,677,000)          (2,275,000)
  Proceeds from sale of property and equipment                                   --               126,000                   --
  Advances to non-affiliate, subsequently acquired (Note 4)                      --              (971,000)                  --
  Purchase of intangibles                                                  (299,000)                   --                   --
  Acquisitions of companies, net of cash acquired (Notes 4 and 17)       (2,799,000)           (2,207,000)                  --
  Increase in restricted cash                                                (4,000)             (100,000)                  --
  Other assets                                                             (224,000)             (109,000)              26,000
-------------------------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES                                        (5,723,000)          (14,982,000)          (8,380,000)
-------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
  Proceeds from notes payable (Notes 4 and 5)                             6,835,000               250,000            7,810,000
  Proceeds from notes payable-related party (Note 7)                     28,258,000             1,200,000                   --
  Proceeds from issuance of preferred stock                              12,670,000                    --                   --
  Stock issuance costs                                                   (1,582,000)                   --                   --
  Proceeds from exercise of warrants                                        721,000                    --                   --
  Proceeds from exercise of options                                          61,000                    --              138,000
  Proceeds from issuance of common stock                                    250,000                    --            7,345,000
  Deferred financing and acquisition costs                                       --              (524,000)                  --
  Distribution to minority interest holder                                  (52,000)                   --                   --
  Payments on capital leases                                               (860,000)             (198,000)            (448,000)
  Payments on notes payable                                             (10,180,000)             (716,000)         (10,864,000)
  Payments on notes payable - related party (Note 7)                     (8,066,000)                   --                   --
-------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES                                    28,055,000                12,000            3,981,000
-------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH                                          (1,372,000)             (871,000)             694,000
TRANS GLOBAL CASH ACTIVITY FOR THE THREE MONTHS ENDED MARCH 31, 1998             --                    --            1,466,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                            4,031,000             4,902,000            2,742,000
===============================================================================================================================
CASH AND CASH EQUIVALENTS, END OF PERIOD                                $ 2,659,000           $ 4,031,000          $ 4,902,000
===============================================================================================================================
</TABLE>
See Note 17 for Supplemental Cash Flow Information.
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements.

                                      F-11
<PAGE>



                                                                    eGLOBE, INC.
                                                  SUMMARY OF ACCOUNTING POLICIES
--------------------------------------------------------------------------------
ORGANIZATION            eGlobe,  Inc.  and  subsidiaries,   (collectively,   the
AND BUSINESS            "Company")   is   a   global    supplier   of   enhanced
                        telecommunications  and information services,  including
                        Internet   Protocol   ("IP")   transmission    services,
                        international  and  domestic  long  distance   telephone
                        services,  switching  services,   co-location  services,
                        telephone  portal,   unified   messaging   services  and
                        international  voice  and  data  services.  The  Company
                        operates in  partnership  with  telephone  companies and
                        Internet service providers around the world. Through the
                        Company's World Direct network,  the Company  originates
                        traffic in 90  territories  and countries and terminates
                        traffic  anywhere  in  the  world  and  through  its  IP
                        network,   the  Company  can   originate  and  terminate
                        IP-based  telecommunication services in 30 countries and
                        5 continents. In addition, the Company can transport and
                        terminate voice, fax or data calls to any country with a
                        hard  wire  or  cell-based  communications  system.  The
                        Company  provides  its  services  principally  to  large
                        national  telecommunications  companies, card providers,
                        Internet  service  providers and financial  institutions
                        around the world.

                        In   December   1998,    the   Company    acquired   IDX
                        International,   Inc.   ("IDX"),   a   supplier   of  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 4 for further discussion).

                        In February 1999, the Company  completed the acquisition
                        of Telekey, Inc.  ("Telekey"),  a provider of card-based
                        telecommunications  services. In June 1999, the Company,
                        through its newly formed subsidiary,  Vogo Networks, LLC
                        ("Vogo"),  purchased substantially all of the assets and
                        assumed     certain     liabilities    of    Connectsoft
                        Communications  Corporation  and  Connectsoft  Holdings,
                        Corp. (collectively "Connectsoft"),  which developed and
                        continues to enhance a server based communication system
                        that integrates various forms of messaging, Internet and
                        web content,  personal services,  and provides telephone
                        access  to  Internet   content   (including   email  and
                        e-commerce   functions).   In  July  1999,  the  Company
                        completed  the  acquisition  of Swiftcall  Equipment and
                        Services (USA) Inc., ("Swiftcall"), a telecommunications
                        company, and certain network operating equipment held by
                        an affiliate of Swiftcall. Effective August 1, 1999, the
                        Company   assumed   operational   control  of  Highpoint
                        International  Telecom,  Inc.  and  certain  assets  and
                        operations  of  Highpoint  Carrier  Services,  Inc.  and
                        Vitacom,  Inc.  (collectively  "Highpoint").  The  three
                        entities were majority owned  subsidiaries  of Highpoint
                        Telecommunications   Inc.  ("HGP"),  a  publicly  traded
                        company on the Canadian Venture Exchange. On October 14,
                        1999,  substantially  all of  the  operating  assets  of
                        Highpoint were transferred to iGlobe, Inc. ("iGlobe"), a
                        newly  formed   subsidiary   of  HGP,  and  the  Company
                        concurrently  acquired all of the issued and outstanding
                        common   stock   of   iGlobe.    iGlobe   possesses   an
                        infrastructure supplying IP services, particularly voice
                        over IP,  throughout  Latin America.  In September 1999,
                        the Company,  acting through a newly formed  subsidiary,
                        acquired control of Oasis  Reservations  Services,  Inc.
                        ("ORS"), a Miami based transaction  support services and
                        call center to the travel industry, from its


                                      F-12
<PAGE>


                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
ORGANIZATION            sole  stockholder,  Outsourced  Automated  Services  and
AND BUSINESS            Integrated  Solutions,  Inc. ("Oasis").  The Company and
(CON'T)                 Oasis formed eGlobe/Oasis Reservations LLC ("LLC") which
                        is  responsible  for  conducting  ORS'  operations.  The
                        Company  manages and controls the LLC. In December 1999,
                        the  Company   completed   the   acquisition   of  Coast
                        International,  Inc.  ("Coast"),  a provider of enhanced
                        long-distance  interactive voice and internet  services.
                        See Notes 4, 5, 7 and 10 for further discussion.

                        Pursuant to an Agreement and Plan of Merger entered into
                        on December 16, 1999,  and  effective  March 23, 2000, a
                        wholly-owned  subsidiary  of eGlobe merged with and into
                        Trans Global Communications, Inc. ("Trans Global"), with
                        Trans Global continuing as the surviving corporation and
                        becoming  a  wholly-owned   subsidiary  of  eGlobe  (the
                        "Merger").    Trans    Global   is   a    provider    of
                        facilities-based,  direct  connection and resale network
                        services.  The  Merger  provided  for  the  issuance  of
                        40,000,000 shares of the eGlobe common stock in exchange
                        for all of the outstanding common stock of Trans Global.
                        Pursuant to the merger  agreement,  the Company withheld
                        and  deposited  into  escrow  2,000,000  shares  of  the
                        40,000,000  shares  of its  common  stock  issued to the
                        Trans Global stockholders in the Merger.  These escrowed
                        shares  cover  the  indemnification  obligations  of the
                        Trans Global  stockholders  under the merger  agreement.
                        The Company deposited an additional  2,000,000 shares of
                        its   common    stock   into   escrow   to   cover   its
                        indemnification  obligations under the merger agreement.
                        The merger was  accounted for as a pooling of interests,
                        and as such, the 40,000,000  shares of common stock have
                        been treated as if outstanding for all periods presented
                        in the supplemental consolidated financial statements.

                        The Company's  consolidated  financial  statements  have
                        been retroactively  restated as of December 31, 1999 and
                        December  31, 1998 and for the year ended  December  31,
                        1999,  the nine months  ended  December 31, 1998 and the
                        year ended March 31, 1998,  to reflect the  consummation
                        of   the   Trans   Global   merger.   The   supplemental
                        consolidated  financial  statements included herein give
                        retroactive effect to the Trans Global merger, which was
                        accounted for using the pooling of interests  method. As
                        a result, the financial position, results of operations,
                        and statements of  comprehensive  income (loss) and cash
                        flows  are   presented  as  if  Trans  Global  had  been
                        consolidated for all periods presented. The supplemental
                        consolidated  statements of stockholders' equity reflect
                        the  accounts of eGlobe as if the common stock issued in
                        connection  with the Trans Global merger had been issued
                        for all periods  presented.  As  required  by  generally
                        accepted   accounting   principles,   the   supplemental
                        consolidated   financial   statements  will  become  the
                        historical  financial  statements  of the  Company  upon
                        issuance of the financial statements for the period that
                        includes the consummation of the Trans Global merger.


                                      F-13
<PAGE>

                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
ORGANIZATION            In the  supplemental  consolidated  balance sheets,  the
AND BUSINESS            balance  sheets of eGlobe as of  December  31,  1999 and
(CON'T)                 1998 have been combined with those of Trans Global as of
                        December   31,   1999   and   1998.   The   supplemental
                        consolidated   statements  of  operations   combine  the
                        results of eGlobe for the year ended  December  31, 1999
                        and the nine months  ended  December 31, 1998 with those
                        of Trans  Global for the same  periods.  The  results of
                        operations for the year ended March 31, 1998 include the
                        combined  results  of  eGlobe's  results  for the twelve
                        months ended March 31, 1998 and Trans  Global's  results
                        for the year ended December 31, 1997. Trans Global's net
                        income for the three  months  ended  March 31,  1998 has
                        been   reflected   in  the   supplemental   consolidated
                        statements of  stockholders'  equity as an adjustment to
                        accumulated  deficit.  In  addition,  the cash  activity
                        during the three  months  ended  March 31, 1998 has been
                        reflected as an  adjustment  in the year ended March 31,
                        1998 supplemental  consolidated statement of cash flows.
                        There were no seasonal  trends in operations  during the
                        three months ended March 31, 1998.

                        The  supplemental   consolidated  financial  statements,
                        including   the  notes   thereto,   should  be  read  in
                        conjunction   with  eGlobe's   historical   consolidated
                        financial  statements  included in its Annual  Report on
                        Form 10-K for the year ended  December  31, 1999 and the
                        financial  statements  of Trans  Global  included in the
                        Company's  Current  Report on Form 8-K/A dated March 23,
                        2000 and filed on May 22, 2000.


                                      F-14
<PAGE>

                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
ORGANIZATION            Revenue, extraordinary loss on early retirement of debt,
AND BUSINESS            net  income  (loss),  net loss  attributable  to  common
(CON'T)                 stockholders  and net loss per common  share  previously
                        reported  by eGlobe and Trans  Global  and the  combined
                        amounts  presented  in  the  accompanying   supplemental
                        consolidated  financial  statements  for the year  ended
                        December  31, 1999,  the nine months ended  December 31,
                        1998 and the year ended March 31, 1998 are as follows:

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,        DECEMBER 31,          MARCH 31,
                                                                           1999                1998                 1998
                                                                        -------------------------------------------------------
                        <S>                                             <C>                   <C>                 <C>
                        REVENUE:

                        eGlobe as previously presented in Form
                           10-K                                         $  42,002,000         $22,491,000        $ 33,123,000

                        Trans Global as previously presented in
                           Form 8-K/A                                     100,445,000          85,119,000          46,473,000

                        Adjustments:

                        Intercompany revenue                                 (499,000)                 --                  --
                        Trans Global revenue for the three
                           months ended March 31, 1998                             --         (17,190,000)                 --
                                                                        -------------------------------------------------------
                        eGlobe, as restated combined                    $ 141,948,000         $90,420,000        $ 79,596,000
                                                                        =======================================================
                        EXTRAORDINARY LOSS ON EARLY
                           RETIREMENT OF DEBT:

                        eGlobe, as previously presented in              $ (1,901,000)         $        --        $         --
                           Form 10-K
                        Trans Global as previously reported
                           in Form 8-K/A                                          --                   --                  --
                                                                        -------------------------------------------------------
                        eGlobe, as restated combined                    $ (1,901,000)         $        --        $         --
                                                                        =======================================================
                        NET INCOME (LOSS):

                        eGlobe as previously presented in
                          Form 10-K                                     $(51,468,000)         $(7,090,000)       $(13,290,000)

                        Trans Global as previously presented in
                          Form 8-K/A                                      (3,383,000)           1,406,000           1,565,000

                        Adjustments:
                          Deferred tax adjustment                           (253,000)             142,000             468,000
                          Trans Global net income for the
                            three months ended March 31,
                            1998                                                  --             (416,000)                 --
                                                                        -------------------------------------------------------
                        eGlobe, as restated combined                    $(55,104,000)         $(5,958,000)       $(11,257,000)
                                                                        =======================================================
</TABLE>


                                      F-15
<PAGE>
                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
ORGANIZATION
AND BUSINESS
(CON'T)

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,        DECEMBER 31,          MARCH 31,
                                                                           1999                1998                 1998
                                                                        -------------------------------------------------------
                        <S>                                             <C>                   <C>                 <C>
                        NET LOSS ATTRIBUTABLE TO COMMON
                          STOCKHOLDERS:

                        eGlobe net loss, as restated combined            $ (55,104,000)         $(5,958,000)       $(11,257,000)

                        eGlobe preferred stock dividends as
                          previously reported in Form 10-K                 (11,930,000)                  --                  --
                                                                        -------------------------------------------------------
                        eGlobe, as restated combined                     $ (67,034,000)         $(5,958,000)       $(11,257,000)
                                                                        =======================================================
                        NET LOSS PER SHARE:

                        As previously presented in Form 10-K:
                             Basic and diluted                                  $(3.08)              $(0.40)             $(0.78)

                        Restated combined:
                             Basic and diluted                                  $(1.11)              $(0.10)             $(0.20)
</TABLE>

                        Adjustments  were made to reflect  deferred income taxes
                        on a  combined  basis in the  supplemental  consolidated
                        results of  operations  for the year ended  December 31,
                        1999,  the nine months  ended  December 31, 1998 and the
                        year ended March 31, 1998.

                        An   adjustment   was  made  to  decrease   consolidated
                        stockholders'  equity as of the beginning of the periods
                        presented of $183,000 to record the deferred  income tax
                        adjustment  for the previous  periods.  An adjustment of
                        $416,000   was  also  made  to   increase   consolidated
                        stockholders'  equity  as of March 31,  1998 to  reflect
                        Trans  Global's  net income for the three  months  ended
                        March 31, 1998.


                                      F-16
<PAGE>


                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
MANAGEMENT'S            As of December 31,  1999,  the Company had a net working
PLAN                    capital  deficiency of $44.7  million.  This net working
                        capital deficiency resulted principally from a loss from
                        operations  of $46.9  million  (including  depreciation,
                        amortization  and other  non-cash  charges) for the year
                        ended  December  31,  1999.  Also  contributing  to  the
                        working  capital  deficiency  was $7.9  million in notes
                        payable and current  maturities of long-term  debt, $4.7
                        million  in notes  payable  and  current  maturities  of
                        long-term debt due to related parties, and $53.9 million
                        in  accounts  payable,  accrued  expenses  and  deferred
                        revenue. The $7.9 million current maturities consists of
                        $4.2 million primarily related to acquisition debt, $1.1
                        million  related to a note  collatoralized  by equipment
                        and $2.6 million  related to capital lease  payments due
                        over the one year period ending  December 31, 2000.  The
                        $4.7  million  current   maturities  due  to  a  related
                        parties,  net of  unamortized  discount of $3.0 million,
                        consists  of a $0.9  million  note,  net of  unamortized
                        discount of $0.1 million,  due to a stockholder on April
                        18,  2000,  term  payments  of  $3.5  million,   net  of
                        unamortized  discount  of  $2.9  million,  due  to  EXTL
                        Investors, the Company's largest stockholder,  and notes
                        payable  of $3.2  million  due to an  affiliate  of EXTL
                        Investors.

                        On an  operating  level,  the Company is  continuing  to
                        renegotiate  its  relationship  with an entity  that was
                        formerly  one of the  Company's  largest  customers.  At
                        December 31, 1999,  7.7% of the  Company's  net accounts
                        receivable  of $15.1 million was due from this entity to
                        which extended  credit terms have been granted.  The new
                        arrangement,  once  finalized,  will  establish  payment
                        terms and sales growth, which will assure more effective
                        and timely  collection of receivables  from the customer
                        and  will  permit   renewed  growth  in  the  customer's
                        business.  This  arrangement  will  also  assist  in the
                        collection  of certain  amounts due to the Company under
                        the extended credit terms.

                        If  the  Company  meets  its  projections  for  reaching
                        breakeven at the end of the second  quarter of 2000, the
                        Company will still have additional capital  requirements
                        through  December  2000  of up  to  $66.0  million.  The
                        Company will need to fund  pre-existing  liabilities and
                        note  payable  obligations  and the  purchase of capital
                        equipment,  along with  financing the  Company's  growth
                        plans.

                        Thus far in 2000,  the Company has met its initial  cash
                        requirements  from (1)  proceeds  from the  exercise  of
                        options and  warrants of $2.4  million,  primarily  as a
                        result of the  improvement in the Company's  stock price
                        during  the  month  of  January  2000  and as  sustained
                        thereafter,  (2)  proceeds of $0.5 million from the sale
                        of  Series N  Convertible  Preferred  Stock  ("Series  N
                        Preferred"), (3) proceeds of $15.0 million from the sale
                        of  Series P  Convertible  Preferred  Stock  ("Series  P
                        Preferred"),  (4) proceeds of $4.0 million from the sale
                        of  Series  Q  Convertible  Preferred  Stock ("Series  Q
                        Preferred")  with  an  additional  $6.0  million  to  be
                        received upon  registration of the underlying  shares of
                        common stock.  These capital  transactions are discussed
                        in Note 16.


                                      F-17
<PAGE>
                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
MANAGEMENT'S            In   addition   to  the   firm   commitments   discussed
PLAN (CON'T)            previously,   the  Company  is  proceeding   with  other
                        financing opportunities,  which have not been finalized.
                        The  Company is working  on several  different  debt and
                        equity fund raising  efforts to raise the funds that the
                        Company  will require to achieve its growth plan through
                        the end of the year 2000.

                        There is some  risk  that  the  Company  will not  reach
                        breakeven  as  projected  and  will  continue  to  incur
                        operating  losses. If this occurs and should the Company
                        be unsuccessful in its efforts to raise additional funds
                        to cover such  losses,  then its growth plans would have
                        to be  sharply  curtailed  and  its  business  would  be
                        adversely affected.

                        As discussed in Note 13, in December 1999,  Trans Global
                        entered  into an  agreement  with AT&T,  Trans  Global's
                        largest supplier,  regarding the payment of various past
                        due 1999  switch and  circuit  costs.  Pursuant  to that
                        agreement,   Trans   Global   has  agreed  to  pay  AT&T
                        approximately   $13.8  million  in  consecutive  monthly
                        installments at 9% interest  through January 1, 2001. As
                        of December 31, 1999, the remaining  balance due to AT&T
                        was $13.5  million.  As part of the agreement with AT&T,
                        Trans Global entered into a security agreement (Security
                        Agreement)  granting AT&T a security interest in certain
                        fixed  assets  owned by Trans  Global as of December 14,
                        1999.  As of April 6,  2000,  Trans  Global has not paid
                        $1.5  million  of  scheduled  payments  that were due in
                        April 2000.  Trans Global is  currently  in  discussions
                        with AT&T regarding  alternative  options for settlement
                        of  the   outstanding   obligation.   There  can  be  no
                        assurances   that   Trans   Global   will   be  able  to
                        satisfactorily  resolve this matter.  Should this not be
                        resolved and should AT&T take  possession  of the assets
                        held as  security,  Trans  Global  believes  that  their
                        business  will not be  adversely  impacted.  There is no
                        guarantee  that Trans Global and therefore the Company's
                        business will not have its operations affected adversely
                        should a satisfactory resolution between the parties not
                        be reached.

CHANGE OF               Effective  with the period ended  December 31, 1998, the
FISCAL YEAR             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  December 31, 1999 and March 31,
                        1998.

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

                        Revenue                                     $63,102,000
                        Gross profit                                $16,746,000
                        Taxes on income                             $   436,000
                        Net loss                                    $(3,352,000)
                        Net loss per common share-
                             Basic and diluted                      $     (0.06)

CHANGE OF               At the annual meeting of the stockholders of the Company
COMPANY                 on June 16, 1999, the stockholders  approved and adopted
NAME                    a proposal for amending the Certificate of Incorporation
                        to  change  the  name  of  the  Company  from  Executive
                        TeleCard,  Ltd. to eGlobe,  Inc. The amended Certificate
                        of Incorporation has been filed with and accepted by the
                        State of Delaware.

BASIS OF                The consolidated financial statements have been prepared
PRESENTATION            in  accordance   with  generally   accepted   accounting
AND                     principles and include the accounts of the Company,  its
CONSOLIDATION           wholly-owned subsidiaries, and its controlling  interest
                        in a limited  liability  company  ("LLC").  All material
                        intercompany   transactions   and  balances   have  been
                        eliminated in consolidation. As the Company controls the
                        operations  of the LLC, the LLC has been included in the
                        supplemental, consolidated financial statements with the
                        other member's interests recorded as Minority Interest.

                                      F-18
<PAGE>

                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
USE OF                  The  preparation  of financial  statements in conformity
ESTIMATES               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.

FOREIGN                 For subsidiaries whose functional  currency is the local
CURRENCY                currency and which do not operate in highly inflationary
TRANSLATION             economies,  all net monetary and non-monetary assets and
                        liabilities are translated into U.S.  dollars 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.
                        Cumulative  translation gains and losses are reported as
                        accumulated  other  comprehensive  income  (loss) in the
                        supplemental  consolidated  statements of  stockholders'
                        equity and are included in comprehensive loss.

FINANCIAL               Financial  instruments,  which  potentially  subject the
INSTRUMENTS             Company  to   concentrations   of  credit  risk  consist
AND                     principally  of cash  and cash  equivalents,  short-term
CONCENTRATIONS          investments and trade accounts receivable.
OF CREDIT RISK
                        The  Company   places  its  cash  and   temporary   cash
                        investments  with  quality  financial  institutions.  At
                        times,   these  amounts  may  exceed  federally  insured
                        limits.

                        Concentrations  of  credit  risk with  respect  to trade
                        accounts  receivable  are  generally  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.  In  certain
                        circumstances,   the   Company  has   purchased   credit
                        insurance on its accounts receivables.

                        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.  In  certain  circumstances  the  Company  will
                        require  security  deposits;   however,  generally,  the
                        Company does not require collateral or other security to
                        support customer  receivables.  As of December 31, 1999,
                        the  Company  had  approximately  16.2%  and 7.7% in net
                        trade  accounts  receivable  from  two  customers.   The
                        Company  is  negotiating  with  the one  customer  whose
                        account is 7.7% of net trade  accounts  receivable for a
                        long-term payment  agreement.  There is no assurance the
                        Company will receive full payment of this receivable.


                                      F-19
<PAGE>


                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
FINANCIAL               Some of the Company's  customers are permitted to choose
INSTRUMENTS AND         the currency in which they pay for calling services from
CONCENTRATIONS          among  several  different  currencies  determined by the
OF CREDIT RISK          Company.  Thus, the Company's earnings may be materially
(CON'T)                 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  majority  of  the
                        Company's  largest  customers  settle their  accounts in
                        U.S. Dollars.

                        The carrying amounts of financial instruments, including
                        cash  and  cash  equivalents,   short-term  investments,
                        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 deposits  with a financial
                        institution  to  secure a letter  of  credit issued to a
                        transmission  vendor related to an agreement whereby the
                        Company will perform platform and transmission services.
                        In addition,  a 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.


RESTRICTED              Restricted    short-term    investments    consist    of
SHORT-TERM              certificates of deposits with a financial institution to
INVESTMENTS             secure letters of credit issued to transmission  vendors
                        related to an agreement whereby the vendors will perform
                        transmission services.

PROPERTY,               Property and equipment are recorded at the lower of cost
EQUIPMENT,              or fair market value. Additions,  installation costs and
DEPRECIATION            major   improvements   of  property  and  equipment  are
AND                     capitalized.  Expenditures  for  maintenance and repairs
AMORTIZATION            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  supplemental   consolidated
                        statement of operations.

                        Depreciation  and  amortization  is  computed  using the
                        straight-line  method over the estimated useful lives of
                        the related  assets  ranging from three to twenty years.
                        Leasehold  improvements  are amortized over the terms of
                        the  respective  leases  and/or  service  lives  of  the
                        improvements,  whichever is shorter.  See  discussion of
                        impairment policy under "Long-Lived Assets".


                                      F-20
<PAGE>

                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
SOFTWARE                Statement of Financial Accounting Standards ("SFAS") No.
DEVELOPMENT             86, "Accounting for the Costs of Computer Software to be
COSTS                   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  expenses  all costs  incurred to  establish
                        technological  feasibility of computer software products
                        to  be  sold  or  leased  or  otherwise  marketed.  Upon
                        establishing  technological  feasibility  of a  software
                        product,  the Company  capitalizes  direct and  indirect
                        costs  related to the product up to the time the product
                        is available for sale to customers. Capitalized software
                        development   costs  are   generally   amortized   on  a
                        product-by-product   basis  each  year  based  upon  the
                        greater of: (1) the amount  computed  using the ratio of
                        current  year gross  revenue  to the sum of current  and
                        anticipated  future gross revenue for that  product,  or
                        (2) five year  straight-line  amortization.  The Company
                        acquired $8.4 million of software  development costs for
                        which   technological   feasibility   had  already  been
                        established  in  connection   with  the  acquisition  of
                        Connectsoft as discussed in Note 4. Additional  software
                        development  costs of $573,000 were  capitalized  during
                        1999.

                        Under  the  provisions  of  the  American  Institute  of
                        Certified  Public  Accountants'  ("AICPA")  Statement of
                        Position  ("SOP")  98-1,  "Accouting  for the  Costs  of
                        Computer  Software  Developed  or Obtained  for Internal
                        Use",   the  Company   expenses  cost  incurred  in  the
                        preliminary project stage and,  thereafter,  capitalizes
                        costs   incurred  in  the  developing  or  obtaining  of
                        internal   use   software.   Certain   costs,   such  as
                        maintenance  and  training,  are  expensed as  incurred.
                        Capitalized  costs  are  amortized  over a period of not
                        more than five years.  The Company acquired $2.9 million
                        of internally  developed software in connection with the
                        acquisition of Telekey, Connectsoft and Coasts discussed
                        in  Note  4.  These   amounts  are   included  in  other
                        intangible  assets  in  the  supplemental   consolidated
                        balance  sheet as of  December  31,  1999.  The  Company
                        recorded   amortization   expense  related  to  software
                        development  costs  of  $1.1  million  during  1999.  No
                        related   amortization   expense  was  recorded  in  the
                        December  1998  and  March  1998  periods.  The  Company
                        assesses the carrying  amount of  capitalized  costs for
                        impairment based upon the impairment policy as discussed
                        under "Long-Lived Assets".

RESEARCH AND            Research  and  development  costs and costs  related  to
DEVELOPMENT             significant  improvements  and  refinements  of existing
                        products are  expensed as  incurred.  For the year ended
                        December 31, 1999,  the nine month period ended December
                        31,  1998  and  the  year  ended  March  31,  1998  the
                        Company's  expensed research and  development costs were
                        nominal.


                                     F-21
<PAGE>

                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
GOODWILL AND OTHER      As of  December  31,  1999 and  1998,  the  Company  has
INTANGIBLE ASSETS       recorded    goodwill   in   connection    with   certain
                        acquisitions,  as discussed in Note 4, of $26.5  million
                        and  $12.0  million,   respectively.   Certain  goodwill
                        amounts  recorded  in 1998 were based  upon  preliminary
                        information  and during 1999 goodwill  adjustments  were
                        recorded   to   reflect   the  final   asset   appraisal
                        information.  In  addition,  as  discussed in Note 4, an
                        adjustment was recorded in 1999 to increase the goodwill
                        related  to  the  IDX  acquisition  as a  result  of  an
                        increase  in the  value of the  purchase  consideration.
                        Amortization of goodwill is provided over seven years on
                        a straight-line  method.  Goodwill  amortization expense
                        for the year ended December 31, 1999 and the nine months
                        ended  December  31,  1998  was  $1.4  million  and $0.1
                        million,  respectively.  There was no goodwill  recorded
                        prior to March 31, 1998.

                        As of December 31, 1998,  the Company had recorded  $1.0
                        million in other intangible assets, consisting primarily
                        of licenses  and  trademarks.  During  1999,  intangible
                        assets of $26.4 million were recorded in connection with
                        the  acquisitions  discussed in Note 4. These intangible
                        assets were recorded based on third party appraisals and
                        consist of the value  related to  assembled  and trained
                        work  forces,  customer  contract  bases,   distribution
                        partnership network, non-compete agreements,  internally
                        developed   software,   long  distance   infrastructure,
                        licenses  and  existing  technologies.  Intangibles  are
                        being  amortized  on  a  straight-line  basis  over  the
                        estimated useful lives from one to ten years.

                        The carrying value of goodwill and other intangibles are
                        reviewed on a periodic basis for recoverability based on
                        the undiscounted  cash flows of the businesses  acquired
                        over  the  remaining  amortization  period.  Should  the
                        review indicate that these amounts are not  recoverable,
                        the  Company's  carrying  value of the  goodwill  and/or
                        other  intangibles  would be  reduced  by the  estimated
                        shortfall of the cash flows.  In  addition,  the Company
                        assesses the carrying amount of these intangible  assets
                        for  impairment  based upon the policy  discussed  under
                        "Long-Lived  Assets" below.  No reduction of goodwill or
                        intangibles  for  impairment  was  necessary  in 1999 or
                        1998.

LONG-LIVED ASSETS       The  Company  follows  the  provisions  of SFAS No. 121,
                        "Accounting  for the Impairment of Long-Lived  Assets to
                        be  Disposed  Of"  for  long-lived  assets  and  certain
                        identifiable  intangibles  to be  held  and  used by the
                        Company.   These  assets  are  reviewed  for  impairment
                        whenever  events or  changes in  circumstances  indicate
                        that  the  carrying  amount  of  an  asset  may  not  be
                        recoverable. If the fair value is less than the carrying
                        amount  of the  asset,  a loss  is  recognized  for  the
                        difference.

DEPOSITS                The Company provides  long-term cash deposits to certain
                        vendors  to  secure  contracts  for   telecommunications
                        services.


                                      F-22
<PAGE>
                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
DEFERRED                Deferred  financing and  acquisition  costs  included in
FINANCING AND           other   assets   in   the   accompanying    supplemental
ACQUISITION             consolidated  balance sheets represent third party costs
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.   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                 Some revenues from the Company's card services  business
RECOGNITION             come from  supplying  underlying  services to issuers of
                        prepaid  cards.  Those issuers prepay some or all of the
                        services provided. Payments received in advance for such
                        services are recorded in the  accompanying  supplemental
                        consolidated   balance   sheets  as  deferred   revenue.
                        Consequently, revenues from such services are recognized
                        as the cards are used and  service is  provided.  Direct
                        costs associated with these revenues are also recognized
                        when the  related  services  are  provided  or  expired.
                        Payments  related to unrecognized  revenues are included
                        as a  reduction  to  deferred  revenue.  When a card for
                        which service has been contracted  expires without being
                        fully used (cards  generally have effective  lives of up
                        to one year),  then the unused  value is  referred to as
                        breakage   and  recorded  as  revenue  at  the  date  of
                        expiration.

                        In   addition,   the  Company,   following   its  recent
                        acquisition  of  ORS,  has  recorded   deferred  revenue
                        related  to  certain   reservations  service  contracts.
                        Customers   are   required   to  pay  the   Company  for
                        reservation  services  in  advance  based on  forecasted
                        amounts.  These  advance  payments  are  recorded by the
                        Company  as  deferred  revenue,  which  is  subsequently
                        recognized  as revenue  when the  related  services  are
                        performed.

                        Revenue for all services is  recognized on an individual
                        product basis as provided to the customer.  Revenue from
                        the  provision  of the  Calling  Card  and  transmission
                        services is  recognized as utilized by customers or upon
                        the  completion  of  telephone  calls  by the end  user.
                        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.

                        For Vogo, the Company's  provider of software  products,
                        revenue   is   recognized   from  the   license  of  its
                        proprietary  software in accordance  with the provisions
                        of SOP 97-2,  "Software  Revenue  Recognition." SOP 97-2
                        provides   guidelines   concerning  the  recognition  of
                        revenue of software products.  This statement  requires,
                        among  other  things,  the  individual   elements  of  a
                        contract  for  the  sale  of  software  products  to  be
                        identified and accounted for separately.


                                      F-23
<PAGE>

                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
REVENUE                 IDX  operates  and  manages   Cyberpost   equipment  and
RECOGNITION             associated  software  licenses to its Internet  Backbone
(CON'T)                 Providers.  Under  such  licensing  agreements,  IDX  is
                        generally  obligated to provide maintenance and upgrades
                        and Internet Backbone  Providers 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.  IDX'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.   IDX
                        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.

                        Coast  recognizes  revenue upon  completion of telephone
                        calls by the end users.  Interactive Media Works ("IMW")
                        and  ISPN,  divisions  of  Coast,  as  well  as  iGlobe,
                        recognize revenue as service is provided.

TAXES ON                The  Company  accounts  for income  taxes under SFAS No.
INCOME                  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            The Company  applies SFAS No. 128,  "Earnings Per Share"
(LOSS)                  for the  calculation  of "Basic" and "Diluted"  earnings
PER SHARE               (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.


                                      F-24
<PAGE>


                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
STOCK                   The Company applies Accounting  Principles Board ("APB")
OPTIONS                 Opinion 25,  "Accounting for Stock Issued to Employees,"
                        and related  Interpretations in accounting for all stock
                        option  plans.  Compensation  cost of stock  options  is
                        measured  as the excess,  if any,  of the quoted  market
                        price of the  Company's  stock at the date of grant over
                        the option  exercise  price and is charged to operations
                        over the vesting period.

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

SHORT-TERM              Short-term investments include funds invested in a money
INVESTMENTS             market  fund  which  invests  in a broad  range of money
                        market  securities,   including,  but  not  limited  to,
                        short-term U.S.  government and agency securities,  bank
                        certificates of deposit and corporate  commercial paper.
                        Short-term  investments  are carried at amortized  cost,
                        which approximates fair value.

COMPREHENSIVE           The   Company   applies   SFAS   No.   130,   "Reporting
INCOME (LOSS)           Comprehensive  Income".  Comprehensive  income (loss) is
                        comprised  of net  income  (loss)  and  all  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   net  loss  in  a   separate
                        supplemental  consolidated  statement  of  comprehensive
                        loss.


                                      F-25
<PAGE>

                                                                    eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
FAIR VALUE              The estimated  fair value of financial  instruments  has
OF FINANCIAL            been determined  using available  market  information or
INSTRUMENTS             other  appropriate  valuation  methodologies.   However,
                        considerable judgment is required in interpreting market
                        data to develop  estimates of fair value.  Consequently,
                        the  estimates  are not  necessarily  indicative  of the
                        amounts  that  could be  realized  or would be paid in a
                        current market  exchange.  The carrying amounts reported
                        on  the   supplemental   consolidated   balance   sheets
                        approximate their respective fair values.

SEGMENT                 The  Company  follows  the  provisions  of SFAS No. 131,
INFORMATION             "Disclosures about Segments of an Enterprise and Related
                        Information".  This statement  establishes standards for
                        the reporting of information about operating segments in
                        annual  and  interim  financial  statements.   Operating
                        segments are defined as components of an enterprise  for
                        which separate  financial  information is available that
                        is evaluated  regularly by the chief operating  decision
                        maker(s) in deciding  how to allocate  resources  and in
                        assessing  performance.   SFAS  No.  131  also  requires
                        disclosures  about  products  and  services,  geographic
                        areas  and  major   customers.   The  Company  has  four
                        operating  reporting  segments  consisting  of  Enhanced
                        Services,  Network  Services,  Customer  Care and Retail
                        Services.

RECENT                  The Financial  Accounting  Standards  Board ("FASB") has
ACCOUNTING              recently issued SFAS No. 133, "Accounting for Derivative
PRONOUNCEMENT           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, as extended by SFAS
                        No. 137, is effective for fiscal years  beginning  after
                        June 15, 2000 and is  currently  not  applicable  to the
                        Company.

RECLASSIFICATIONS       Certain   consolidated   financial   amounts  have  been
                        reclassified for consistent presentation.


                                      F-26
<PAGE>


                                                                    eGLOBE, INC.
                         NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. PROPERTY AND         Property and equipment consist of the following:
   EQUIPMENT

<TABLE>
<CAPTION>

                           DECEMBER 31,                                                 1999                    1998
                           --------------------------------------------------------------------------------------------
                           <S>                                                         <C>                  <C>
                           Land                                                        $  122,000           $   122,000
                           Buildings and improvements                                   1,985,000             1,920,000
                           Calling card platform equipment                             14,722,000            13,480,000
                           Telecom equipment                                            8,628,000             1,140,000
                           IP transmission equipment                                    4,229,000               888,000
                           Operations center equipment and furniture                   13,255,000             8,789,000
                           Call diverters                                              18,016,000             8,175,000
                           Equipment under capital leases (Note 5)                      4,910,000             1,279,000
                           Internet communications equipment                              563,000               562,000
                           --------------------------------------------------------------------------------------------
                                                                                       66,430,000            36,355,000
                           Less accumulated depreciation and amortization              24,352,000            16,157,000
                           --------------------------------------------------------------------------------------------
                                                                                      $42,078,000           $20,198,000
                           ============================================================================================
</TABLE>
                        Depreciation  expense  for the year ended  December  31,
                        1999,  the nine months  ended  December 31, 1998 and the
                        year ended March 31, 1998 was $8.4 million, $3.2 million
                        and $3.3 million, respectively.

2. OTHER                Other intangible assets consist of the following:
   INTANGIBLE
   ASSETS
<TABLE>
<CAPTION>
                       DECEMBER 31,                                                      1999                      1998
                       ---------------------------------------------------------------------------------------------------
                       <S>                                                             <C>                      <C>
                       Existing technology                                             $ 8,400,000              $       --
                       Distribution partnership network                                  5,290,000                      --
                       Assembled and trained workforce                                   4,391,000                      --
                       Internally developed software                                     3,488,000                      --
                       Long distance infrastructure                                      1,580,000                      --
                       Non-compete agreements                                            1,540,000                      --
                       Customer contract base                                            1,343,000                      --
                       Licenses                                                          1,143,000                 433,000
                       Trademarks                                                          549,000                 518,000
                       Other                                                               416,000                  76,000
                       ---------------------------------------------------------------------------------------------------
                                                                                        28,140,000               1,027,000
                       Less accumulated amortization                                     6,466,000                 786,000
                       ---------------------------------------------------------------------------------------------------
                                                                                       $21,674,000              $  241,000
                       ===================================================================================================
</TABLE>


                                      F-27
<PAGE>


                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
2. OTHER                Intangible  assets  amortization  expense  for the  year
   INTANGIBLE           ended  December  31,  1999,  the nine month period ended
   ASSETS               December  31, 1998 and the year ended March 31, 1998 was
   (CON'T)              $5.7   million,   $0.1   million   and   $0.2   million,
                        respectively.  Included in internally developed software
                        is  approximately  $0.6 million of  additional  software
                        development   costs   capitalized  in  1999  related  to
                        enhancements for the existing technology acquired in the
                        Connectsoft acquisition.

3. ACCRUED              Accrued expenses consist of the following:
   EXPENSES
<TABLE>
<CAPTION>
                          DECEMBER 31,                                                       1999                     1998
                        -----------------------------------------------------------------------------------------------------
                        <S>                                                            <C>                       <C>
                          Telephone carriers                                            $  2,658,000              $ 3,091,000
                          Accrued telecom taxes                                            1,930,000                       --
                          External development costs                                       1,582,000                       --
                          Dividends on preferred stock                                     1,277,000                       --
                          Legal and professional fees                                      1,165,000                  479,000
                          Salaries and benefits                                              895,000                  737,000
                          Interest                                                           313,000                  647,000
                          Costs associated with acquisitions                                 296,000                  697,000
                          Other                                                              876,000                1,264,000
                        -----------------------------------------------------------------------------------------------------
                                                                                        $ 10,992,000              $ 6,915,000
                        =====================================================================================================
</TABLE>

                        The Company incurred $3.1 million of various realignment
                        expenses,  including primarily employee severance, legal
                        and  consulting  fees  and the  write  down  of  certain
                        investments  during the year ended March 31, 1998. As of
                        December  31,  1999,  there was a  remaining  accrual of
                        $281,000  included in other accrued  expenses related to
                        litigation  with a former  employee  that was settled in
                        October 1999.  Final payment to the former  employee was
                        made subsequent to December 31, 1999.

4. BUSINESS             As discussed  previously,  the Company  acquired IDX and
   ACQUISITIONS         UCI  in   December   1998  and   Telekey,   Connectsoft,
                        Swiftcall, iGlobe, ORS and Coast in 1999. The results of
                        operations  of the acquired  businesses  are included in
                        the supplemental  consolidated financial statements from
                        the date of acquisition.


                                      F-28
<PAGE>

                                                                    eGLOBE, INC.
              NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             IDX
   ACQUISITIONS
   (CON'T)              On December 2, 1998,  the  Company  acquired  all of the
                        common and preferred stock of IDX, for an original value
                        of approximately $10.8 million consisting of (a) 500,000
                        shares of the Company's  Series B Convertible  Preferred
                        Stock ("Series B Preferred")  originally  valued at $3.5
                        million which were  convertible  into  2,500,000  shares
                        (2,000,000   shares  until   stockholder   approval  was
                        obtained on June 16, 1999 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
                        which was obtained on June 16, 1999 and an 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
                        $40,000;   (e)   $418,000    convertible    subordinated
                        promissory note for IDX dividends  accrued and unpaid on
                        IDX's  Preferred  Stock and (f) direct costs  associated
                        with  the  acquisition  of $0.4  million  (another  $0.3
                        million of direct  costs were  recorded  in 1999).  This
                        acquisition  was accounted for using the purchase method
                        of accounting.  The shares of Series B Preferred  Stock,
                        IDX  Warrants  and IDX Notes  were  subject  to  certain
                        adjustments  related to IDX's ability to achieve certain
                        performance  criteria,  working capital levels and price
                        guarantees  for the  Series B  Preferred  Stock  and IDX
                        Warrants providing IDX met its performance objectives.

                        At the  Company's  annual  meeting  in  June  1999,  the
                        stockholders approved the increase of the convertibility
                        of the  Series B  Preferred  Stock and IDX  Warrants  as
                        discussed  in (a)  and  (b)  above,  respectively.  As a
                        result,  the acquired  goodwill  associated with the IDX
                        purchase was increased by approximately  $1.5 million in
                        the  second  quarter to  reflect  the higher  conversion
                        feature approved in June 1999.

                        The Company  obtained a final  appraisal of IDX's assets
                        from  independent  appraisers  in the third  quarter  of
                        1999.    This    appraisal    resulted    in   a   gross
                        reclassification  of approximately $6.5 million of IDX's
                        goodwill  to  other   identifiable   intangibles  as  of
                        December 31, 1999. As a result, the purchase  allocation
                        as of  December  31,  1999  resulted in goodwill of $6.4
                        million  (including final  allocations of other acquired
                        assets of $0.2  million) and other  intangibles  of $6.5
                        million. These other identifiable intangibles consist of
                        assembled and trained workforce, partnership network and
                        non-compete  agreements  and are  being  amortized  on a
                        straight-line basis from one to four years.  Goodwill is
                        being  amortized  on a  straight-line  basis  over seven
                        years.

                        In July 1999, the Company  renegotiated the terms of the
                        IDX  purchase  agreement  with the IDX  stockholders  as
                        follows:


                                      F-29
<PAGE>


                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             (a)     The 500,000  shares of Series B Preferred  Stock
   ACQUISITIONS                 were  reacquired  by the Company in exchange for
   (CON'T)                      500,000 shares of Series H Convertible Preferred
                                Stock ("Series H Preferred").

                        (b)     The Company reacquired the original IDX Warrants
                                in  exchange  for new  warrants to acquire up to
                                1,250,000  shares of the Company's common stock,
                                subject to IDX meeting certain revenue,  traffic
                                and EBITDA  ("Earnings  Before Interest,  Taxes,
                                Depreciation and Amortization") levels at either
                                September  30, 2000 or December  31, 2000 if not
                                achieved by September 30, 2000.

                        (c)     The Company reacquired the outstanding IDX Notes
                                of $4.0 million in exchange  for 400,000  shares
                                of  Series  I  Convertible  Optional  Redemption
                                Preferred  Stock  ("Series I  Preferred").  (See
                                Note 10 for further discussion) .

                        (d)     The   maturity    date   of   the    convertible
                                subordinated  promissory  note,  face  value  of
                                $418,000, was extended to July 15, 1999 from May
                                31, 1999, and  subsequently  paid by issuance of
                                140,599 shares of common stock.

                        (e)     The  Company  waived  its  right to  reduce  the
                                principal  balance  of  the  $2.5  million  note
                                payable by certain  claims as provided for under
                                the   terms  of  the   original   IDX   purchase
                                agreement.

                        As a result of the July  1999  exchange  agreement,  the
                        Company  recorded the excess of the fair market value of
                        the new preferred  stock issuances and the warrants over
                        the carrying  value of the reacquired  preferred  stock,
                        warrants  and notes  payable as a  dividend  to Series B
                        Preferred  Stock   stockholders  of  approximately  $6.0
                        million  (subsequently  reduced  by  $1.4  million,  see
                        discussion below).

                        The Company will  determine  the final  goodwill  amount
                        when the contingent purchase element is resolved and the
                        contingent   warrants   are   exercised.   Goodwill  may
                        materially increase when this contingency is resolved.

                        At  the  acquisition   date,  the  stockholders  of  IDX
                        originally   received   Series  B  Preferred  Stock  and
                        warrants  as  discussed  above,  which  were  ultimately
                        convertible into common stock subject to IDX meeting its
                        performance  objectives.   These  stockholders  in  turn
                        granted preferred stock and warrants,  each of which was
                        convertible  into a  maximum  of  240,000  shares of the
                        Company's  common stock,  to certain IDX employees.  The
                        increase  in the  market  price  during  the year  ended
                        December 31, 1999 and the nine months ended December 31,
                        1998 of the  underlying  common stock granted by the IDX
                        stockholders to certain  employees  resulted in a charge
                        to   income   of  $0.6   million   and   $0.4   million,
                        respectively.  The stock grants were  performance  based
                        and were adjusted each  reporting  period (but not below
                        zero)  for the  changes  in the  stock  price  until the
                        shares  and/or   warrants  (if  and  when)  issued  were
                        converted to common stock.


                                      F-30
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             In December 1999,  the Company and the IDX  stockholders
   ACQUISITIONS         agreed  to  reduce  the  Series H  Preferred  Stock  and
   (CON'T)              warrant  consideration  paid by the  Company  by a value
                        equivalent to the consideration  paid by the Company for
                        4,500 shares of IDX. In exchange,  the IDX  stockholders
                        will not issue the original preferred stock and warrants
                        to the above IDX employees or other parties. The Company
                        agreed to issue eGlobe  options to these  employees  and
                        others related to IDX. The options will have an exercise
                        price of $1.20 and a three year term.  The options  will
                        vest 75% at March  31,  2000 and the other 25% will vest
                        on an accelerated  basis if IDX meets its earn out or in
                        three years if it does not.  These  options were granted
                        by eGlobe on January 7, 2000. The Company also agreed to
                        issue  150,000  shares of common stock as payment of the
                        original    consideration    allocated    as    purchase
                        consideration  for an acquisition of a subsidiary by IDX
                        prior to the Company's purchase of IDX.

                        As a result of the above  renegotiation,  which resulted
                        in the  reduction  of the  fair  value  of the  Series H
                        Preferred Stock and the new warrants and the issuance of
                        eGlobe's options,  the Company recorded the reduction in
                        consideration of  approximately  $1.4 million to be paid
                        to  the  IDX   stockholders   as  a  negative   dividend
                        (offsetting   the  dividend   recorded   from  the  July
                        renegotiation)  and reduced the net loss attributable to
                        common stockholders in the fourth quarter of 1999.

                        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 a value of  approximately
                        $1.2  million  for 125,000  shares of common  stock (50%
                        delivered at the  acquisition  date (valued at $102,000)
                        and 50% to be  delivered  February  1, 2000,  subject to
                        adjustment),  and $2.1 million  payable as follows:  (a)
                        $75,000 paid in cash in January  1999;  (b) $1.0 million
                        in the form of two notes;  (c) $1.0  million in the form
                        of a non-interest bearing note payable only depending on
                        the percentage of projected revenue achieved, subject to
                        adjustment;  and (d) warrants to purchase  50,000 shares
                        of  common  stock  with an  exercise  price of $1.63 per
                        share.  See Note 5 for the terms and  conditions  of the
                        notes. This acquisition has been accounted for under the
                        purchase method of accounting.

                        In 1999, the Company obtained a final appraisal of UCI's
                        assets from  independent  appraisers  which  resulted in
                        acquired  goodwill  of  $0.5  million  and  an  acquired
                        intangible   of  $0.7   million   related  to   customer
                        contracts.    Goodwill   is   being   amortized   on   a
                        straight-line  basis over seven  years and the  acquired
                        intangible is being amortized on a  straight-line  basis
                        over  two  years.   The  Company  may  issue  additional
                        purchase  consideration  (see  discussion  above of $1.0
                        million  note)  if UCI  meets  certain  defined  revenue
                        targets.  The  Company is  currently  renegotiating  the
                        original   agreement  and  timing  of  the   performance
                        measurement.  The  goodwill  amount  will  be  finalized
                        pending    resolution    of   these    purchase    price
                        contingencies.  As a result,  goodwill may increase when
                        these contingencies are resolved.


                                      F-31
<PAGE>


                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             TELEKEY
   ACQUISITIONS
   (CON'T)              On  February  12,  1999,   the  Company   completed  the
                        acquisition of Telekey for a value of approximately $3.4
                        million for which it: (i) paid $0.1  million at closing;
                        (ii) issued a promissory  note for  $150,000  payable in
                        equal monthly  installments  over one year; (iii) issued
                        1,010,000 shares of Series F Convertible Preferred Stock
                        ("Series F Preferred") valued at $2.0 million;  and (iv)
                        agreed to issue at least 505,000 and up to an additional
                        1,010,000  shares of Series F Preferred  Stock 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;  and (v)  direct  costs
                        associated  with the  acquisition  of $0.2 million.  See
                        Notes 5 and 10 for  further  discussion.  The  value  of
                        $979,000  for the  above  505,000  shares  of  Series  F
                        Preferred  Stock  has  been  included  in  the  purchase
                        consideration.

                        This  acquisition  was  accounted for using the purchase
                        method of  accounting.  The  purchase  price  allocation
                        based on management's  review and third party appraisals
                        resulted  in  goodwill  of  $2.1  million  and  acquired
                        intangibles of approximately $3.0 million related to the
                        value  of  certain  distribution  networks,   internally
                        developed  software and assembled and trained workforce.
                        Goodwill is being  amortized  on a  straight-line  basis
                        over seven  years.  The acquired  intangibles  are being
                        amortized on a straight-line basis over the useful lives
                        of three to seven years.  The final purchase amount will
                        be  determined  when  the  contingent  purchase  element
                        related to Telekey's  ability to achieve certain revenue
                        and EBITDA  objectives  is resolved  and the  additional
                        shares  are  issued.  Goodwill  may  increase  when this
                        contingency is resolved.

                        At the  acquisition  date, the  stockholders  of Telekey
                        received  Series F Preferred  Stock as discussed  above,
                        which is ultimately  convertible  into common stock.  In
                        addition, the stockholders may receive additional shares
                        of Series F Preferred  Stock subject to Telekey  meeting
                        its performance  objectives.  These stockholders in turn
                        agreed  to  grant  upon   conversion  of  the  Series  F
                        Preferred  Stock  a  total  of  240,000  shares  of  the
                        Company's common stock to certain Telekey employees.  Of
                        this total, 60,000 shares will be issued only if Telekey
                        meets certain performance objectives. As of December 31,
                        1999, the value of the underlying non-contingent 180,000
                        shares  of  common   stock   granted   by  the   Telekey
                        stockholders  to certain  employees  has  resulted  in a
                        charge to income of $0.8  million.  The stock grants are
                        performance  based and will be adjusted  each  reporting
                        period  (but not less than zero) for the  changes in the
                        stock   price   until  the  shares  are  issued  to  the
                        employees.   As   discussed  in  Note  10,  the  Telekey
                        stockholders   converted   their   shares  of  Series  F
                        Preferred  Stock  on  January  3,  2000;  therefore,  no
                        additional compensation expense will be recorded for the
                        non-contingent shares after this date.


                                      F-32
<PAGE>



                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             In  February  2000,  the Company  reached a  preliminary
   ACQUISITIONS         agreement  with the  former  stockholders  of Telekey to
   (CON'T)              restructure  certain  terms of the original  acquisition
                        agreement.  Such  restructuring,  which  is  subject  to
                        completion   of   final   documentation,   includes   an
                        acceleration of the original earn out provisions as well
                        as  the   termination   dates  of   certain   employment
                        agreements.

                        CONNECTSOFT

                        In June 1999, the Company,  through its subsidiary Vogo,
                        purchased  substantially  all the assets of Connectsoft,
                        for a value of approximately  $5.3 million consisting of
                        the following:  (a) one share of the Company's 6% Series
                        G  Cumulative  Convertible  Redeemable  Preferred  Stock
                        ("Series G Preferred") valued at $3.0 million;  (b) $1.8
                        million  in  advances  (includes  $971,000  in  1998) to
                        Connectsoft made by the Company prior to the acquisition
                        which were converted into part of the purchase price and
                        (c) direct costs associated with the acquisition of $0.5
                        million.  This  acquisition  was accounted for under the
                        purchase   method  of   accounting   and  the  financial
                        statements of the Company  reflect the final  allocation
                        of the purchase price based on appraisals performed by a
                        third party. The final  allocation  resulted in goodwill
                        of  $1.0  million  and  acquired   intangibles  of  $9.1
                        million.  The acquired intangibles consist of internally
                        developed  software,   existing  technology,   assembled
                        workforce  and  customer  base.  Intangibles  are  being
                        amortized on a straight-line  basis over useful lives of
                        three to five years.  Goodwill is being  amortized  on a
                        straight-line basis over seven years.

                        The Company also  borrowed  $0.5 million from the seller
                        which  bears  interest  at  a  variable  rate  (8.5%  at
                        December 31, 1999).  Principal and interest payments are
                        due in twelve (12) equal monthly payments  commencing on
                        September 1, 1999.  The remaining  principal and accrued
                        interest  also become due on the first date on which (i)
                        the  Company  receives in any  transaction  or series of
                        transactions  any equity or debt  financing  of at least
                        $50.0 million or (ii) Vogo  receives in any  transaction
                        or series of  transactions  any equity or debt financing
                        of at  least  $5.0  million.  See  Note  5  for  further
                        discussion.


                                      F-33
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             In August 1999, the Company issued 30 shares of Series K
   ACQUISITIONS         Cumulative   Convertible   Preferred  Stock  ("Series  K
   (CON'T)              Preferred Stock") in exchange for its Series G Preferred
                        Stock  held by the seller of  Connectsoft.  (See Note 10
                        for further discussion).

                        SWIFTCALL

                        In July 1999, the Company  acquired all the common stock
                        of  Swiftcall,   a   privately-held   telecommunications
                        company, and certain network operating equipment held by
                        an affiliate of Swiftcall.  The aggregate purchase price
                        equaled  $3.3  million,  due in two  equal  payments  on
                        December  3,  1999  and  June  1,  2000.  The  agreement
                        provided  that  payments  could be made at the option of
                        the Company, in whole or in part, (i) in cash or (ii) in
                        stock,  by issuing to the  stockholder  of Swiftcall the
                        number of shares of common stock of the Company equal to
                        the first payment amount or the second  payment  amount,
                        as the  case  may be,  divided  by the  market  price as
                        defined. On August 12, 1999, the Company elected to make
                        both payments by issuing common stock. In December 1999,
                        the Company issued 526,063 shares of common stock valued
                        at  $1,645,000  as  payment  for  the  first  of the two
                        installment payments.  The final payment is payable June
                        1, 2000 in shares of common stock.

                        As part of the  transaction,  the former  stockholder of
                        Swiftcall,  who  also  owns  VIP  Communications,  Inc.,
                        ("VIP") a calling  card  company in  Herndon,  Virginia,
                        agreed  to  cause  VIP to  purchase  services  from  the
                        Company's IDX  subsidiary,  of the type presently  being
                        purchased  by VIP from  the  Company's  IDX  subsidiary,
                        which  results  in  revenue  to the  Company of at least
                        $500,000 during the 12 months ending August 3, 2000. Any
                        revenue  shortfall  will be paid by a  reduction  in the
                        number of shares of common  stock  issued to the  former
                        stockholder  of  Swiftcall.  The Company may deposit the
                        applicable portion of the second payment of the purchase
                        price of shares of common  stock into  escrow on June 1,
                        2000  if  it  appears  that  there  will  be  a  revenue
                        shortfall under the arrangement with VIP.

                        The  acquisition  was  accounted  for using the purchase
                        method of  accounting.  The financial  statements of the
                        Company  reflect the final  allocation  of the  purchase
                        price based on  appraisals  performed  by a third party.
                        The final allocation  resulted in acquired  property and
                        equipment valued at  approximately  $5.1 million that is
                        being  depreciated on a  straight-line  basis over seven
                        years.


                                      F-34
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------

4. BUSINESS             iGLOBE
   ACQUISITIONS
   (CON'T)              Effective   August  1,   1999,   the   Company   assumed
                        operational  control of  Highpoint,  owned by  Highpoint
                        Telecommunications,  Inc. ("HGP").  On October 14, 1999,
                        substantially  all of the operating  assets of Highpoint
                        were transferred to iGlobe, a newly formed subsidiary of
                        HGP,  and the  Company  acquired  all of the  issued and
                        outstanding  common  stock  of  iGlobe  for a  value  of
                        approximately  $9.9 million..  In July 1999, the Company
                        and  Highpoint  agreed that the Company would manage the
                        business of iGlobe and would take responsibility for the
                        ongoing  financial  condition  of iGlobe  from August 1,
                        1999,  pursuant to a Transition  Services and Management
                        Agreement  ("TSA").  Pursuant  to  this  agreement,  HGP
                        financed  working  capital  through the closing  date to
                        iGlobe for which the Company  issued a  short-term  note
                        payable of $1.8  million  (see Note 5). The  acquisition
                        closed October 14, 1999. The purchase price consisted of
                        (i) one  share  of 20%  Series M  Convertible  Preferred
                        Stock  ("Series  M  Preferred  Stock")  valued  at  $9.6
                        million  (see  Note  10 for  further  discussion),  (ii)
                        direct  acquisition costs of approximately $0.3 million;
                        and  (iii)  HGP was given a  non-voting  beneficial  20%
                        interest of the equity  interest  subscribed  or held by
                        the Company in a yet-to-be-completed joint venture known
                        as IP Solutions B.V.

                        The  acquisition  was  accounted  for using the purchase
                        method of accounting.  This initial preliminary purchase
                        price allocation based on management's  review and third
                        party  appraisals  has  resulted  in  goodwill  of  $1.8
                        million and acquired intangibles of $2.4 million related
                        to a customer base, licenses and operating agreements, a
                        sales agreement and an assembled workforce.  Goodwill is
                        being  amortized  on a  straight-line  basis  over seven
                        years. The acquired intangibles are being amortized on a
                        straight-line  basis over the estimated  useful lives of
                        three  years.  The  Company  will  determine  the  final
                        purchase  price   allocation   based  on  completion  of
                        management's review.


                                      F-35
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------

4. BUSINESS             ORS
   ACQUISITIONS
   (CON'T)              In September 1999, the Company  acquired  control of ORS
                        from its sole stockholder,  Oasis. The Company and Oasis
                        formed eGlobe/Oasis  Reservations LLC, ("LLC"), which is
                        responsible  for conducting  the business  operations of
                        ORS.  The  Company  manages  and  controls  the  LLC and
                        receives  90%  of  the  profits  and  losses  from  ORS'
                        business.  The LLC was funded by contributions  effected
                        by  the   members   under   a   Contribution   Agreement
                        ("Contribution  Agreement").  Oasis  contributed all the
                        outstanding  shares of ORS valued at approximately  $2.3
                        million  as its  contribution  to the LLC.  The  Company
                        contributed  1.5  million  shares  of its  common  stock
                        valued  at $3.0  million  on the  date of  issuance  and
                        warrants  to  purchase  additional  shares of its common
                        stock to the LLC. The warrants are  exercisable  for the
                        shares of common stock as discussed below:

                        (a)     shares  equal  to the  difference  between  $3.0
                                million  and  the  value  of the  Company's  1.5
                                million share  contribution on the date that the
                                shares of common  stock  (including  the  shares
                                underlying the warrants)  contributed to the LLC
                                are registered  with the SEC if the value of the
                                1.5  million  shares  on that  date is less than
                                $3.0 million;

                        (b)     shares equal to $100,000 of the Company's common
                                stock  for each  30-day  period  beyond  90 days
                                following  the  date of  contribution  that  the
                                shares of the Company's  common stock (including
                                the shares underlying the warrants)  contributed
                                to the LLC remain unregistered;

                        (c)     shares  up to  $2.0  million  of  the  Company's
                                common stock,  subject to adjustment  based upon
                                ORS achieving certain revenue and EBITDA targets
                                during the measurement  period of August 1, 1999
                                to January  31,  2000:  provided  however,  that
                                Oasis may select a different  period if: (i) ORS
                                obtains  a new  customer  contract  at any  time
                                between the closing date and March 31, 2000, and
                                (ii) the Company enters into a new contract with
                                a  specific  customer  at any time  between  the
                                closing  date and March 31,  2000.  If either of
                                these events occur, then Oasis may select as the
                                measurement  period,  in its discretion,  any of
                                the  following;  (x) the period  from  August 1,
                                1999 to January  31,  2000,  (y) the period from
                                September  1, 1999 to  February  29, 2000 or (z)
                                the  period  from  October  1, 1999 to March 31,
                                2000;


                                      F-36
<PAGE>


                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             (d) additional  shares  based  upon  (1)  ORS  achieving
   ACQUISITIONS             certain revenue and  EBITDA  targets,  and  (2)  the
   (CON'T)                  Company's   share  price at the date of registration
                            of the shares for this  transaction.  Under  certain
                            circumstances,  these  shares  may be  equal  to the
                            greater of (A) 50% of the  incremental  revenue  for
                            the Second  Measurement  Period  (as  defined in the
                            agreements)  over $9.0 million or (B) four times the
                            incremental  Adjusted  EBITDA  (as  defined  in  the
                            agreements) for the Second  Measurement  Period over
                            $1.0 million provided,  however, that such number of
                            shares   shall  not  exceed  the   greater  of;  (i)
                            1,000,000  shares of the  Company's  common stock or
                            (ii) that the  number  of  shares  of the  Company's
                            common stock  determined by dividing $8.0 million by
                            the Second  Measurement Period Date Market Value (as
                            defined in the  agreements);  and provided  further,
                            that if the basis  for  issuance  of such  shares is
                            incremental  revenue  over $9.0  million then EBITDA
                            for the Second  Measurement  Period must be at least
                            $1.0  million for the revenue  between  $9.0 million
                            and  $12.0  million  or at least  $1.5  million  for
                            revenue above $12.0  million.  In addition,  the LLC
                            may  receive  0.5  million  shares of the  Company's
                            common   stock  if  the   revenue   for  the  Second
                            Measurement Period is equal to or greater than $37.0
                            million  and the  Adjusted  EBITDA  for  the  Second
                            Measurement  Period is equal to or greater than $5.0
                            million.

                        According to the  Operating  Agreement,  the net profits
                        and  net  losses  of the LLC  are  allocated  90% to the
                        Company and 10% to Oasis.  Proceeds from the sale of the
                        Company's  common  stock or warrants  would be allocated
                        90% to the Company and 10% to Oasis.  Proceeds  from the
                        sale of the ORS stock or its  assets  will be  allocated
                        100% to Oasis until Oasis has received  distributions of
                        at least $9.0  million  and then 90% to Oasis and 10% to
                        the Company.  Pursuant to the LLC's Operating Agreement,
                        the LLC is an interim  step to full  ownership of ORS by
                        the  Company.  Once the Company has either  raised $10.0
                        million in new capital or  generated  three  consecutive
                        months of positive cash flow and  registered  the shares
                        issued in this  transaction,  the LLC will be  dissolved
                        and ORS will  become a  wholly-owned  subsidiary  of the
                        Company. Under these circumstances,  Oasis would receive
                        the shares of common stock and warrants  contributed  to
                        the LLC by the  Company.  Additionally,  even  if  these
                        conditions  are not  fulfilled,  Oasis  has the right to
                        redeem its  interest  in the LLC at any time in exchange
                        for the shares of common stock and the  warrants  issued
                        to the LLC by eGlobe.

                        In January  2000,  the  Company  raised  more than $10.0
                        million in new capital.  Once the Company  registers the
                        shares  issued  in this  transaction,  the  LLC  will be
                        dissolved and ORS will become a wholly-owned  subsidiary
                        of the Company.


                                      F-37
<PAGE>
                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             This  acquisition  was  accounted for using the purchase
   ACQUISITIONS         method of accounting.  The purchase  allocation based on
   (CON'T)              management's  review and third party appraisals resulted
                        in goodwill of $0.4 million and acquired  intangibles of
                        $1.6 million related to assembled and trained  workforce
                        and customer contracts.  The goodwill is being amortized
                        on a straight-line  basis over seven years. The acquired
                        intangibles are being amortized on a straight-line basis
                        over the estimated  useful lives of three to five years.
                        The Company has not  determined  at this time if certain
                        performance  measures have been met. The purchase amount
                        may  increase  upon  resolution  of  the   contingencies
                        discussed earlier.

                        As the Company  controls the  operations of the LLC, the
                        LLC has been included in the  supplemental  consolidated
                        financial  statements  with  Oasis'  interest in the LLC
                        recorded as Minority Interests.

                        In  connection  with the  purchase and  installation  of
                        equipment  and  leasehold   improvements   at  ORS'  new
                        facility in Miami, Florida,  Oasis agreed to loan ORS up
                        to  $451,000.  The loan is  required to be repaid in six
                        equal   quarterly   principal   installments   beginning
                        November  30,   1999.   The  Company   guaranteed   ORS'
                        obligations under this loan and granted Oasis a security
                        interest  in its  ownership  interest  in the LLC. As of
                        December 31, 1999, there was $451,000  outstanding under
                        this commitment. See Note 5 for further discussion.

                        Subsequent  to the  acquisition,  $1.0  million of costs
                        were incurred  related to the purchase and  installation
                        of  equipment  and  leasehold  improvements  at this new
                        facility. Of these costs, $0.6 million was paid by Oasis
                        and  contributed  to the LLC resulting in an increase in
                        the Minority Interests.


                                      F-38
<PAGE>


                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             COAST
   ACQUISITIONS
   (CON'T)              On December 2, 1999, the Company acquired all the common
                        shares  of  Coast  which  was  majority   owned  by  the
                        Company's largest stockholder (See Note 7). The purchase
                        consideration  valued  at  approximately  $16.7  million
                        consisted  of: (a) 16,100 shares of Series O Convertible
                        Preferred  Stock ("Series O Preferred  Stock") valued at
                        approximately  $13.4  million;  (b)  882,904  shares  of
                        common stock valued at approximately  $3.0 million;  and
                        (c) direct  costs  associated  with the  acquisition  of
                        approximately $0.3 million. The Series O Preferred Stock
                        is  convertible  into a maximum of  3,220,000  shares of
                        common stock. See Note 10 for further discussion.

                        The  acquisition  was  accounted  for using the purchase
                        method of  accounting.  The financial  statements of the
                        Company  reflect  the  preliminary   allocation  of  the
                        purchase   price  based  on   management's   review  and
                        preliminary  third  party  appraisals.  The  preliminary
                        purchase price allocation  resulted in goodwill of $14.3
                        million and  intangibles of $3.2 million  related to the
                        value of certain  distribution  networks,  certain  long
                        distance  infrastructure,  internally developed software
                        and assembled and trained  workforce.  Goodwill is being
                        amortized on a straight-line basis over seven years, and
                        the  acquired  intangibles  are  being  amortized  on  a
                        straight-line  basis over the estimated  useful lives of
                        five years.  The final purchase price allocation has not
                        been finalized  pending final third party appraisals and
                        completion of management's review.

                        PRO FORMA RESULTS OF OPERATIONS

                        The IDX and UCI  acquisitions  as well as the subsequent
                        increase  in  the   preferred   conversion   factor  for
                        preferred shares  originally issued to IDX stockholders,
                        the  renegotiations  of the  terms  of the IDX  purchase
                        agreement  and the  1999  reclassification  of  acquired
                        goodwill   to  other   identifiable   intangibles,   are
                        reflected   in  the   following   unaudited   pro  forma
                        supplemental consolidated results of operations assuming
                        the  acquisitions  had occurred at the  beginning of the
                        year ended March 31,  1998.  The  Telekey,  Connectsoft,
                        Swiftcall, iGlobe, ORS, and Coast acquisitions,  as well
                        as the exchange of the Series G Preferred  Stock for the
                        Series K Preferred Stock, are reflected in the following
                        unaudited pro forma supplemental consolidated results of
                        operations assuming the acquisitions had occurred at the
                        beginning of the nine month  period  ended  December 31,
                        1998.


                                      F-39
<PAGE>


                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             The  unaudited  pro  forma   supplemental   consolidated
   ACQUISITIONS         results of operations  for the year ended March 31, 1998
   (CON'T)              include IDX's  results of operations  for the year ended
                        December 31, 1997 and eGlobe's results of operations for
                        the year ended March 31, 1998.  The IDX,  UCI,  Telekey,
                        Connectsoft, Swiftcall, iGlobe, ORS and Coast results of
                        operations  for the nine months ended  December 31, 1998
                        are estimated  based on annualized  results for the year
                        ended   December  31,  1998  and   seasonal   trends  in
                        operations.

<TABLE>
<CAPTION>
                                                                           Unaudited Pro Forma Results
                                                           -----------------------------------------------------------------
                                                             Year Ended            Nine Months Ended         Year Ended
                                                            December 31,                December 31,            March 31,
                                                               1999                       1998                    1998
                        ----------------------------------------------------------------------------------------------------
                        <S>                                <C>                    <C>                        <C>
                        Revenue                            $ 163,103,000          $ 116,630,000              $   80,164,000
                        Net loss before
                             extraordinary item            $ (66,533,000)         $ (22,085,000)             $  (19,615,000)
                        Net loss                           $ (68,434,000)         $ (22,085,000)             $  (19,615,000)
                        Net loss attributable to
                             common stockholders           $ (77,215,000)         $ (24,764,000)             $  (24,527,000)
                        Basic and diluted net
                             loss per share                $       (1.20)         $       (0.40)             $        (0.43)
</TABLE>

                        In  management's  opinion,  these  unaudited  pro  forma
                        amounts  are not  necessarily  indicative  of  what  the
                        actual combined results of operations might have been if
                        the  acquisitions had been effective at the beginning of
                        each respective period, as presented above.


                                      F-40
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
5. NOTES PAYABLE        Notes  payable  and   long-term   debt  consist  of  the
   AND LONG-            following:
   TERM DEBT

<TABLE>
<CAPTION>
                     DECEMBER 31,                                                            1999               1998
                     ----------------------------------------------------------------------------------------------------
                     <S>                                                                    <C>              <C>
                     Promissory note to a telecommunications company, net of
                     unamortized discount of $0 and $206,000  (1)                           $    --          $ 7,294,000

                     Promissory notes for acquisition of IDX (2)                                 --            5,418,000

                     Promissory note for acquisition of UCI, net of unamortized
                     discount of $0 and $43,000 (3)                                         250,000              457,000

                     Promissory note for acquisition of UCI (4)                             500,000              500,000

                     Promissory note to an investor, net of unamortized
                     discount of $0 and $26,000 (5)                                         282,000              224,000

                     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              299,000              305,000

                     Promissory note of Telekey payable to a telecommunication
                     company (6)                                                            454,000                   --

                     Promissory note for acquisition of Connectsoft (7)                     500,000                   --

                     Promissory note for acquisition of Telekey (8)                          25,000                   --

                     Promissory note due to seller of iGlobe (9)                          1,831,000                   --

                     Promissory note due to seller of ORS (10)                              451,000                   --

                     Promissory note secured by certain equipment (11)                    2,720,000                   --

                     Capitalized lease obligations (12)                                   5,750,000              724,000
                     ----------------------------------------------------------------------------------------------------
                     Total                                                               13,062,000           14,922,000

                     Less current maturities, net of unamortized discount
                         of $0 and $275,000                                               7,868,000           13,685,000
                     ----------------------------------------------------------------------------------------------------
                     Total notes payable and long-term debt                              $5,194,000           $1,237,000
                     ====================================================================================================
</TABLE>


                                      F-41
<PAGE>
                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
5. NOTES PAYABLE        (1)     In  February  1998,  the Company  borrowed  $7.5
   AND LONG-                    million from a  telecommunications  company. The
   TERM DEBT                    note was  unsecured and bore interest at 8.875%.
   (CON'T)                      In connection with this transaction,  the lender
                                was granted warrants  expiring February 23, 2001
                                to  purchase  500,000  shares  of the  Company's
                                common stock at a price of $3.03 per share.  The
                                value of approximately  $0.5 million assigned to
                                such warrants  when granted in  connection  with
                                the  above  note  agreement  was  recorded  as a
                                discount to long-term  debt and  amortized  over
                                the term of the  note as  interest  expense.  In
                                January  1999,  pursuant  to  the  anti-dilution
                                provisions of the loan  agreement,  the exercise
                                price of the  warrants  was  adjusted to $1.5125
                                per share, resulting in additional debt discount
                                of $0.2 million.  This amount was amortized over
                                the  remaining  term of the note.  In July 1999,
                                this note plus  accrued  interest was repaid and
                                the remaining  unamortized discount was recorded
                                as interest expense.

                        (2)     In  connection  with  the IDX  acquisition,  the
                                Company originally issued $5.0 million unsecured
                                convertible  subordinated promissory notes and a
                                $418,000  convertible   subordinated  promissory
                                note for  accrued but unpaid  dividends  owed by
                                IDX. The notes bore interest at LIBOR plus 2.5%.
                                Each of the notes, plus accrued interest,  could
                                be  paid  in cash  or  shares  of the  Company's
                                common  stock,  at the  sole  discretion  of the
                                Company.  In March 1999, the Company  elected to
                                pay the first  note,  which had a face  value of
                                $1.0 million,  plus accrued interest,  in shares
                                of common  stock and  issued  431,729  shares of
                                common stock to discharge this indebtedness.  In
                                connection    with   the   discharge   of   this
                                indebtedness,  the IDX stockholders were granted
                                warrants  expiring  March 23,  2002 to  purchase
                                43,173 shares of the Company's common stock at a
                                price of $2.37 per share.  The value assigned to
                                the warrants of $62,000 was recorded as interest
                                expense in March 1999.

                                In July 1999, the Company renegotiated the terms
                                of  the   purchase   agreement   with   the  IDX
                                stockholders. As a result of the renegotiations,
                                the  Company   exchanged  the  remaining   notes
                                payable totaling $4.0 million for 400,000 shares
                                of  Series  I  Preferred  Stock  valued  at $4.0
                                million.  In addition,  the maturity date of the
                                $418,000  note was extended and repaid in August
                                1999 with 140,599  shares of common  stock.  See
                                Notes 4 and 10 for further discussion.

                        (3)     On December 31, 1998, the Company  acquired UCI.
                                In connection with this transaction, the Company
                                issued a $0.5 million unsecured  promissory note
                                bearing   interest  at  8%  with  principal  and
                                interest   originally  due  June  27,  1999.  In
                                connection   with  the  note,  UCI  was  granted
                                warrants   expiring  in  December  31,  2003  to
                                purchase  50,000 shares of the Company's  common
                                stock at a price of $1.63 per  share.  The value
                                assigned to the warrants of $43,000 was recorded
                                as a  discount  to the  note  and was  amortized
                                through   June  1999  as   additional   interest
                                expense.  In August 1999, the Company  completed
                                renegotiation of the terms of this note pursuant
                                to which the Company  paid  $250,000 in November
                                1999 with the  remaining  $250,000  plus accrued
                                interest  payable  on  December  31,  1999.  The
                                remaining  note was paid in full  subsequent  to
                                year end.

                        (4)     In  connection  with  the UCI  acquisition,  the
                                Company   issued   a  $0.5   million   unsecured
                                promissory note with 8% interest payable monthly
                                due no later than September 30, 2000.

                                      F-42
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
5. NOTES PAYABLE        (5)     In September  1998, a subsidiary  of the Company
   AND LONG-                    entered  into  a  12%   unsecured   bridge  loan
   TERM DEBT                    agreement  with an investor for $250,000 and the
   (CON'T)                      proceeds were advanced to Connectsoft, a company
                                acquired in September  1999 as discussed in Note
                                4. 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 $34,000  was  recorded as a discount
                                to the note and has been fully  amortized  as of
                                December   31,  1999  as   additional   interest
                                expense.   As   part  of  the   acquisition   of
                                Connectsoft,  the Company renegotiated the terms
                                of this note  with the  investor  in July  1999.
                                Pursuant  to the  renegotiations,  the  original
                                note was replaced  with a new note due September
                                12, 1999  representing  principal  plus  accrued
                                interest due on the original note. In connection
                                with  this new  note,  the  lender  was  granted
                                warrants  to  purchase   25,000  shares  of  the
                                Company's  common  stock at a price of $2.82 per
                                share.  The  value of  $34,000  assigned  to the
                                warrants  was recorded as a discount to the note
                                and  amortized  over  the term of the  loan.  In
                                December 1999, the lender  extended the note and
                                was granted  warrants to purchase  10,000 shares
                                of the  Company's  common  stock  at a price  of
                                $2.82  per  share.  The  value  of  $15,000  was
                                recorded as interest  expense in December  1999.
                                On  January  28,  2000,  the  Company  paid  the
                                principal and interest in full.

                        (6)     Telekey has an outstanding  promissory  note for
                                $454,000 bearing interest,  payable quarterly at
                                10% with principal due on December 31, 2000. The
                                note  is  secured  by  certain   assets  of  the
                                previous stockholders of Telekey.

                        (7)     In   connection    with   the   acquisition   of
                                Connectsoft,  the Company  issued a $0.5 million
                                note to the seller. The note bears interest at a
                                variable  rate (8.5% at December  31,  1999) and
                                principal  and  interest  payments  are  due  in
                                twelve  equal  monthly  payments  commencing  on
                                September 1, 1999.  The remaining  principal and
                                accrued  interest  also  become due on the first
                                date on which (i) the  Company  receives  in any
                                transaction or series of transactions any equity
                                or debt  financing of at least $50.0  million or
                                (ii) Vogo receives in any  transaction or series
                                of transactions  any equity or debt financing of
                                at least  $5.0  million.  The note is secured by
                                all  the   acquired   assets  and   property  of
                                Connectsoft.  The  Company  repaid  the note and
                                accrued  interest  subsequent  to  December  31,
                                1999.


<PAGE>


                        (8)     In connection  with the  acquisition of Telekey,
                                the     Company     issued     an     unsecured,
                                non-interest-bearing    note    for    $150,000.
                                Principal  payments  are  due in  equal  monthly
                                payments through February 2000. Telekey also had
                                a $1.0  million line of credit due on demand and
                                bearing   interest   at  a   variable   rate  to
                                facilitate operational financing needs. The line
                                of credit was personally  guaranteed by previous
                                stockholders  of Telekey  and was due on demand.
                                This line of credit  expired in October 1999 and
                                the balance was repaid on November 2, 1999.

                        (9)     Effective  August 1, 1999, the Company  acquired
                                iGlobe.  In  connection  with this  transaction,
                                Highpoint  financed  working  capital for iGlobe
                                through the  closing  date for which the Company
                                has  issued  an   unsecured   note  payable  for
                                approximately  $1.8 million which was subject to
                                adjustment.  The  outstanding  past due  balance
                                bears interest at 15% per annum. As of March 24,
                                2000,  the  Company  has repaid  $713,000 of the
                                note and the parties are  currently  negotiating
                                payment terms on the remaining balance.

                        (10)    In  connection  with the  purchase  of ORS,  the
                                seller loaned ORS up to $451,000  which was used
                                to purchase and install  equipment and leasehold
                                improvements  at ORS'  new  facility  in  Miami,
                                Florida.  The  note  bears  interest  at 7%  and
                                principal  and  interest  are  due in six  equal
                                quarterly  installments  beginning  November 30,
                                1999. The Company  guaranteed  ORS'  obligations
                                under  this  loan  and   granted  the  seller  a
                                security  interest in its ownership  interest in
                                the LLC.


                                      F-43
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
5. NOTES PAYABLE        (11)    Effective  June 11, 1999,  Trans Global  entered
   AND LONG-                    into a financing  agreement to fund the purchase
   TERM DEBT                    of certain  switch  hardware and  software.  The
   (CON'T)                      note is payable  for a total of $3.3  million in
                                36   consecutive    monthly    installments   of
                                approximately  $105,000 (principal and interest)
                                at a fixed  interest rate of 8.88%.  The note is
                                collateralized  by the equipment which has a net
                                carrying  value of $2.9  million at December 31,
                                1999.

                        (12)    During  1999,  the  Company   acquired   certain
                                capital lease obligations of approximately  $5.0
                                million  through  its  acquisitions  of Telekey,
                                Connectsoft,  iGlobe and Coast as  discussed  in
                                Note 4. The Company is committed  under  various
                                capital   leases  for   certain   property   and
                                equipment.  These  leases  are for  terms  of 18
                                months to 36 months  and bear  interest  ranging
                                from 8.52% to 28.0%. Accumulated depreciation on
                                equipment   held   under   capital   leases  was
                                $1,395,000 and $150,000 at December 31, 1999 and
                                1998, respectively.

                                Notes  payable,  future  maturities of long-term
                                debt and future  minimum  lease  payments  under
                                capital lease  obligations  at December 31, 1999
                                are as follows:

<TABLE>
<CAPTION>
                                                                             NOTES PAYABLE
                                                                                AND
                                                                              LONG-TERM            CAPITAL
                           YEARS ENDING DECEMBER 31,                            DEBT                LEASES            TOTAL
                        ------------------------------------------------------------------------------------------------------
                           <S>                                                <C>               <C>                <C>
                           2000                                               $ 5,280,000       $ 3,252,000        $ 8,532,000
                           2001                                                 1,237,000         2,427,000          3,664,000
                           2002                                                   521,000           915,000          1,436,000
                           2003                                                     9,000                --              9,000
                           2004                                                    10,000                --             10,000
                           Thereafter                                             255,000                --            255,000
                        ------------------------------------------------------------------------------------------------------
                           Total payments                                       7,312,000         6,594,000         13,906,000
                           Less amounts
                             representing interest                                     --           844,000            844,000
                        ------------------------------------------------------------------------------------------------------
                           Principal payments                                   7,312,000         5,750,000         13,062,000
                           Less current maturities                              5,280,000         2,588,000          7,868,000
                        ------------------------------------------------------------------------------------------------------
                           Total long-term debt                               $ 2,032,000       $ 3,162,000        $ 5,194,000
                        ======================================================================================================
</TABLE>


                                      F-44
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
6. EARNINGS (LOSS)              Earnings per share are  calculated in accordance
   PER SHARE                    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 are  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
                                of   5,245,468,   2,538,159  and  2,020,822  and
                                warrants of  9,188,974,  4,093,167 and 1,391,667
                                were not included in diluted  earning (loss) per
                                share for the year ended  December 31, 1999, the
                                nine months ended December 31, 1998 and the 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, including dividends
                                payable in shares of common  stock,  stock to be
                                issued, and convertible  subordinated promissory
                                notes  convertible into 26,223,940 and 5,323,926
                                shares  of common  stock  were not  included  in
                                diluted  earnings  (loss) per share for the year
                                ended  December  31, 1999 and for the nine month
                                period ended  December  31, 1998,  respectively,
                                due to the loss for the  periods.  There  was no
                                convertible  preferred stock or convertible debt
                                outstanding at March 31, 1998.

                                Subsequent  to December  31,  1999,  the Company
                                issued  additional  preferred stock and warrants
                                convertible  into  shares of common  stock.  See
                                Note  10  for  discussion.   Also,  the  Company
                                renegotiated  the  terms  of a  preferred  stock
                                issuance   and  certain   preferred   stock  was
                                converted  into common  stock.  (See Note 16 for
                                discussion).  The shares of common stock and the
                                contingent  warrants  held  by the  LLC  and the
                                2,000,000  shares of common stock held in escrow
                                to  cover  eGlobe's  potential   indemnification
                                obligations   under  the  Trans  Global   merger
                                agreement,  are not included in the  computation
                                of basic and diluted loss per share.


                                      F-45
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
6. EARNINGS (LOSS)
   PER SHARE (CON'T)

<TABLE>
<CAPTION>
                                                                            YEAR                  NINE                 YEAR
                                                                           ENDED             MONTHS ENDED             ENDED
                                                                       DECEMBER 31,          DECEMBER 31,           MARCH 31,
                                                                           1999                  1998                 1998
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                   <C>                 <C>
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:

      NUMERATOR

        Net loss before extraordinary item                              $(53,203,000)         $ (5,958,000)       $ (11,257,000)
        Preferred stock dividends                                        (11,930,000)                   --                   --
                                                                        --------------------------------------------------------
        Net loss before extraordinary item
          attributable to common stockholders                            (65,133,000)           (5,958,000)         (11,257,000)
        Loss on early retirement of debt                                  (1,901,000)                   --                   --
                                                                        --------------------------------------------------------
        Net loss attributable to common stockholders                    $(67,034,000)         $ (5,958,000)       $ (11,257,000)
                                                                        --------------------------------------------------------
      DENOMINATOR
        Weighted average shares outstanding                               60,610,548            57,736,654           57,082,495
                                                                        --------------------------------------------------------
      PER SHARE AMOUNTS (BASIC AND DILUTED)

        Net loss before extraordinary item                                $    (1.08)            $    (0.10)          $    (0.20)
        Loss on early retirement of debt                                       (0.03)                    --                   --
                                                                        =========================================================
        Net loss per share                                                $    (1.11)            $   (0.10)          $    (0.20)
                                                                        =========================================================
</TABLE>


                                      F-46
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
-------------------------------------------------------------------------------
7. RELATED PARTY        NOTES PAYABLE AND LONG-TERM DEBT
   TRANSACTIONS
                        Notes  payable and long-term  debt with related  parties
                        consist of the following:

<TABLE>
<CAPTION>
                        DECEMBER 31,                                                           1999                  1998
                        ---------------------------------------------------------------------------------------------------
                        <S>                                                                 <C>                  <C>
                        Accounts receivable revolving credit note (1)                       $1,058,000           $       --
                        Secured notes, net of unamortized discount of
                             $7,128,000 and $0 (1)                                           7,806,000                   --

                        Promissory note of Coast (2)                                         3,000,000                   --

                        Promissory note of Coast (2)                                           250,000                   --

                        Promissory note payable to a stockholder, net of
                             unamoritized discount of $137,000 and $46,000 (3)                 863,000              954,000

                        Short-term loan from two officers and an investor (4)                       --              200,000
                        ---------------------------------------------------------------------------------------------------
                        Total, net of unamortized discount of $7,265,000
                             and $46,000                                                    12,977,000            1,154,000
                        Less current maturities, net of unamortized discount
                              of $2,988,000 and $46,000.                                     4,676,000            1,154,000
                        ---------------------------------------------------------------------------------------------------
                        Total long-term debt, net of unamortized discount
                        of  $4,277,000 and $0                                               $8,301,000           $       --
                        ===================================================================================================
</TABLE>

                        (1)     In April 1999,  the Company  entered into a loan
                                and note purchase  agreement with EXTL Investors
                                ("EXTL"),  which together with its affiliates is
                                the  Company's  largest  stockholder.  Under the
                                terms of this Loan and Note  Purchase  Agreement
                                ("Agreement"),   in  April  1999,   the  Company
                                initially received an unsecured loan ("Loan") of
                                $7.0  million  bearing  interest  at 8%  payable
                                monthly with  principal and  remaining  interest
                                due on the earlier of (i) April  2000,  (ii) the
                                date of closing of an  offering  by the  Company
                                from which the Company  received net proceeds of
                                $30.0  million or more,  or (iii) the closing of
                                the $20.0  million  purchase of the Company's 5%
                                Secured Notes. As additional consideration, EXTL
                                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  were   immediately   exercisable   and
                                1,000,000  warrants were exercisable only in the
                                event that the  stockholders did not approve the
                                repayment of the $20.0 million  credit  facility
                                committed  by EXTL in  shares  of the  Company's
                                common  stock and grant of  warrants to purchase
                                5,000,000  shares of the Company's  common stock
                                or the Company  elected not to draw it down. The
                                1,000,000  warrants  did not become  exercisable
                                because  both  the   stockholder   approval  was
                                received  and the  Company  elected to draw down
                                the funds as discussed below.

                                The value of approximately $2.9 million assigned
                                to  the  500,000  warrants  was  recorded  as  a
                                discount  to  the  note  payable  and  amortized
                                through July 1999 when the note was repaid.


                                      F-47
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. RELATED PARTY        Under the Agreement,  in July 1999, EXTL purchased $20.0
   TRANSACTIONS         million of 5%  Secured  Notes  ("Notes")  dated June 30,
   (CON'T)              1999  at  the  Company's   request.   The   transactions
                        contemplated  by  the  Agreement  were  approved  by the
                        Company's   stockholders  at  the  annual   stockholders
                        meeting in June 1999.  The initial $7.0 million note was
                        repaid from the proceeds of the Notes along with accrued
                        interest of $0.1 million.

                        As  additional  consideration  for the  Notes,  EXTL was
                        granted  warrants  vesting  over two years  expiring  in
                        three  years,  to  purchase   5,000,000  shares  of  the
                        Company's common stock at an exercise price of $1.00 per
                        share. The value assigned such warrants of approximately
                        $10.7  million  was  recorded as a discount to the Notes
                        and is being  amortized  over  the term of the  Notes as
                        additional interest expense.

                        Principal  and  interest on the Notes are  payable  over
                        three years in monthly installments commencing August 1,
                        1999 with a balloon  payment for the  remaining  balance
                        due on the  earlier  to occur of (i) June 30,  2002,  or
                        (ii)  the date of  closing  of an  offering  ("Qualified
                        Offering") by the Company of debt or equity  securities,
                        in  a  single   transaction   or   series   of   related
                        transactions,   from  which  the  Company  receives  net
                        proceeds of $100.0 million or more.  Alternatively,  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 or more 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.

                        Also, under the Agreement,  EXTL agreed to make advances
                        to the Company under a 5% Accounts Receivable  Revolving
                        Credit Note  ("Revolver") for an amount up to the lesser
                        of (1) 50% of eligible  receivables  (as defined) or (2)
                        the aggregate  amount of principal  that has been repaid
                        to date  ($1,066,000 as of December 31, 1999).  Interest
                        payments are due monthly with the unpaid  principal  and
                        interest on the Revolver due on the earliest to occur of
                        (i) the third  anniversary  of the  agreement,  June 30,
                        2002,  or  (ii)  the  date  of  closing  of a  Qualified
                        Offering as defined above.

                        In August 1999,  the Company and EXTL agreed to exchange
                        $4.0  million  of the  Notes  for 40  shares of Series J
                        Cumulative   Convertible   Preferred  Stock  ("Series  J
                        Preferred"). At the date of exchange, the carrying value
                        of the  $4.0  million  Notes,  net  of  the  unamortized
                        discount   of    approximately    $1.9   million,    was
                        approximately $2.1 million. The excess of the fair value
                        of the Series J Preferred Stock of $4.0 million over the
                        carrying value of the Notes of $1.9 million was recorded
                        as an  extraordinary  loss on early  retirement of debt.
                        The transaction  does not result in a tax benefit to the
                        Company. As a result of this agreement, the $4.0 million
                        is not subject to redraw under the  Revolver.  (See Note
                        10 for further discussion.)


                                      F-48
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. RELATED PARTY                These   Notes  and   Revolver   are  secured  by
   TRANSACTIONS                 substantially all of eGlobe's existing operating
   (CON'T)                      assets (excluding Trans Global) and eGlobe's and
                                IDX's accounts receivables, although the Company
                                can   pursue   certain   additional    permitted
                                financing,  including  equipment and  facilities
                                financing, for certain capital expenditures. The
                                Agreement  contains  certain debt  covenants and
                                restrictions by and on the Company,  as defined.
                                The  Company  was  in  arrears  on  a  scheduled
                                principal payment under this debt facility as of
                                December 31, 1999 for which it received a waiver
                                from EXTL through  January 1, 2001.  In addition
                                the Company was in default  under certain of its
                                other   debt   agreements   as   a   result   of
                                non-payments  of scheduled  payments at December
                                31, 1999 and obtained a waiver through  February
                                14,  2000 from EXTL.  The Company  repaid  these
                                other notes by February  14,  2000.  The Company
                                was  technically  in default under the Notes due
                                to the Company's  assumption of the Coast notes,
                                as  discussed  below in (2).  However,  in April
                                2000,  the  Agreement was amended and this event
                                of default was permanently cured as discussed in
                                Note 18.

                        (2)     Coast,   acquired  in  December  1999,  has  two
                                outstanding  unsecured  promissory notes with an
                                affiliate of EXTL for $3.0 million and $250,000.
                                The notes bear  interest at a variable rate (10%
                                at  December  31,  1999) and 11%,  respectively.
                                Interest on both notes is payable  monthly  with
                                the  principal due July 1, 2000 and November 29,
                                2000,  respectively.  A  change  of  control  is
                                considered   an  event  of  default   under  the
                                existing $3.0 million  note. In April 2000,  the
                                agreement  was  amended and the event of default
                                was permanently cured as discussed in Note 18.


<PAGE>


                        (3)     In June 1998, the Company  borrowed $1.0 million
                                from an  existing  stockholder  under an  8.875%
                                unsecured   note.   In   connection   with  this
                                transaction,  the  lender was  granted  warrants
                                expiring   September  2001  to  purchase  67,000
                                shares of the Company's  common stock at a price
                                of  $3.03  per  share.   The  stockholder   also
                                received  as  consideration  for the  loan,  the
                                repricing and  extension of an existing  warrant
                                for 55,000 shares  exercisable  before  February
                                2001 at a price of $3.75  per  share.  The value
                                assigned  to  such   warrants,   including   the
                                revision of terms, of approximately $69,000, was
                                recorded as a discount  to the note  payable and
                                was  amortized  over  the  term  of the  note as
                                interest  expense through  December 31, 1999. In
                                January 1999,  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 of $57,000  assigned
                                to  the   revision  in  terms  was  recorded  as
                                additional  debt  discount and was  amortized as
                                interest expense through December 31, 1999.

                                In August 1999, the Company entered into a stock
                                purchase  agreement with the lender.  Under this
                                agreement, the lender agreed to purchase 160,257
                                shares of common stock of the Company at a price
                                per share of $1.56  and  received  a warrant  to
                                purchase  60,000  shares of common  stock of the
                                Company   at  a  price   per   share  of  $1.00.
                                Additionally,  the lender  acquired an option to
                                exchange  the  principal  of the  note  (up to a
                                maximum  amount of $500,000)  for: (1) shares of
                                common stock of the Company at a price per share
                                of $1.56 and (2) warrants to purchase  shares of
                                common  stock of the Company at a price of $1.00
                                (60,000 shares per $250,000 of debt  exchanged).
                                The value of the maximum number of warrants that
                                would be issued  upon  exercise of the option of
                                approximately $71,000 was recorded as additional
                                debt  discount  and was  amortized  as  interest
                                expense through December 31, 1999.


                                      F-49
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. RELATED PARTY                Effective  December 16, 1999 the Company and the
   TRANSACTIONS                 lender extended the maturity date of the note to
   (CON'T)                      April 18, 2000 and  increased  the interest rate
                                on the balance  outstanding  from  December  18,
                                1999  to  maturity  to  14%.  Additionally,  the
                                option to  exchange  up to 50% of the  principal
                                balance for shares of common stock was increased
                                to  75%  under  the  same  terms  as   discussed
                                earlier.   As  a   result,   the  value  of  the
                                additional  60,000 warrants that would be issued
                                upon  exercise  of the  option of  $137,000  was
                                recorded as additional debt discount and will be
                                amortized as interest  expense through April 18,
                                2000.  The  value  of  $313,000  related  to the
                                excess  of the  market  value  of the  Company's
                                common stock over the conversion price under the
                                option was recorded as interest  expense because
                                the debt is  convertible  at the election of the
                                lender until April 2000.

                                During 1999,  the same  stockholder  loaned $0.2
                                million to the  Company  for short  term  needs.
                                This note was converted  into 125,000  shares of
                                common stock during 1999. Upon  conversion,  the
                                stockholder  was  issued  warrants  to  purchase
                                40,000  shares  of common  stock at an  exercise
                                price  of  $1.60  per  share  and   warrants  to
                                purchase  40,000  shares of  common  stock at an
                                exercise price of $1.00 per share.  The value of
                                $102,000  related to these warrants was recorded
                                as interest expense.

                        (4)     On  December  31,  1998,  two  officers  of  the
                                Company  each  loaned  $50,000  and an  investor
                                loaned  $100,000 to the  Company for  short-term
                                needs. The loans were repaid in 1999.

                        Future  maturities of notes  payable and long-term  debt
                        with  related  parties  at  December  31,  1999  are  as
                        follows:

<TABLE>
<CAPTION>
                           YEARS ENDING DECEMBER 31,                                                                TOTAL
                        ----------------------------------------------------------------------------------------------------
                           <S>                                                                                    <C>
                           2000                                                                                   $7,664,000
                           2001                                                                                    3,076,000
                           2002                                                                                    9,502,000
                        ----------------------------------------------------------------------------------------------------
                           Total principal payments                                                               20,242,000
                           Less unamortized discount                                                               7,265,000
                        ----------------------------------------------------------------------------------------------------
                           Total debt                                                                             12,977,000
                           Less current maturities, net of unamortized discount of $2,988,000                      4,676,000
                        ----------------------------------------------------------------------------------------------------
                           Total long-term debt, net of unamortized discount of $4,277,000                        $8,301,000
                        ====================================================================================================
</TABLE>


                                      F-50
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. RELATED PARTY        SETTLEMENT WITH PRINCIPAL STOCKHOLDER
   TRANSACTIONS
   (CON'T)              In November 1998, the Company  reached an agreement with
                        its former chairman,  Mr. Ronald Jensen, who at the time
                        was also the Company's largest  stockholder.  Mr. Jensen
                        is also a member of EXTL, the Company's  current 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  Stock"),  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
                        permitted  Mr.  Jensen to convert  the face value of the
                        preferred  stock to  common  stock at 90% of the  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 non-cash charge
                        to   the   Company's    statement   of   operations   of
                        approximately  $1.0  million  in the nine  months  ended
                        December 31, 1998.

                        In February  1999,  contemporaneous  with the  Company's
                        issuance of Series E Cumulative  Convertible  Redeemable
                        Preferred  Stock  ("Series E  Preferred  Stock") to EXTL
                        which is  discussed  below,  the  terms of the  Series C
                        Preferred  Stock were  amended  and the  Company  issued
                        3,000,000  shares of common stock in exchange for the 75
                        shares  of   outstanding   Series  C   Preferred   Stock
                        (convertible  into  1,875,000  shares of common stock on
                        the exchange  date).  The market value of the  1,125,000
                        incremental  shares of common  stock issued was recorded
                        as a  preferred  stock  dividend of  approximately  $2.2
                        million. See Note 10 for further discussion.


                                      F-51
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. RELATED PARTY        PREFERRED STOCK ISSUANCES
   TRANSACTIONS
   (CON'T)              In February 1999, the Company issued 50 shares of Series
                        E Preferred Stock to the Company's  largest  stockholder
                        for $5.0 million. See Note 10 for further discussion.

                        As discussed earlier, in August 1999, the Company issued
                        40 shares of Series J Preferred  Stock as  prepayment of
                        $4.0  million  of the  Secured  Notes.  See  Note 10 for
                        further discussion.

                        ACQUISITION OF COMPANIES

                        In December 1999, the Company acquired Coast,  which was
                        majority  owned by Mr.  Jensen.  See Note 4 for  further
                        discussion.   In   addition,   Coast   has   outstanding
                        promissory  notes with an affiliate of EXTL as discussed
                        above.

                        Effective August 1, 1999, the Company acquired iGlobe, a
                        wholly-owned  subsidiary  of HGP. An eGlobe  director is
                        the  president and chief  executive  officer of HGP. See
                        Note 4 for further discussion.

                        REDEEMABLE COMMON STOCK

                        Upon the execution of the Coast merger agreement, one of
                        the Coast  stockholders  signed an employment  agreement
                        with the Company.  Under a side letter to the employment
                        agreement,  the Company was obligated to repurchase  the
                        247,213  shares of common stock issued this  employee in
                        the  Coast   acquisition   for  $700,000  under  certain
                        conditions.   Accordingly,   the  redemption   value  of
                        $700,000 for these shares was reclassified and reflected
                        as  Redeemable   Common  Stock  at  December  31,  1999.
                        Subsequent to December 31, 1999,  this  employee  waived
                        the redemption feature. As a result, this amount will be
                        reclassified  to  stockholders'   equity  in  the  first
                        quarter of 2000.

                        OFFICE LEASES

                        A  company  owned  by  the  Co-Chairman,   director  and
                        significant stockholder of eGlobe leases certain offices
                        to the Company.  The monthly rent of these office leases
                        approximates   $50,000  through  March  31,  2003.  Rent
                        expense paid to companies  owned by the  stockholder was
                        approximately  $573,000,  $197,000  and $209,000 for the
                        year ended  December  31,  1999,  the nine months  ended
                        December  31,  1998 and the year ended  March 31,  1998,
                        respectively.


                                      F-52
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
8. PROXY RELATED        The Company, its former auditors, certain of its present
   LITIGATION AND       and former  directors  and others were  defendants  in a
   SETTLEMENT           consolidated  securities class action which alleged that
   COSTS                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 an Order and Final Judgment entered in this action
                        on September  21, 1998  pursuant to the  Stipulation  of
                        Settlement  dated  April 2,  1998,  the  Company  issued
                        350,000  shares of its common  stock  into a  Settlement
                        Fund that was  distributed  as of October 1999 among the
                        Class on whose behalf the action was brought.

                        As a result of the above action and related matters, the
                        Company  recorded $0.1 million and $3.9 million in costs
                        and expenses  during the nine months ended  December 31,
                        1998 and the year ended March 31, 1998.  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   related   to  the   Company's
                        obligation  under the Stipulation of Settlement to issue
                        additional  stock if the market  price of the  Company's
                        stock was less than $10.00 per share  during the defined
                        periods.   The  Company  had  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.  In March 2000,  that condition was satisfied and
                        the  Company  has  no  further   obligations  under  the
                        Stipulation of Settlement.

                        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 $81,000.


                                      F-53
<PAGE>


                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
9. OTHER                In  October  1999,  a major  telecommunications  carrier
   LITIGATION           filed suit  against  the Company  seeking  approximately
                        $2.5 million pursuant to various service contracts.  The
                        Company  disputes  the amounts  allegedly  owed based on
                        erroneous invoices,  the quality of service provided and
                        unfair and  deceptive  billing  practices.  The  Company
                        believes  it  has  substantial   counterclaims   and  is
                        vigorously  defending this suit. The ultimate outcome of
                        this litigation is unknown at this time.

                        In July 1999, a certain  transmission  vendor filed suit
                        against the  Company,  seeking to collect  approximately
                        $300,000.   The  Company  believes  it  has  substantial
                        counterclaims  and is  vigorously  defending  this  suit
                        based upon breach of contract.

                        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 the  items
                        discussed  above and such other  actions and claims will
                        not have a material  effect on the  financial  position,
                        operating results or cash flows of the Company.


                                      F-54
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       PREFERRED STOCK AND REDEEMABLE PREFERRED STOCK
    EQUITY
                        At the June  16,  1999  annual  stockholder  meeting,  a
                        proposal   to  amend  the   Company's   Certificate   of
                        Incorporation  to  increase  the  Company's   authorized
                        preferred  stock to 10,000,000 was approved and adopted.
                        Par value for all preferred  stock remained at $.001 per
                        share. In addition,  the stockholders  also approved and
                        adopted a prohibition on stockholders  increasing  their
                        percentage  of ownership of the Company above 30% of the
                        outstanding  stock or 40% on a fully diluted basis other
                        than by a  tender  offer  resulting  in the  stockholder
                        owning 85% or more of the outstanding  common stock. The
                        following  is a  summary  of  the  Company's  series  of
                        preferred   stock  and  the   amounts   authorized   and
                        outstanding at December 31, 1999 and 1998:

                                Series B Convertible  Preferred  Stock,  500,000
                                shares  authorized,  and 0 and  500,000  shares,
                                respectively,  issued  and  outstanding  (series
                                eliminated in December 1999).

                                8%  Series C  Cumulative  Convertible  Preferred
                                Stock, 275 shares  authorized,  0 and 75 shares,
                                respectively,  issued  and  outstanding  (series
                                eliminated in December 1999).

                                8%  Series D  Cumulative  Convertible  Preferred
                                Stock, 125 shares  authorized,  35 and 0 shares,
                                respectively,   issued  and  outstanding   ($3.5
                                million   aggregate   liquidation    preference)
                                (converted in January 2000).

                                8%  Series E  Cumulative  Convertible  Preferred
                                Stock, 125 shares  authorized,  50 and 0 shares,
                                respectively,  issued and outstanding (converted
                                on January 31, 2000).

                                Series F Convertible Preferred Stock,  2,020,000
                                authorized,     1,010,000    and    0    shares,
                                respectively,  issued and outstanding (converted
                                on January 3, 2000).

                                6% Series G  Cumulative  Convertible  Redeemable
                                Preferred Stock, 1 share  authorized,  no shares
                                issued and  outstanding  (series  eliminated  in
                                December 1999).


                                      F-55
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'               Series H Convertible  Preferred  Stock,  500,000
    EQUITY (CON'T)              shares   authorized,   500,000   and  0  shares,
                                respectively,  issued and outstanding (converted
                                on January 31, 2000).

                                Series   I   Convertible   Optional   Redemption
                                Preferred  Stock,   400,000  shares  authorized,
                                400,000 and 0 shares,  respectively,  issued and
                                outstanding   (150,000   shares   converted   on
                                February 14, 2000).

                                5%  Series J  Cumulative  Convertible  Preferred
                                Stock,  40 shares  authorized,  40 and 0 shares,
                                respectively,   issued  and  outstanding   ($4.0
                                million   aggregate   liquidation    preference)
                                (converted on January 31, 2000).

                                5%  Series K  Cumulative  Convertible  Preferred
                                Stock,  30 shares  authorized,  30 and 0 shares,
                                respectively,   issued  and  outstanding   ($3.0
                                million   aggregate   liquidation    preference)
                                (converted on January 31, 2000).

                                20%  Series M  Convertible  Preferred  Stock,  1
                                share authorized,  1 and 0 share,  respectively,
                                issued and outstanding  ($9.0 million  aggregate
                                liquidation preference).

                                8%  Series N  Cumulative  Convertible  Preferred
                                Stock,  20,000  shares  authorized,  1,535 and 0
                                shares,  respectively,  issued  and  outstanding
                                ($1.5 million liquidation preference) (converted
                                during January 2000).

                                Series O  Convertible  Preferred  Stock,  16,100
                                shares   authorized,   16,100   and  0   shares,
                                respectively,   issued  and  outstanding  ($16.0
                                million aggregate liquidation preference).

                        Following  is a detailed  discussion  of each  series of
                        preferred  stock  outstanding  at December  31, 1999 and
                        1998:


                                      F-56
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Series B Convertible Preferred Stock
    EQUITY (CON'T)
                        On December 2, 1998,  the Company  issued 500,000 shares
                        of  Series B  Preferred  Stock  valued  at $3.5  million
                        (value  increased  an  additional  $1.5  million in June
                        1999) in connection with the acquisition of IDX. In July
                        1999,  the  Company  renegotiated  the  terms of the IDX
                        purchase  agreement with the IDX stockholders.  Pursuant
                        to the renegotiations,  the Series B Preferred Stock was
                        reacquired by the Company in exchange for 500,000 shares
                        of Series H Preferred Stock. As a result of the exchange
                        agreement,  the Company  recorded the excess of the fair
                        market  value  of  the  new  preferred  stock  over  the
                        carrying value of the reacquired  preferred  stock, as a
                        dividend  to the  Series  B  Preferred  stockholders  of
                        approximately   $6.0   million.   Pursuant   to  further
                        renegotiations  in  December  1999,  this  dividend  was
                        reduced by approximately  $1.4 million.  (See Note 4 for
                        further discussion).

                        8% Series C Cumulative Convertible Preferred Stock

                        In November 1998, in connection  with a settlement  with
                        the  Company's  largest  stockholder  (see  Note 7),  75
                        shares of Series C  Preferred  Stock were  issued to Mr.
                        Ronald Jensen in exchange for 1,425,000 shares of common
                        stock.  The  terms  of  the  Series  C  Preferred  Stock
                        permitted  the holders to convert the Series C Preferred
                        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 a maximum  conversion price of $6.00
                        per share,  subject to adjustment if the Company  issued
                        common stock for less than the conversion price.

                        In February 1999, the Company issued 3,000,000 shares of
                        common   stock  in   exchange   for  the  75  shares  of
                        outstanding  Series C Preferred Stock.  This transaction
                        was  contemporaneous  with  the  Company's  issuance  of
                        Series E Preferred  Stock to EXTL,  an  affiliate of Mr.
                        Jensen,  which  is  discussed  below.  See  Note  7  for
                        discussion of this transaction.

                        Series D Cumulative Convertible Preferred Stock

                        In January 1999,  the Company issued 30 shares of Series
                        Preferred  Stock  ("Series  D  Preferred  Stock")  to  a
                        private  investment  firm  for  gross  proceeds  of $3.0
                        million.  The holder agreed to purchase for $2.0 million
                        20  additional  shares of Series D Preferred  Stock 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.


                                      F-57
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10.STOCKHOLDERS'        Upon  the  Company's  registration  in May  1999  of the
   EQUITY (CON'T)       common stock  issuable upon the conversion of the Series
                        D Preferred Stock, the investor  purchased 20 additional
                        shares of Series D Preferred Stock and warrants for $2.0
                        million 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.

                        The value of  approximately  $634,000  assigned to these
                        warrants  when  granted  was  originally  recorded  as a
                        discount  to  the  Series  D  Preferred   Stock.   These
                        discounts  were  amortized  as  deemed  preferred  stock
                        dividends  over the periods from the dates of the grants
                        to the dates that the  Series D  Preferred  Stock  could
                        first be converted  into common stock defined as 90 days
                        from issuance. On August 20, 1999, the exercise price of
                        $1.60 for  100,000  warrants  was  lowered  to $1.44 per
                        share.  The value assigned to this revision in terms was
                        recorded as a preferred  stock  dividend.  In connection
                        with the revision in terms,  the investor  exercised the
                        warrants to purchase  100,000 shares at a price of $1.44
                        per share and  warrants  to  purchase  75,000  shares at
                        $0.01 per share.  As of December 31,  1999,  warrants to
                        purchase   112,500   shares  at  $0.01  per  share  were
                        outstanding.

                        Due to the  Company's  failure to  consummate a specific
                        merger  transaction  by May 30, 1999, the Company issued
                        to the investor a warrant  exercisable  beginning August
                        1999 to purchase  76,923  shares of common stock with an
                        exercise price of $.01 per share.  The value of $250,000
                        assigned  to the  warrant  was  recorded  as a preferred
                        stock  dividend.  The warrant is  exercisable  for three
                        years.  In August  1999,  the investor  exercised  these
                        warrants.

                        The Series D Preferred  Stock carried an annual dividend
                        of 8%, payable  quarterly  beginning  December 31, 1999.
                        All  dividends  that would accrue  through  December 31,
                        2000 on each  share of  Series  D  Preferred  Stock  are
                        payable  in full upon  conversion  of such  share.  As a
                        result, dividends through December 31, 2000 were accrued
                        over the period from the issuance  date to the date that
                        the Series D Preferred Stock could first be converted by
                        the holder. The Company accrued  approximately  $477,000
                        (net of  $240,000  included in the 1999  conversion)  in
                        cumulative  Series D  Preferred  Stock  dividends  as of
                        December  31,  1999.  The  shares of Series D  Preferred
                        Stock were  convertible,  at the holder's  option,  into
                        shares of the  Company's  common stock any time after 90
                        days from issuance at a conversion price equal to $1.60.
                        The  shares of Series D  Preferred  Stock  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  $20.0
                        million.


                                      F-58
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       In December 1999, 15 shares of Series D Preferred  Stock
    EQUITY (CON'T)      were converted  into  1,087,500  shares of common stock.
                        Subsequent to December 31, 1999, the remaining 35 shares
                        of  Series  D  Preferred   Stock  were   converted  into
                        2,537,500  shares of common stock.  The shares of common
                        stock issued upon  conversion of the 50 shares of Series
                        D Preferred Stock included payment for dividends through
                        December 31, 2000.

                        Series E Cumulative Convertible Preferred Stock

                        In February 1999, the Company issued 50 shares of Series
                        E Preferred Stock to the Company's largest  stockholder,
                        for  gross  proceeds  of  $5.0  million.  The  Series  E
                        Preferred  Stock  carried  an  annual  dividend  of  8%,
                        payable  quarterly  beginning  December  31,  2000.  All
                        dividends that would accrue through December 31, 2000 on
                        each share of Series E  Preferred  Stock are  payable in
                        full  upon  conversion  of  such  share.  As  a  result,
                        dividends  through  December  31, 2000 were accrued over
                        the period from the  issuance  date to the date that the
                        Series E Preferred Stock could first be converted by the
                        holder.  The Company accrued  approximately  $750,000 in
                        Series E Preferred  Stock  dividends  as of December 31,
                        1999. As additional consideration, the Company issued 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 value of
                        $1.1 million assigned to such warrants was recorded as a
                        deemed  dividend  when  granted  because  the  Series  E
                        Preferred  Stock was  convertible at the election of the
                        holder at the issuance  date. In connection  with a debt
                        placement  concluded  in April  1999 (see  Note 7),  the
                        Series E  Preferred  Stockholder  elected  to make  such
                        shares  convertible;  accordingly,  such  shares were no
                        longer redeemable.

                        The  shares of Series E  Preferred  Stock  automatically
                        convert into shares of the Company's  common  stock,  on
                        the  earliest to occur of (a) 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, (b) the date that 80% or
                        more of the Series E Preferred  Stock has been converted
                        into common stock, or (c) 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 $20.0 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.


                                      F-59
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       On  January  31,  2000,  the  Series E  Preferred  Stock
    EQUITY (CON'T)      automatically  converted into 2,352,941 shares of common
                        stock because the last  reported  closing sales price of
                        the  Company's   common  stock  was  over  the  required
                        threshold for the requisite number of trading days.

                        Series F Convertible Preferred Stock

                        As  discussed in Note 4, in February  1999,  the Company
                        completed  the  acquisition  of  Telekey.  The  purchase
                        consideration  included the issuance of 1,010,000 shares
                        of Series F Preferred  Stock valued at  $1,957,000.  The
                        Company  originally agreed to issue at least 505,000 and
                        up  to  an  additional  1,010,000  shares  of  Series  F
                        Preferred  Stock 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 505,000  shares  valued at $979,000  are included in
                        stock  to be  issued  in the  accompanying  supplemental
                        consolidated balance sheet.

                        The shares of Series F Preferred Stock initially  issued
                        automatically convert into shares of common stock on the
                        earlier  to occur of (a) the first  date as of which the
                        market  price is  $4.00  or more for any 15  consecutive
                        trading  days  during  any  period  that  the  Series  F
                        Preferred Stock is outstanding, or (b) July 1, 2001. The
                        Company  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
                        defined revenue and EBITDA objectives.

                        On December 31, 1999,  the market price of the Company's
                        common stock exceeded  $4.00;  therefore,  no additional
                        shares  were  issuable.  On January 3, 2000,  the former
                        stockholders   of  Telekey   converted   their  combined
                        1,010,000  shares of  Series F  Preferred  Stock  into a
                        total of 1,209,584 shares of common stock.

                        In  February  2000,  the Company  reached a  preliminary
                        agreement  with the  former  stockholders  of Telekey to
                        restructure  certain  terms of the original  acquisition
                        agreement.  Such  restructuring,  which  is  subject  to
                        completion   of   final   documentation,   includes   an
                        acceleration  of the original  earn-out  provision.  See
                        Note 4.


                                      F-60
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Series G  Cumulative  Convertible  Redeemable  Preferred
    EQUITY (CON'T)      Stock

                        In connection with the purchase of substantially  all of
                        the assets of  Connectsoft in June 1999, as discussed in
                        Note 4,  the  Company  issued  one  share  of  Series  G
                        Preferred  Stock  valued at $3.0  million.  The Series G
                        Preferred  Stock  carried  an  annual  dividend  of  6%,
                        payable annually beginning September 30, 2000. In August
                        1999, the Company issued 30 shares of Series K Preferred
                        Stock  in  exchange  for  the  one  share  of  Series  G
                        Preferred  Stock.  This  exchange is  discussed  in more
                        detail below.

                        Series H Convertible Preferred Stock

                        In July  1999,  the  Company  issued  500,000  shares of
                        Series  H   Preferred   Stock   originally   valued   at
                        approximately  $11.0  million in  exchange  for  500,000
                        shares of Series B Preferred.  See Note 4 for discussion
                        of the  exchange  agreement.  The  shares  of  Series  H
                        Preferred Stock convert  automatically into a maximum of
                        3,750,000 shares of common stock,  subject to adjustment
                        as  described  below,  on January 31, 2000 or earlier if
                        the closing  sale price of the common  stock is equal to
                        or greater than $6.00 for 15  consecutive  trading days.
                        Providing   the  Series  H   Preferred   Stock  had  not
                        converted,  the Company  guaranteed a price of $6.00 per
                        share on January 31, 2000.

                        In December 1999,  the Company and the IDX  stockholders
                        agreed  to  reduce  the  preferred  stock  and  warrants
                        consideration  paid to the IDX stockholders as discussed
                        in Note 4. As a result of this renegotiation,  the value
                        of the shares of Series H Preferred Stock was reduced by
                        $1.4 million.  As a result,  the shares were convertible
                        into a maximum of 3,262,500 shares at December 31, 1999.

                        On January  31,  2000,  the shares of Series H Preferred
                        Stock  automatically  converted into 3,262,500 shares of
                        common stock (reflecting the above adjustment negotiated
                        in December 1999).


                                      F-61
<PAGE>
                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Series I Convertible Optional Redemption Preferred Stock
    EQUITY (CON'T)

                        In July  1999,  the  Company  issued  400,000  shares of
                        Series I Preferred  Stock in exchange for notes  payable
                        of $4.0 million due to the IDX stockholders.  See Note 4
                        for  discussion of  renegotiations.  The Company had the
                        option,  which the Company did not  exercise,  to redeem
                        150,000 shares of the Series I Preferred  Stock prior to
                        February 14, 2000 at a price of $10.00 per share plus 8%
                        of the value of Series I Preferred  Stock per annum from
                        December  2, 1998  through the date of  redemption.  The
                        Company still has an option to redeem  250,000 shares of
                        Series I  Preferred  Stock  prior to July 17,  2000 at a
                        price of $10.00 per share plus 8% of the value of Series
                        I  Preferred  Stock  per  annum  from  December  2, 1998
                        through the date of redemption for cash, common stock or
                        a combination  of the two. Any Series I Preferred  Stock
                        not redeemed by the  applicable  dates  discussed  above
                        automatically  converts  into  common  stock  based on a
                        conversion  price of $10.00  per share plus 8% per annum
                        of the  value  of the  Series  I  Preferred  Stock  from
                        December 2, 1998 through the date of conversion  divided
                        by the  greater of the average  closing  price of common
                        stock over the 15 days  immediately  prior to conversion
                        or $2.00 up to a maximum of 3.9 million shares of common
                        stock.  The  Company  made a written  election in August
                        1999 to pay the 8% of the  value  in  shares  of  common
                        stock upon redemption or conversion.

                        On February  14,  2000,  150,000  shares of the Series I
                        Preferred  Stock  plus  the  8%  accrual  of  the  value
                        automatically  converted  into 166,304  shares of common
                        stock.

                        Series J Cumulative Convertible Preferred Stock

                        In August 1999,  the Company  reached an agreement  with
                        EXTL which was  finalized  in November  1999 whereby the
                        Company  issued to EXTL 40 shares of Series J  Preferred
                        Stock  valued  at $4.0  million  as  prepayment  of $4.0
                        million of the  outstanding  $20.0 million Secured Notes
                        issued to EXTL. (See Note 7 for discussion).


                                      F-62
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       The Series J Preferred  Stock carries an annual dividend
    EQUITY (CON'T)      of 5% which is payable quarterly, beginning December 31,
                        2000. The Company has accrued  approximately  $29,000 in
                        cumulative  Series J  Preferred  Stock  dividends  as of
                        December  31,  1999.  The  shares of Series J  Preferred
                        Stock are  convertible,  at the  holder's  option,  into
                        shares of the  Company's  common  stock at any time at a
                        conversion  price,  subject to  adjustment  for  certain
                        defined events,  equal to $1.56.  The shares of Series J
                        Preferred   Stock   automatically   converts   into  the
                        Company's  common stock, on the earliest to occur of (i)
                        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 Series J Preferred Stock is outstanding,  (ii) the
                        date that 80% or more of the  Series J  Preferred  Stock
                        the  Company  has  issued  has been  converted  into the
                        Company's common stock, or (iii) 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 $20.0 million.

                        On  January  31,  2000,  the  Series J  Preferred  Stock
                        automatically  converted into 2,564,102 shares of common
                        stock because the last  reported  closing sales price of
                        the  Company's   common  stock  was  over  the  required
                        threshold for the requisite number of trading days.

                        Series K Cumulative Convertible Preferred Stock

                        In August 1999, the Company  reached an agreement  under
                        which it issued 30  shares of Series K  Preferred  Stock
                        valued at $3.0  million in exchange for the one share of
                        its Series G Preferred  Stock. The carrying value of the
                        Series G Preferred  Stock exceeded the fair value of the
                        Series K Preferred  Stock  because of accrued  dividends
                        that were not paid pursuant to the exchange.  The excess
                        of  $36,000  reduced  the loss  attributable  to  common
                        stockholders.


                                      F-63
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       The Series K Preferred  Stock carries an annual dividend
    EQUITY (CON'T)      of 5% which is payable quarterly, beginning December 31,
                        2000. All dividends  that would accrue through  December
                        31, 2000 on each share of Series K  Preferred  Stock are
                        payable  in full upon  conversion  of such  share.  As a
                        result, dividends through December 31, 2000 were accrued
                        over the period from the issuance  date to the date that
                        the Series K Preferred Stock could first be converted by
                        the holder. The Company accrued  approximately  $200,000
                        in Series K Preferred Stock  cumulative  dividends as of
                        December  31,  1999.  The  shares of Series K  Preferred
                        Stock are  convertible,  at the  holder's  option,  into
                        shares of the  Company's  common  stock at any time at a
                        conversion  price equal to $1.56,  subject to adjustment
                        for  certain  defined  events.  The  shares  of Series K
                        Preferred Stock automatically convert into the Company's
                        common stock,  on the earliest to occur of (i) 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 Series K Preferred Stock is outstanding,  (ii) the
                        date that 80% or more of the  Series K  Preferred  Stock
                        the  Company  has  issued  has been  converted  into the
                        Company's common stock, or (iii) 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 $20.0 million.

                        On  January  31,  2000,  the  Series K  Preferred  Stock
                        automatically  converted into 1,923,077 shares of common
                        stock because the closing price of the Company's  common
                        stock was over the required  threshold for the requisite
                        number of trading days.


                                      F-64
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Series M Convertible Preferred Stock
    EQUITY (CON'T)
                        In October 1999,  the Company issued one share of Series
                        M Preferred  Stock valued at $9.6 million in  connection
                        with the acquisition of iGlobe.  The one share of Series
                        M  Preferred  Stock  has a  liquidation  value  of  $9.0
                        million and carries an annual cumulative dividend of 20%
                        which  will  accrue  and  be  payable   annually  or  at
                        conversion  in cash or shares of  common  stock,  at the
                        option of the Company.  The Company accrued  $380,000 in
                        Series M Preferred  Stock  dividends  as of December 31,
                        1999. The above market dividend resulted in a premium of
                        $643,000  which will be amortized as a deemed  preferred
                        dividend  stock  over  the  one  year  period  from  the
                        issuance  date  through   October  2000.  The  Series  M
                        Preferred  Stock is  convertible,  at the  option of the
                        holder,  one year after the issue  date at a  conversion
                        price of $2.385.  The Company recorded a dividend on the
                        Series M Preferred Stock of  approximately  $1.4 million
                        for  the  beneficial  conversion  feature  based  on the
                        excess  of  the  common  stock   closing  price  on  the
                        effective  date of the  acquisition  over the conversion
                        price.  This  dividend  will be  amortized  as a  deemed
                        preferred  dividend  over the one year  period  from the
                        date of issuance.

                        The  Company  has the  right,  at any time  prior to the
                        holder's   exercise  of  its   conversion   rights,   to
                        repurchase the Series M Preferred  Stock for cash upon a
                        determination  by eGlobe's  Board that it has sufficient
                        cash to fund operations and make the purchase. The share
                        of  Series M  Preferred  Stock  shall  automatically  be
                        converted  into  shares  of common  stock,  based on the
                        then-effective conversion rate, on the earliest to occur
                        of (but no earlier than one year from  issuance) (i) the
                        first date as of which the last reported  sales price of
                        the common stock is $5.00 or more for any 10 consecutive
                        trading  days  during  any  period  in  which  Series  M
                        Preferred  Stock is  outstanding,  (ii) the date that is
                        seven years after the issue date, or (iii) the date upon
                        which the  Company  closes a public  offering  of equity
                        securities  of the  Company at a price of at least $4.00
                        per  share and with  gross  proceeds  of at least  $20.0
                        million.


                                      F-65
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Series N Cumulative Convertible Preferred Stock
    EQUITY (CON'T)
                        During October and November 1999, the Company sold 2,670
                        shares  of 8%  Series  N  Preferred  Stock  and  304,636
                        warrants for gross proceeds of $2.7 million.  The Series
                        N Preferred Stock carries an 8% annual dividend  payable
                        in cash or common  stock at the holder's  option,  or in
                        the  absence  of an  election  of  the  holder,  at  the
                        election of the Company.  The Company accrued $45,000 in
                        Series N Preferred  Stock  dividends  as of December 31,
                        1999.

                        The shares of Series N Preferred  Stock are  immediately
                        convertible,  at the holder's option, into shares of the
                        Company's  common stock at a  conversion  price equal to
                        the  greater of $2.125 and 101% of the  average  closing
                        market  price  per  share  of  common  stock  for the 15
                        trading  days  prior to the  binding  commitment  of the
                        holder to  invest  (provided  however  that no shares of
                        Series N Preferred  Stock sold after the first  issuance
                        shall have an initial conversion price below the initial
                        conversion of the shares sold at first  issuance) or 85%
                        of the market price per share of common stock, computing
                        the  market  price  per share  for the  purpose  of such
                        conversion as equal to the average  closing market price
                        per share for the five trading days immediately prior to
                        the   conversion   date,   provided   however  that  the
                        conversion  price shall not be greater  than the greater
                        of $3.25 or 150% of the initial  conversion  price.  The
                        Company recorded  dividends at issuance of approximately
                        $230,000 for the beneficial  conversion feature based on
                        the excess of the common  stock market price on the date
                        of the issuance over the conversion price.

                        The Series N Preferred Stock automatically converts into
                        shares of common  stock on the earliest to occur of: (i)
                        the date that is the fifth  anniversary  of the issuance
                        of Series N Preferred  Stock;  (ii) the first date as of
                        which the last reported  sales price of the common stock
                        on  Nasdaq  is  $6.00  or more  for  any 15  consecutive
                        trading  days  during  any  period  in  which  Series  N
                        Preferred Stock is outstanding;  (iii) the date that 80%
                        or more of the Series N Preferred  issued by the Company
                        has  been  converted  into  common  stock,  the  holders
                        thereof  have  agreed  with the  Company  in  writing to
                        convert such Series N Preferred  Stock into common stock
                        or a combination of the  foregoing;  or (iv) the Company
                        closes a public  offering  of equity  securities  of the
                        Company with gross proceeds of at least $25.0 million.


                                      F-66
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       The warrants are  exercisable one year from issuance and
    EQUITY (CON'T)      expire three years from  issuance.  The exercise  prices
                        vary from $3 to $5 per share.  In addition,  the holders
                        may elect to make a cash-less exercise. The value of the
                        warrants of $423,000  was  recorded as a dividend at the
                        issuance  date  because the Series N Preferred  Stock is
                        immediately convertible.

                        During December 1999, 1,135 shares of Series N Preferred
                        Stock  were  converted  into  457,162  shares  of common
                        stock.  Subsequent  to December 31, 1999,  the remaining
                        shares  of  Series  N  Preferred  Stock  outstanding  at
                        December 31, 1999 were  converted into 375,263 shares of
                        common stock.

                        See Note 16 for a  discussion  of  additional  shares of
                        Series N Preferred  Stock sold and converted  subsequent
                        to year end.

                        Due to a delay in  registering  shares of the  Company's
                        common  stock,  in February  2000,  the  Company  issued
                        warrants to certain Series N Preferred  Stockholders  to
                        purchase 200,000 shares of the Company's common stock at
                        a price  per  share  equal to $7.50.  The  warrants  are
                        exercisable in whole or in part at any time beginning on
                        the date  that is one year  after  the date of  issuance
                        until the third anniversary of the date of issuance.

                        Series O Convertible Preferred Stock

                        In December  1999,  the Company  issued 16,100 shares of
                        Series  O  Preferred   Stock  in  connection   with  the
                        acquisition of Coast. See Note 4 for further discussion.
                        The estimated  value of the Series O Preferred  Stock of
                        $13.4 million is based upon a preliminary appraisal. The
                        Series O Preferred  Stock carries an annual  dividend of
                        10%. All dividends  that would accrue  through  November
                        30, 2001 on each share of Series O  Preferred  Stock are
                        payable  in full  upon  conversion  of such  share.  The
                        preliminary  appraisal  includes a present value of $2.5
                        million for  dividends  through  November 30, 2001.  The
                        difference   between  the  undiscounted   value  of  the
                        dividends  and  $2.5  million  is  being  accrued  as  a
                        dividend  over the period  that the  Series O  Preferred
                        Stock could first be converted by the holder.


                                      F-67
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       The   shares  of  Series  O   Preferred   Stock  have  a
    EQUITY (CON'T)      liquidation  value of $16.1 million and are convertible,
                        at the holder's option,  into a maximum 3,220,000 shares
                        of common  stock at any time  after the later of (a) one
                        year  after  the date of  issuance  and (b) the date the
                        Company  has  received  stockholder  approval  for  such
                        conversion and the applicable  Hart-Scott-Rodino waiting
                        period has expired or terminated (the "Clearance Date"),
                        at a  conversion  price  equal to $5.00.  The  shares of
                        Series O Preferred Stock will automatically be converted
                        into shares of common stock, on the earliest to occur of
                        (i) the  fifth  anniversary  of the  first  issuance  of
                        Series O  Preferred  Stock,  (ii) the  first  date as of
                        which the last  reported  sales price of common stock on
                        Nasdaq is $6.00 or more for any 15  consecutive  trading
                        days during any period in which Series O Preferred Stock
                        is  outstanding,  (iii) the date that 80% or more of the
                        Series O  Preferred  Stock the  Company  issued has been
                        converted  into  common  stock,   or  (iv)  the  Company
                        completes a public  offering of equity  securities  with
                        gross  proceeds to the Company of at least $25.0 million
                        at a price  per  share  of  $5.00.  Notwithstanding  the
                        foregoing,  the  Series O  Preferred  Stock  will not be
                        converted  into the Company's  common stock prior to the
                        Company's  receipt  of  stockholder  approval  for  such
                        conversion,  which was  obtained  at the March 23,  2000
                        stockholders' meeting, and the expiration or termination
                        of the applicable  Hart-Scott-Rodino  waiting period. If
                        the events  discussed above occur prior to the Clearance
                        Date,  the  automatic   conversion  will  occur  on  the
                        Clearance Date.

                        On January  26,  2000,  the  closing  sales price of the
                        Company's   common  stock  was  $6.00  or  more  for  15
                        consecutive   trading  days  and  accordingly,   on  the
                        Clearance Date, the outstanding Series O Preferred Stock
                        will be converted into 3,220,000 shares of common stock.

                        COMMON STOCK

                        At the March 23, 2000 stockholders'  meeting, a proposal
                        to  amend  the   Company's   Restated   Certificate   of
                        Incorporation  to  increase  the  Company's   authorized
                        number  of  shares  of   common   stock   available   to
                        200,000,000 was approved and adopted.

                        In November  1998, the Company agreed to issue 75 shares
                        of  Series  C  Preferred   Stock  in  exchange  for  the
                        1,425,000  shares of common stock  originally  valued at
                        $7.5 million as described  above. As discussed  earlier,
                        in February 1999, the Company issued 3,000,000 shares of
                        common stock in exchange for these outstanding shares of
                        Series C Preferred Stock.


                                      F-68
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       During the nine months  ended  December 31, 1998 and the
    EQUITY (CON'T)      year ended March 31, 1998,  the Company  agreed to issue
                        28,700  shares  valued at $81,000 and 350,000  shares of
                        common stock valued at $3.5 million in  connection  with
                        the  settlement  of  litigation.  See Note 8 for further
                        discussion.  Additionally,  in June  1999,  the  Company
                        issued  to  a  former  employee  54,473  shares  of  the
                        Company's  common stock valued at $99,000 in  settlement
                        of certain potential claims.

                        In December  1998,  the Company  issued 62,500 shares of
                        common stock valued at $102,000 in the UCI  acquisition.
                        During 1999, the Company issued 526,063 shares of common
                        stock amounting to $1,645,000 as payment of the first of
                        two   installments   under  the  Swiftcall   acquisition
                        agreement,  1.5  million  shares  of  common  stock  and
                        warrants to purchase  additional  shares of common stock
                        in connection with its acquisition of control of ORS and
                        882,904  shares  (prior to the  reclassification  of the
                        value  of  247,213  shares  reclassified  to  Redeemable
                        Common Stock valued at $0.7 million as discussed in Note
                        7) of common stock valued at  $2,980,000  in  connection
                        with the  acquisition  of  Coast.  See Notes 4 and 7 for
                        discussion of acquisitions.

                        In March 1999,  the Company  elected to pay the IDX $1.0
                        million promissory note and accrued interest with shares
                        of common stock.  The Company  issued  431,729 shares of
                        common stock and warrants to purchase  43,173  shares of
                        common stock  valued at  $1,023,000  to  discharge  this
                        indebtedness.  In July 1999,  the Company issued 140,599
                        shares of common  stock  valued at $433,000 in repayment
                        of  the  $418,000  note  and  related  accrued  interest
                        related to the IDX  acquisition.  In  addition,  in July
                        1999,  the Company  repaid a $200,000  note payable with
                        125,000  shares of common stock  valued at $200,000.  In
                        connection  with  this  transaction,  the  Company  also
                        issued  warrants to purchase  40,000 common shares at an
                        exercise price of $1.60 and a warrant to purchase 40,000
                        common  shares at an exercise  price of $1.00 per share.
                        See Notes 4 and 7 for discussion.


                                      F-69
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       In  August  1999,  the  Company  entered  into  a  stock
    EQUITY (CON'T)      purchase  agreement with a long time  stockholder  and a
                        lender. Under this agreement, for $250,000, the investor
                        purchased 160,257 shares of common stock and warrants to
                        purchase  60,000  shares of common  stock at an exercise
                        price of $1.00 per share and the option to exchange  the
                        principal of an existing note (up to a maximum amount of
                        $500,000)  for  shares  of  common  stock at a price per
                        share of $1.56  and a  warrant  to  purchase  shares  of
                        common stock at a price of $1.00 (60,000 per $250,000 of
                        debt  exchanged).  On December  16,  1999,  the lender's
                        option to convert the loan  principal  outstanding  into
                        common stock was increased from a maximum of $500,000 to
                        $750,000 and therefore a maximum of 180,000 warrants can
                        now be issued. (See Note 7 for further discussion).

                        On  December  23,  1999,  the  Company  entered  into  a
                        promissory  note with a bank,  as amended on February 1,
                        2000,  for a  principal  amount  of  $14.0  million.  In
                        connection  with  the note  agreement,  a  security  and
                        pledge agreement was signed whereby the Company assigned
                        all of its rights to 4,961,000  shares of eGlobe  common
                        stock  to  the  lender.   The  Company  and  the  lender
                        concurrently  entered  into a stock  purchase  agreement
                        whereby the lender  purchased the shares in exchange for
                        a $30.0 million stock purchase note. However, the lender
                        failed  to fund the note on a timely  basis and in March
                        2000,   eGlobe   advised   the  lender  that  they  were
                        terminating the agreement and demanded the lender return
                        eGlobe's stock  certificates.  As of March 24, 2000, the
                        lender has not returned the certificates. Such shares of
                        common stock are included in the  outstanding  shares at
                        December 31, 1999 at par value.

                        In  the  year  ended  December  31,  1999,  the  Company
                        received  proceeds of  approximately  $721,000  from the
                        exercise  of  warrants  to acquire  1,168,518  shares of
                        common  stock.  No warrants  were  exercised in the nine
                        months  ended  December  31,  1998  and the  year  ended
                        March 31, 1998.

                        In the year ended  December 31, 1999, and the year ended
                        March  31,  1998,  the  Company  received   proceeds  of
                        approximately  $61,000 and $138,000 from the exercise of
                        options and stock appreciation  rights to acquire 39,517
                        and  18,348  shares of common  stock,  respectively.  No
                        proceeds  were  received  during the nine  months  ended
                        December 31, 1998.


                                      F-70
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Notes Receivable from Stock Sales
    EQUITY (CON'T)
                        The Company  loaned  certain of its  executive  officers
                        money in connection with their exercise of non-qualified
                        stock options in December 1999. The notes  receivable of
                        $1,210,000  are full recourse  promissory  notes bearing
                        interest  at 6% and are  collateralized  by the  430,128
                        shares  of  stock  issued  upon  exercise  of the  stock
                        options.  Interest is payable  quarterly  in arrears and
                        principal  is due the earlier of (a) for $177,000 of the
                        notes  December 16, 2003 and for $1,033,000 of the notes
                        December 16, 2004 and (b) the date that is 90 days after
                        the date  that  the  employee's  employment  terminates,
                        unless such  termination  occurs  other than "for cause"
                        (as  defined).  The  employee  also  agrees to  promptly
                        redeem the  outstanding  note  balances upon the sale of
                        the underlying  stock. The notes receivable are shown on
                        the  supplemental   consolidated   balance  sheet  as  a
                        reduction to  stockholders'  equity.  These options were
                        not  granted   under  the  Employee   Stock  Option  and
                        Appreciation Rights Plan (the "Employee Plan") discussed
                        below.


                                      F-71
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       EMPLOYEE STOCK OPTION AND APPRECIATION RIGHTS PLAN
    EQUITY (CON'T)
                        On December 14, 1995, the Board of Directors adopted 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.

                        On June 16, 1999, the Company's  stockholders adopted an
                        amendment  to  increase  the  number  of  shares  of the
                        Company's common stock available for grant to 3,250,000.
                        This  increase  included the  reduction of the number of
                        shares  available for issuance  under the Company's 1995
                        Director  Stock Option and  Appreciation  Rights Plan by
                        400,000  shares.   On  March  23,  2000,  the  Company's
                        stockholders adopted an amendment to increase the number
                        of shares of the  Company's  common stock  available for
                        grant to 7,000,000 shares.

                        As of December 31, 1999, options  outstanding under this
                        Employee Plan exceeded the shares available for grant by
                        1,995,468  shares.  The Board of Directors granted these
                        options  to certain  executive  officers  and  directors
                        subject to  stockholder  approval of the increase in the
                        number of shares  available  under the Employee Plan. As
                        discussed  earlier,  stockholder  approval  was obtained
                        March 23, 2000.

                        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


                                      F-72
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       common  stock  equal in value to the  excess of the fair
    EQUITY (CON'T)      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 year ended December 31,1999,  the nine months
                        ended  December  31,  1998 and the year ended  March 31,
                        1998,  the  Compensation   Committee  of  the  Board  of
                        Directors  granted  options to purchase an  aggregate of
                        3,068,054, 996,941 and 1,677,229,  respectively,  shares
                        of common stock to its employees under the Employee Plan
                        at exercise prices ranging from $0.01 to $7.67 per share
                        for the year ended December 31,1999,  $1.47 to $3.81 per
                        share for the nine months  ended  December  31, 1998 and
                        $2.32 to $3.12 per share  for the year  ended  March 31,
                        1998.  The  employees  were also granted SAR's in tandem
                        with the  options  granted  to them in  connection  with
                        grants prior to December 5, 1997.

                        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 were
                        originally  870,000 shares of the Company's common stock
                        reserved  for  issuance  under the  Director  Plan.  The
                        Director  Plan was 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. On June 16, 1999, the Company's
                        stockholders  approved a transfer  of 437,000  shares of
                        common stock  previously  available  for grant under the
                        Director  Plan to the Employee  Plan.  As a result,  the
                        number of shares of the Company's common stock available
                        for  grant  under  the  Director  Plan  was  reduced  to
                        433,000.

                        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 year ended  December
                        31, 1999,


                                      F-73
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       the nine  months  ended  December  31, 1998 and the year
    EQUITY (CON'T)      ended March 31, 1998, the Compensation  Committee of the
                        Board of Directors  confirmed the grant of total options
                        (including   options  with  vesting   contingencies)  to
                        purchase  300,000,  240,000  and  85,000,  respectively,
                        shares of common stock to its directors  pursuant to the
                        Company's  Director Plan at an exercise price of $2.8125
                        per share for the year ended December 31, 1999, $1.81 to
                        $3.19 per share for the nine month period ended December
                        31, 1998 and $2.63 to $2.69 per share for the year ended
                        March 31, 1998.  These exercise prices were equal to the
                        fair market value of the shares on the date of grants.

                        WARRANTS

                        In connection with the issuance of preferred  stock, the
                        Board of Directors granted warrants valued at $2,403,000
                        to purchase an aggregate  of 1,669,058  shares of common
                        stock  during  the year  ended  December  31,  1999 with
                        exercise  prices  between  $0.001  and $5.00 per  share.
                        During the nine months ended December 31, 1998,  375,000
                        contingent   warrants  were   granted.   See  the  above
                        discussion of preferred stock for further information.

                        In  connection  with the issuance of debt,  the Board of
                        Directors  granted  warrants to purchase an aggregate of
                        5,658,173,  142,000 and 856,667  shares of common stock,
                        respectively,  during the year ended  December 31, 1999,
                        the nine  months  ended  December  31, 1998 and the year
                        ended March 31, 1998,  at exercise  prices  ranging from
                        $0.01 to $2.82 per share for the year ended December 31,
                        1999, $2.00 to $3.03 per share for the nine months ended
                        December  31, 1998 and $0.01 to $6.61 per share for year
                        ended March 31,  1998.  For the year ended  December 31,
                        1999,  the nine months  ended  December 31, 1998 and the
                        year  ended  March 31,  1998,  the fair  value for these
                        warrants  of   $14,277,000,   $325,000   and   $923,000,
                        respectively,  at the grant date was originally recorded
                        as a discount to the related debt.  These  discounts are
                        being amortized as additional  interest expense over the
                        term of the respective debt using the effective interest
                        method.  Additional  interest  expense relating to these
                        warrants for the year ended  December 31, 1999, the nine
                        months ended  December 31, 1998 and the year ended March
                        31,  1998  was   $5,182,000,   $255,000  and   $479,000,
                        respectively.  See  Notes  5  and 7  for  discussion  of
                        certain significant transactions.


                                      F-74
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       During the year ended December 31, 1999, the nine months
    EQUITY (CON'T)      ended  December  31,  1998 and the year ended  March 31,
                        1998,  the  Board  of  Directors   granted  warrants  to
                        purchase  an  aggregate  of  826,594,  2,500 and  91,200
                        shares of common stock, respectively,  to non-affiliates
                        at exercise prices ranging from $1.37 to $2.18 per share
                        for the year ended  December 31,  1999,  $2.00 per share
                        for the nine month  period  ended  December 31, 1998 and
                        $2.75 per share for the year ended March 31,  1998.  For
                        the year ended  December 31, 1999, the nine months ended
                        December 31, 1998 and the year ended March 31, 1998, the
                        fair value for these warrants of $1,794,000,  $3,000 and
                        $213,000,   respectively,  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 year  ended  December  31,  1999 and the nine
                        months ended December 31, 1998, 3,037,000 and 318,000 of
                        the warrants granted above expired.

                        During  1999,  in  connection  with the  stock  purchase
                        agreement with an existing  stockholder and lender,  the
                        Company  granted  warrants to purchase an  aggregate  of
                        60,000  shares of common  stock  during the fiscal  year
                        December  31, 1999 with an  exercise  price of $1.00 per
                        share.

                        During the nine months  ended  December  31,  1998,  the
                        Board of  Directors  granted  warrants  to  purchase  an
                        aggregate  of  2,500,000  (2,000,000  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.
                        During 1999, the Company  renegotiated  the IDX purchase
                        agreement whereby the Company reacquired the warrant for
                        2,500,000  shares  of  common  stock  issued in 1998 and
                        granted  new   warrants  to  purchase  an  aggregate  of
                        1,087,500  shares of common stock to the stockholders of
                        IDX at an exercise  price of $0.001.  These warrants are
                        exercisable  contingent upon IDX meeting certain revenue
                        and EBITDA  objectives at September 30, 2000 or December
                        31, 2000. See Note 4 for further information.

                        During 1999, the Board of Directors also issued warrants
                        in connection with the purchase of ORS. The warrants are
                        exercisable  for  shares  of common  stock as  discussed
                        further in Note 4.


                                      F-75
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       SFAS No. 123, "Accounting for Stock-Based  Compensation"
    EQUITY (CON'T)      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  the  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 year
                        ended  December 31, 1999, the nine months ended December
                        31,   1998  and  the  year   ended   March   31,   1998,
                        respectively:   no  expected  dividend  yields  for  all
                        periods;  expected volatility of 55% for the first three
                        quarters of 1999 and 75% for the fourth quarter of 1999,
                        55% and 55%;  risk-free  interest rates of 6.00%,  4.51%
                        and 5.82%; and expected lives of 3 years, 3.65 years and
                        2 years for the Plans and stock awards.

                        Under the  accounting  provisions  for SFAS No. 123, the
                        Company's  net loss and loss per share  would  have been
                        increased by the pro forma amounts indicated below:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                        YEAR ENDED          NINE MONTHS ENDED           YEAR ENDED
                                                        DECEMBER 31,           DECEMBER 31,              MARCH 31,
                                                           1999                   1998                     1998
                                                     --------------------------------------------------------------
<S>                                                     <C>                     <C>                   <C>
   NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
        AS REPORTED                                     $(67,034,000)           $(5,958,000)          $(11,257,000)
        PRO FORMA                                       $(68,717,000)           $(6,308,000)          $(11,425,000)

   LOSS PER SHARE - BASIC AND DILUTED
        AS REPORTED                                       $    (1.11)            $    (0.10)            $    (0.20)
        PRO FORMA                                         $    (1.13)            $    (0.10)            $    (0.20)
</TABLE>


                                      F-76
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       A summary of the status of the  Company's  stock  option
    EQUITY (CON'T)      plans and  options  issued  outside of these plans as of
                        December  31,  1999 and 1998 and  March  31,  1998,  and
                        changes during the periods are presented below:

<TABLE>
<CAPTION>
                                                            DECEMBER 31,              DECEMBER 31,              MARCH 31,
                                                                1999                     1998                     1998
                                                       -----------------------  -----------------------  -----------------------
                                                                    WEIGHTED                 WEIGHTED                 WEIGHTED
                                                                     AVERAGE                  AVERAGE                  AVERAGE
                                                       NUMBER OF    EXERCISE    NUMBER OF    EXERCISE    NUMBER OF    EXERCISE
                                                         SHARES       PRICE       SHARES       PRICE       SHARES       PRICE
                                                       -------------------------------------------------------------------------
                            <S>                        <C>               <C>     <C>              <C>     <C>              <C>
                            OUTSTANDING, BEGINNING
                               OF PERIOD               2,538,159         $3.55   2,020,822        $3.93   1,263,032        $6.70
                                    GRANTED            3,798,182         $2.93   1,236,941        $2.39   1,762,229        $1.85
                                    EXPIRED             (621,228)        $2.85    (719,604)       $2.91    (986,091)       $6.87
                                    EXERCISED           (469,645)        $2.71          --           --     (18,348)       $5.75
                                                       -------------------------------------------------------------------------
                            OUTSTANDING,  END OF
                               PERIOD                  5,245,468         $2.93   2,538,159        $3.55   2,020,822        $3.93
                                                       -------------------------------------------------------------------------
                            EXERCISABLE, END OF        1,881,788         $3.02     773,049        $5.14     484,193        $7.95
                               PERIOD
                                                       =========================================================================

                            WEIGHTED AVERAGE FAIR
                               VALUE OF OPTIONS
                               GRANTED DURING THE
                               PERIOD AT MARKET        $    1.41                $     0.83                $    0.99
                                                       ===========              ===========               ==========
                            WEIGHTED AVERAGE FAIR
                               VALUE OF OPTIONS
                               GRANTED DURING THE
                               PERIOD BELOW MARKET     $    3.10                $       --                $      --
                                                       ===========              ===========              ===========
</TABLE>

                        Included  in the above  table are  certain  options  for
                        which  vesting is  contingent  based on  various  future
                        performance  measures.   See  earlier  discussion  under
                        "Employee Stock Option and Appreciation Rights Plan".

                        The following table summarizes  information  about stock
                        options outstanding at December 31, 1999:

<TABLE>
<CAPTION>
                                                           OUTSTANDING                              EXERCISABLE
                                          ----------------------------------------------- ---------------------------------
                                                             WEIGHTED        WEIGHTED                          WEIGHTED
                                                             REMAINING        AVERAGE                          AVERAGE
                      RANGE OF EXERCISE     NUMBER OF       CONTRACTUAL      EXERCISE        NUMBER OF         EXERCISE
                           PRICES             SHARES       LIFE (YEARS)        PRICE           SHARES           PRICE
                     ------------------------------------------------------------------------------------------------------
                     <S>                      <C>              <C>             <C>            <C>              <C>
                         $      0.01              9,885        2.41            $ .01              9,885        $ .01
                         $ 1.46-2.00            589,833        3.96            $1.67            371,858        $1.69
                         $ 2.25-3.16          4,065,135        4.38            $2.82          1,104,760        $2.66
                         $ 3.50-4.50            279,666        2.89            $4.13             94,336        $3.71
                         $ 5.45-7.67            300,949        2.55            $5.89            300,949        $5.89
                       ----------------------------------------------------------------------------------------------------
                         $ 0.01-7.67          5,245,468        4.14            $2.93          1,881,788        $3.02
                       ====================================================================================================
</TABLE>


                                      F-77
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       A summary  of the  status of the  Company's  outstanding
    EQUITY (CON'T)      warrants as of December 31, 1999 and 1998, and March 31,
                        1998,  and  changes  during the  periods  are  presented
                        below:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,              DECEMBER 31,             MARCH 31,
                                                                  1999                     1998                    1998
                                                         -----------------------   ---------------------   ----------------------
                                                                      WEIGHTED                  WEIGHTED                WEIGHTED
                                                                       AVERAGE                   AVERAGE                 AVERAGE
                                                         NUMBER OF    EXERCISE     NUMBER OF    EXERCISE    NUMBER      EXERCISE
                                                          SHARES        PRICE       SHARES       PRICE     OF SHARES     PRICE
                                                        -------------------------------------------------------------------------
                             <S>                        <C>                <C>     <C>              <C>       <C>           <C>
                             OUTSTANDING, BEGINNING
                                OF  PERIOD               4,093,167         $0.91   1,391,667        $4.00     443,800       $6.31
                                     GRANTED             9,301,325         $1.04   3,019,500        $0.12     947,867       $2.61
                                     EXPIRED            (3,037,000)        $0.32    (318,000)       $6.90          --       $  --
                                     EXERCISED          (1,168,518)        $0.62          --        $  --          --       $  --
                                                        -------------------------------------------------------------------------
                             OUTSTANDING,  END OF
                                 PERIOD                  9,188,974         $1.35   4,093,167        $0.91   1,391,667       $4.00
                                                        =========================================================================
                             EXERCISABLE, END OF         4,463,507         $1.71   1,218,167        $3.05   1,391,667       $4.00
                                 PERIOD                 =========================================================================
</TABLE>

                        Included in the above table are  certain  warrants  that
                        are  contingent  based  on  various  future  performance
                        measures. (See Note 4 ).

                        The  following  table   summarizes   information   about
                        warrants outstanding at December 31, 1999:

<TABLE>
<CAPTION>
                                                           OUTSTANDING                              EXERCISABLE
                                          ---------------------------------------------------------------------------------
                                                             WEIGHTED        WEIGHTED                        WEIGHTED
                                                             REMAINING        AVERAGE                         AVERAGE
                      RANGE OF EXERCISE     NUMBER OF       CONTRACTUAL      EXERCISE       NUMBER OF        EXERCISE
                           PRICES             SHARES       LIFE (YEARS)        PRICE         SHARES            PRICE
                     ------------------------------------------------------------------------------------------------------
                     <S>                      <C>              <C>            <C>             <C>             <C>
                         $      .001          1,087,500        1.00           $ .001                 --        $  --
                         $       .01            404,500        2.29           $  .01            404,500        $ .01
                         $ 1.00-1.50          5,499,999        2.75           $ 1.04          2,166,667        $1.09
                         $ 1.51-2.18          1,472,500        2.05           $ 1.92          1,472,500        $1.92
                         $ 2.37-3.00            124,761        2.84           $ 2.73             78,173        $2.57
                         $      5.00            258,047        2.88           $ 5.00                 --        $  --
                         $ 6.00-6.61            341,667        5.76           $ 6.52            341,667        $6.52
                       ====================================================================================================

                         $0.001-6.61          9,188,974        2.53           $ 1.35          4,463,507        $1.71
                       ====================================================================================================
</TABLE>


                                      F-78
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       The Company may be required to issue additional warrants
    EQUITY(CON'T)       under the following circumstances:

                        (a)     During  1999,  the Company  entered into a stock
                                agreement  with a lender  pursuant  to which the
                                lender may elect to convert debt in exchange for
                                shares of common  stock and warrants to purchase
                                60,000  shares  of  common  stock at a price per
                                share  of  $1.00  for  each  $250,000  (up  to a
                                maximum  amount of $750,000) of debt  exchanged.
                                See Note 7 for further discussion.

                        (b)     As  discussed  in Note  4,  the  Company  issued
                                contingent  warrants to purchase common stock in
                                the  ORS  acquisition.  These  warrants  are not
                                included in the outstanding warrants because the
                                Company  includes the  operations  of ORS in its
                                supplemental  consolidated financial statements.
                                Upon the  exchange  by Oasis of its  interest in
                                the  LLC  for  the  eGlobe   common   stock  and
                                warrants, these warrants will be included.

11. TAXES (BENEFIT)     Taxes  (benefit)  on income  (loss)  for the year  ended
    ON INCOME           December  31, 1999,  the nine months ended  December 31,
    (LOSS)              1998 and the year ended March 31, 1998, consisted of the
                        following:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,         DECEMBER 31,          MARCH 31,
                                                                    1999                 1998                1998
                                                             ------------------------------------------------------------
                             <S>                              <C>                     <C>                <C>
                             Current:
                                 Federal                      $   (962,000)           $ 578,000          $  321,000
                                 Foreign                                --                   --             140,000
                                 State                                  --                   --                  --
                                 Other                                  --                   --           1,500,000
                                                             ------------------------------------------------------------

                             Total Current                        (962,000)             578,000           1,961,000
                                                             ------------------------------------------------------------

                             Deferred:
                                 Federal                       (17,132,000)            (286,000)         (1,568,000)
                                 State                          (1,520,000)             (25,000)           (140,000)
                                                             ------------------------------------------------------------

                                                               (18,652,000)            (311,000)         (1,708,000)
                             Change in
                                 valuation allowance            18,652,000              311,000           1,708,000
                                                             ------------------------------------------------------------

                             Total                             $  (962,000)           $ 578,000         $ 1,961,000
                                                             ============================================================
</TABLE>


                                      F-79
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
11. TAXES (BENEFIT)     During the year ended  December 31,  1999,  Trans Global
    ON INCOME           elected  to  carryback  approximately  $2.8  million  of
    (LOSS) (CON'T)      taxable  losses,  resulting  in  a  receivable  and  tax
                        benefit of approximately $962,000.

                        During the year ended March 31, 1998, eGlobe undertook a
                        study to simplify its  organizational  and tax structure
                        and  identified  potential   international  tax  issues.
                        eGlobe  determined that it had potential tax liabilities
                        and recorded an additional tax provision of $1.5 million
                        to reserve against  liabilities.  In early 1999,  eGlobe
                        filed with the Internal  Revenue Service ("IRS") amended
                        returns for the years ended March 31, 1991 through 1998.
                        In May 1999,  eGlobe  was  informed  by the IRS that all
                        amended returns had been accepted as filed. The eventual
                        outcome of discussions with State Tax Authorities and of
                        any other issues cannot be predicted with certainty.

                        As of December 31, 1999 and 1998 and March 31, 1998, the
                        net deferred tax asset recorded and its  approximate tax
                        effect consisted of the following:

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,          DECEMBER 31,           MARCH 31,
                                                                         1999                  1998                  1998
                                                                ---------------------------------------------------------------
                              <S>                                     <C>                     <C>                  <C>
                              Net operating loss carry-
                                      forwards                        $ 21,290,000            $ 6,041,000          $ 3,496,000
                              Expense accruals                             618,000              1,098,000            1,010,000
                              Goodwill and intangible
                                      amortization                       3,626,000                     --                   --
                              Foreign net operating loss
                                      carryforwards                        762,000                260,000                   --
                              Other                                        186,000                431,000              269,000
                                                                ---------------------------------------------------------------

                                                                        26,482,000              7,830,000            4,775,000
                              Valuation allowance                      (26,482,000)            (7,830,000)          (4,775,000)
                                                                ---------------------------------------------------------------

                              Net deferred tax asset                  $         --            $        --          $        --
                                                                ===============================================================
</TABLE>


                                      F-80
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
11. TAXES (BENEFIT)     The  acquisition  of IDX in December 1998 included a net
    ON INCOME           deferred  tax asset of $2.7  million.  This net deferred
   (LOSS) (CON'T)       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 year ended  December 31,  1999,  the nine months
                        ended  December  31,  1998 and the year ended  March 31,
                        1988,  a  reconciliation  of the United  States  Federal
                        statutory rate to the effective rate is shown below:

<TABLE>
<CAPTION>
                                                                           DECEMBER 31,        DECEMBER 31,        MARCH 31,
                                                                               1999                1998              1998
                                                                               ----                ----              ----
                             <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                           (0.9)                  (1.3)          (1.2)
                             Effect of  foreign operations                      1.1                   37.7           23.9
                             Amendment to prior year net
                                 operating loss carryforwards                  (4.9)                    --             --
                             Additional taxes                                    --                     --           16.1
                             Change in valuation allowance                     35.2                    5.8           18.4
                             Other                                              1.7                    2.5           (2.1)
                                                                              -----                   ----           ----
                             Total                                             (1.8)%                 10.7 %         21.1 %
                                                                              =====                   ====           ====
</TABLE>

                        As of December 31, 1999,  the Company has net  operating
                        loss  carryforwards  available  of  approximately  $57.7
                        million,  which can offset  future  years' U.S.  taxable
                        income.  Such  carryforwards  expire  in  various  years
                        through 2019 and are  subject,  as a result of change in
                        ownership, to limitation under the Internal Revenue Code
                        of 1986,  as amended.  The Company  also has foreign net
                        operating loss carryforwards in various jurisdictions of
                        approximately  $2.0  million,  which can  offset  future
                        year's foreign taxable income. Such carryforwards expire
                        in various  years  through 2004 and are subject to local
                        limitations on use.


                                      F-81
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
12.  SEGMENT            OPERATING SEGMENT INFORMATION
     INFORMATION
                        The  Company  has  four  operating   reporting  segments
                        consisting  of  Enhanced  Services,   Network  Services,
                        Customer Care and Retail  Services.  The Company's basis
                        for  determining  the  segments  relates  to the type of
                        services  each  segment   provides.   Enhanced  Services
                        includes  the  unified  messaging  services,   telephone
                        portal services, interactive voice and data services and
                        the card services.  Network Services  includes  low-cost
                        transmission  services,  voice  services  (CyberCall and
                        CyberFax)   and  several   other   additional   services
                        including   billing  and  report   generation   designed
                        exclusively to support CyberCall and CyberFax.  Customer
                        Care  Services  includes the  state-of-art  call center,
                        which  was  part of the  Company's  acquisition  of ORS.
                        Retail  Services   primarily   includes  a  small  North
                        American retail center,  which was part of the Company's
                        acquisition  of Coast,  which was effective  December 2,
                        1999.  Segment results  reviewed by the Company decision
                        makers  do  not  include   general  and   administrative
                        expenses,  interest,  depreciation  and amortization and
                        other  miscellaneous   income  and  expense  items.  All
                        material intercompany  transactions have been eliminated
                        in consolidation. The following table presents operating
                        segment information:

<TABLE>
<CAPTION>
                                         ENHANCED           NETWORK             CUSTOMER            RETAIL
                                         SERVICES           SERVICES              CARE             SERVICES             TOTAL
                                      ---------------- ------------------- ------------------- ------------------ ------------------
             <S>                        <C>                 <C>                  <C>                <C>              <C>
             FOR THE YEAR ENDING
             DECEMBER 31, 1999
             -----------------
             REVENUE                    $ 20,088,000        $120,918,000         $ 1,637,000        $ 1,001,000      $ 143,644,000
             INTER-SEGMENT                   (22,000)         (1,674,000)                 --                 --         (1,696,000)
                                      ----------------------------------------------------------------------------------------------
             TOTAL REVENUE              $ 20,066,000        $119,244,000         $ 1,637,000        $ 1,001,000      $ 141,948,000
             GROSS PROFIT               $  2,946,000        $  1,688,000         $   308,000        $    65,000      $   5,007,000
             TOTAL ASSETS               $ 38,063,000        $ 51,031,000         $ 3,736,000        $20,965,000      $ 113,795,000
                                      ----------------------------------------------------------------------------------------------
             FOR THE NINE MONTHS
             ENDING
             DECEMBER 31, 1998
             -----------------
             REVENUE                    $ 21,360,000        $ 68,507,000         $        --        $   553,000      $  90,420,000
             GROSS PROFIT (LOSS)        $ 10,064,000        $  6,469,000         $        --        $   (42,000)     $  16,491,000
             TOTAL ASSETS               $ 21,697,000        $ 41,775,000         $        --        $   907,000      $  64,379,000
                                      ----------------------------------------------------------------------------------------------
             FOR THE YEAR ENDING
             MARCH 31, 1998
             --------------
             REVENUE                    $ 31,819,000        $ 46,473,000         $        --        $ 1,304,000      $  79,596,000
             GROSS PROFIT               $ 13,667,000        $  6,588,000         $        --        $   590,000      $  20,845,000
             TOTAL ASSETS               $ 21,797,000        $ 12,125,000         $        --        $ 1,103,000      $  35,025,000
                                      ----------------------------------------------------------------------------------------------
</TABLE>

                                      F-82
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
12. SEGMENT             GEOGRAPHIC INFORMATION
    INFORMATION
    (CON'T)             For  purposes of  allocating  revenues  by country,  the
                        Company uses the physical  location of its  customers as
                        its basis.  Identifiable  Long-Lived Assets include only
                        the tangible assets of the Company.  The following table
                        presents  information  about the  Company by  geographic
                        area:

<TABLE>
<CAPTION>
                                                                   NORTH
                                                                  AMERICA
                                                  ASIA           (EXCLUDING           LATIN
                                EUROPE           PACIFIC          MEXICO)            AMERICA            OTHER           TOTALS
                          ---------------------------------------------------------------------------------------------------------
      <S>                      <C>              <C>             <C>                  <C>              <C>           <C>
      FOR THE YEAR ENDING
      DECEMBER 31, 1999
      -----------------
      REVENUE                  $ 7,364,000      $ 7,873,000      $121,709,000        $ 3,485,000      $1,517,000     $141,948,000
      OPERATING LOSS           $(3,074,000)     $(6,993,000)     $(32,053,000)       $(4,374,000)     $ (419,000)    $(46,913,000)
      IDENTIFIABLE LONG-
        LIVED ASSETS           $ 8,243,000      $ 3,846,000      $ 24,813,000        $ 2,035,000      $3,141,000     $ 42,078,000
                          ---------------------------------------------------------------------------------------------------------
      FOR THE NINE
      MONTHS ENDING
      DECEMBER 31, 1998
      -----------------
      REVENUE                  $ 2,241,000      $ 5,949,000      $ 76,664,000        $ 5,244,000      $  322,000      $90,420,000
      OPERATING LOSS           $(1,373,000)     $(1,460,000)     $   (456,000)       $(1,287,000)     $  (79,000)     $(4,655,000)
      IDENTIFIABLE LONG-
         LIVED ASSETS          $ 6,060,000      $ 4,076,000      $  7,568,000        $ 1,571,000      $  923,000      $20,198,000
                          ---------------------------------------------------------------------------------------------------------
      FOR THE YEAR
      ENDING
      MARCH 31, 1998
      --------------
      REVENUE                  $ 3,468,000      $10,295,000       $56,535,000        $ 8,248,000      $1,050,000      $79,596,000
      OPERATING INCOME
        (LOSS)                 $  (759,000)     $(1,772,000)      $ 1,054,000        $(1,419,000)     $ (181,000)     $(3,077,000)
      IDENTIFIABLE LONG-
         LIVED ASSETS          $ 3,150,000      $ 4,138,000       $ 9,530,000        $   440,000      $       --      $17,258,000
                          ---------------------------------------------------------------------------------------------------------
</TABLE>


                                      F-83
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
12. SEGMENT             CUSTOMER INFORMATION
    INFORMATION
    (CON'T)             For the year ended  December 31,  1999,  the nine months
                        ended  December  31,  1998 and the year ended  March 31,
                        1998 revenues from  significant  customers  consisted of
                        the following:

<TABLE>
<CAPTION>
                                                           DECEMBER 31, 1999           DECEMBER 31, 1998        MARCH 31, 1998
                                                           -------------------------------------------------------------------
<S>                                                              <C>                          <C>                    <C>
                               Customer:
                               A                                  4%                          21%                    25%
                               B                                 21%                           7%                     6%
                               C                                  7%                          16%                    --
                               D                                 23%                          15%                    --
</TABLE>

13. COMMITMENTS         EMPLOYMENT AGREEMENTS
    AND
    CONTINGENCIES       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, 1999
                        under such agreements is approximately $3.9 million. The
                        Company  is  also  currently   negotiating   employ-ment
                        agreements  with two officers who were former  owners of
                        Trans Global.

                        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.

                        USAGE COMMITMENT

                        The  Company  has  a  contract   with  a   long-distance
                        telecommunications company to provide telecommunications
                        services for the Company's customers. Under the terms of
                        the   agreement,   the  Company  has  a  minimum   usage
                        commitment of $125,000 per month  through  September 30,
                        2000.  The minimum usage  commitment may be decreased in
                        the  second  and  third  year  of the  agreement  if the
                        cumulative  usage is  achieved  in the first year of the
                        agreement.


                                      F-84
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
13. COMMITMENTS         RESERVATION SERVICES
    AND
    CONTINGENCIES       The  Company  has  entered  into  reservation   services
    (CON'T)             contracts  with its customers  which provide for,  among
                        other  things,  assigning  agents to handle  reservation
                        call volume.  These contracts have initial terms ranging
                        from  three  months  to  one  year.   Either  party  can
                        terminate the contracts after the initial term,  subject
                        to certain conditions contained in the contracts.

                        INTERNATIONAL REGULATIONS

                        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-85
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
13.  COMMITMENTS        TELECOMMUNICATION LINES
     AND
     CONTINGENCIES      In its normal  course of  business,  the Company  enters
     (CON'T)            into   agreements   for  the   use  of   long   distance
                        telecommunication lines. As of December 31, 1999, future
                        minimum  annual  payments  under such  agreements are as
                        follows:

<TABLE>
<CAPTION>
                                 YEARS ENDING DECEMBER 31,                                                   TOTAL
                              --------------------------------------------------------------------------------------------
                                   <S>                                                                      <C>
                                   2000                                                                      $8,488,000
                                   2001                                                                       5,373,000
                                   2002                                                                       1,827,000
                                   2003                                                                         157,000
                                   2004                                                                          75,000
                              --------------------------------------------------------------------------------------------
                                                                                                            $15,920,000
                              --------------------------------------------------------------------------------------------
</TABLE>

                        LEASE AGREEMENTS

                        The Company  leases  office  space and  equipment  under
                        various operating leases. The Company has subleased some
                        office  space to third  parties.  Future  minimum  lease
                        payments  under the  non-cancelable  leases  and  future
                        minimum   rentals   receivable   under  the   subleases,
                        including the related  party office leases  discussed in
                        Note 7, are as follows:

<TABLE>
<CAPTION>
                                                                             MINIMUM
                                                           MINIMUM            LEASE          SUBLEASE
                                  YEARS ENDING              LEASE           PAYMENTS TO       RENTAL
                                  DECEMBER 31,            PAYMENTS         RELATED PARTY      INCOME                TOTAL
                               ---------------------------------------------------------------------------------------------------
                                      <S>                 <C>                <C>             <C>                   <C>
                                      2000                $ 1,679,000        $ 569,000       $ (551,000)           $ 1,697,000
                                      2001                  1,105,000          581,000         (227,000)             1,459,000
                                      2002                    835,000          596,000               --              1,431,000
                                      2003                    740,000          150,000               --                890,000
                                      2004                    421,000               --               --                421,000
                                  Thereafter                  343,000               --               --                343,000
                               ---------------------------------------------------------------------------------------------------
                                                          $ 5,123,000      $ 1,896,000       $ (778,000)           $ 6,241,000
                               ---------------------------------------------------------------------------------------------------
</TABLE>

                        Rent expense for the year ended  December 31, 1999,  the
                        nine months  ended  December 31, 1998 and the year ended
                        March 31,  1998 was  approximately  $2.3  million,  $0.8
                        million,  and $0.9 million,  respectively.  Rent expense
                        for  1999  includes   sublease  rental  income  of  $0.2
                        million.


                                      F-86
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
13.  COMMITMENTS        As a result of the ORS  acquisition,  the Company leases
     AND                certain   employees  from  a   professional   employment
     CONTINGENCIES      organization,  which also  performs  human  resource and
     (CON'T)            payroll   functions.   Total  employment  lease  expense
                        incurred  by  the  Company   related  to  this  contract
                        amounted to  approximately  $1.5  million for the period
                        from acquisition through December 31, 1999.

                        LETTERS OF CREDIT

                        Outstanding  letters  of credit  issued as  security  as
                        required by certain telecommunications vendors, amounted
                        to  approximately  $1,464,000 and $1,100,000 at December
                        31,  1999 and  1998,  respectively.  Such  amounts  were
                        secured by restricted short-term investments.

                        FINANCIAL ADVISORY AGREEMENT

                        On  December  1,  1999,  the  Company  entered  into  an
                        agreement  with an outside  investment  banking  firm to
                        provide  financial  advisory  services.  The term of the
                        agreement   is   for   six   months,   however,   it  is
                        automatically  renewed  for  an  additional  six  months
                        unless written notice of termination is given.  Warrants
                        valued at $1.1  million to  purchase  common  stock were
                        issued  as a  retainer  in  January  2000 (See Note 10).
                        Under  the  agreement,  cash  fees  are  payable  by the
                        Company for acquisition or disposition transactions, and
                        are based on certain calculated percentages. The Company
                        shall also  reimburse  the  investment  banking firm for
                        reasonable out-of-pocket expenses incurred in connection
                        with its services, up to a maximum amount per month.


                                      F-87
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
13. COMMITMENTS         SECURED ACCOUNTS PAYABLE
    AND
    CONTINGENCIES       Approximately  $9.9  million  of Tran  Global's  capital
    (CON'T)             assets are subject to security interests in favor of its
                        major supplier, AT&T Corp. ("AT&T").  Effective December
                        10, 1999,  Trans Global  entered into an agreement  with
                        AT&T  regarding  the  payment  of  approximately   $13.8
                        million  in past  due 1999  switch  and  circuit  costs.
                        Pursuant to the  agreement,  Trans  Global has agreed to
                        repay AT&T in roughly equal monthly installments,  which
                        include  interest  at  9%,  through January 1, 2001. See
                        Note 18 for further discussions.

14. GOVERNMENT          The   Company   is   subject   to    regulation   as   a
    REGULATIONS         telecommunications     service    provider    in    some
                        jurisdictions   in  the  United   States   and   abroad.
                        Applicable laws and regulations,  and the interpretation
                        of such laws and  regulations,  differ  significantly in
                        those jurisdictions. In addition, the Company or a local
                        partner is required to have  licenses  or  approvals  in
                        those countries where it operates and where equipment is
                        installed.  The Company may also be affected  indirectly
                        by the laws of other  jurisdictions  that affect foreign
                        carriers with which it does business.

                        UNITED STATES FEDERAL REGULATION

                        Pursuant to the  Communications  Act of 1934, as amended
                        by the  Telecommunications  Act  of  1996,  the  Federal
                        Communications   Commission  ("FCC")  regulates  certain
                        aspects of the telecommunications industry in the United
                        States.  The  FCC  currently  requires  common  carriers
                        providing international  telecommunications  services to
                        obtain authority under section 214 of the Communications
                        Act.  eGlobe  and  its  subsidiaries  have  section  214
                        authority and are regulated as non-dominant providers of
                        both   international  and  domestic   telecommunications
                        services.


                                      F-88
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
14. GOVERNMENT          Any  common  carrier  providing  wireline  domestic  and
    REGULATIONS         international  service  also must file a tariff with the
    (CON'T)             FCC setting forth the terms and  conditions  under which
                        it provides those services. With few exceptions,  common
                        carriers     are      prohibited      from     providing
                        telecommunications  services to  customers  under rates,
                        terms, or conditions different from those that appear in
                        a tariff.  The FCC has determined that it no longer will
                        require  or allow  non-dominant  providers  of  domestic
                        services  to file  tariffs,  but  instead  will  require
                        carriers to make their  rates  publicly  available,  for
                        example  by posting  the  information  on the  Internet.
                        Because this FCC order has only  recently  been affirmed
                        by the  U.S.  Court  of  Appeals  for  the  District  of
                        Columbia  Circuit,  it is presently being phased in, and
                        carriers are permitted to have tariffs on file for their
                        domestic services.  The Company has tariffs on file with
                        the FCC setting  forth the rates,  terms and  conditions
                        under  which  it  provides  domestic  and  international
                        services.

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

                        The FCC's international settlements policy places limits
                        on the arrangements that U.S. international carriers may
                        enter into with foreign  carriers that have market power
                        in  foreign  telecommunications  markets.  The policy is
                        primarily  intended to prevent dominant foreign carriers
                        from  playing  U.S.  carriers  against each other to the
                        disadvantage of U.S.  carriers and U.S.  consumers.  The
                        international  settlements  policy  provides that a U.S.
                        carrier that enters into an operating  agreement for the
                        exchange  of public  switched  traffic  with a  dominant
                        foreign  carrier must file a copy of that agreement with
                        the FCC. Any such agreement that is materially different
                        from an agreement  filed by another  carrier on the same
                        international  route must be approved by the FCC. Absent
                        FCC approval, no such agreement may provide for the U.S.
                        carrier to receive more than its proportionate  share of
                        inbound traffic.  Certain  competitive routes are exempt
                        from the  international  settlements  policy.  The FCC's
                        policies  also  require U.S.  international  carriers to
                        negotiate  and  adopt   settlement  rates  with  foreign
                        correspondents  that are at or below  certain  benchmark
                        rates.

                        The  FCC's  rules  also  prohibit  a U.S.  carrier  from
                        accepting  a  "special  concession"  from  any  dominant
                        foreign carrier.  The FCC defines a "special concession"
                        as an exclusive  arrangement  (i.e.,  one not offered to
                        similarly  situated U.S. carriers)  involving  services,
                        facilities,  or  functions  on the foreign end of a U.S.
                        international  route that are  necessary  for  providing
                        basic telecommunications.


                                      F-89
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
14. GOVERNMENT          The  regulation  of IP telephony in the United States is
    REGULATIONS         still evolving. The FCC has stated that some forms of IP
    (CON'T)             telephony appear to be similar to  "traditional"  common
                        carrier  service and may be regulated  as such,  but the
                        FCC has not decided  whether  some other IP services are
                        unregulated  "information  services"  or are  subject to
                        regulation. 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  jurisdiction over intrastate IP services and
                        could initiate proceedings to regulate such services. As
                        these  decisions  are made,  the  Company  could  become
                        subject to regulation  that might  eliminate some of the
                        advantages  that it now enjoys as a provider of IP-based
                        services.

                        Management believes that the regulatory  requirements in
                        force  today in the United  States  impose a  relatively
                        minimal burden on the Company.  Management also believes
                        that some of its  network  services  are not  subject to
                        regulation  by the FCC or any  other  state  or  federal
                        agency;  however,  there is some  risk that the FCC or a
                        state  regulator  could  decide  that  certain  services
                        should require  specific  authorization or be subject to
                        other   regulations.   If  that  were  to  occur,  these
                        regulatory     requirements    could    include    prior
                        authorization requirements,  tariffing requirements,  or
                        the  payment  of  contributions  to  federal  and  state
                        subsidy   mechanisms    applicable   to   providers   of
                        telecommunications services. Some of these contributions
                        could be required  whether or not the Company is subject
                        to authorization or tariff requirements.

                        United     Kingdom.     In    the    United     Kingdom,
                        telecommunications  services  that have been  offered by
                        Trans Global  through its  affiliate,  TGC UK Ltd.,  are
                        subject  to  regulation   by  various  U.K.   regulatory
                        agencies.   The   United   Kingdom   generally   permits
                        competition  in all  sectors  of the  telecommunications
                        market,  subject to licensing  requirements  and license
                        conditions. TGC UK has been granted  licenses to provide
                        international traffic on a resale basis and over its own
                        facilities,  which  licenses  are subject to a number of
                        restrictions.  Use of these licenses has permitted Trans
                        Global to engage in  cost-effective  routing  of traffic
                        between  the United  States and the United  Kingdom  and
                        beyond.
<PAGE>
                        OTHER COUNTRIES

                        Telecommunications  activities are subject to government
                        regulation   to  varying   degrees   in  every   country
                        throughout  the  world.  In  many  countries  where  the
                        Company  operates,  equipment cannot be connected to the
                        telephone  network  without  regulatory  approval,   and
                        therefore  installation  and  operation of the Company's
                        operating  platform  or other  equipment  requires  such
                        approval.  The Company has  licenses or other  equipment
                        approvals in the  jurisdictions  where it  operates.  In
                        most jurisdictions  where the Company conducts business,
                        the  Company  relies on its local  partner to obtain the
                        requisite  authority.  In many  countries  the Company's
                        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 some of
                        our operational  and  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 affect on our
                        business and prospects.  In some cases,  principally the
                        United  States  and  countries  that are  members of the
                        European  Community,  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.

                                      F-90
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
14. GOVERNMENT          Many aspects of the Company's  international  operations
    REGULATIONS         and  business  expansion  plans are  subject  to foreign
    (CON'T)             government regulations,  including currency regulations.
                        Foreign  governments may adopt regulations or take other
                        actions  that  would have a direct or  indirect  adverse
                        impact  on the  Company's  business  opportunities.  For
                        example,  the regulatory  status of IP telephony in some
                        countries  is  uncertain.  Some  countries  prohibit  or
                        regulate IP  telephony,  and any of those  policies  may
                        change at any time.

                        The Company is  planning to expand or initiate  services
                        in certain  Middle East  countries  including  Egypt and
                        Kuwait.   These  services  will  include  largely  voice
                        services as regulatory liberalization in those countries
                        permits.  Although the Company plans to obtain authority
                        to provide  service  under  current  and future  laws of
                        those countries (or, where permitted, to provide service
                        without  government  authorization),  there  can  be  no
                        assurance   that   foreign  laws  will  be  adopted  and
                        implemented   providing   the  Company  with   effective
                        practical  opportunities  to compete in these countries.
                        The Company's  ability or inability to take advantage of
                        such liberalization could have a material adverse effect
                        on its ability to expand services as planned.

15. FOURTH              In the fourth  quarter of the year  ended  December  31,
    QUARTER             1999, certain  adjustments related to an increase in the
    ADJUSTMENTS         accounts receivable reserve allowance, accrued dividends
                        for certain series of Preferred  Stock that are entitled
                        to receive dividends for specified periods regardless of
                        the conversation date,  capitalized software development
                        costs  related to Vogo and accrued  excise and sales and
                        use taxes  which in total  amounts  to an  aggregate  of
                        approximately   $1.5  million  were   recorded  and  are
                        discussed in "Summary of  Accounting  Policies" and Note
                        10   to   the   supplemental    consolidated   financial
                        statements.

16. SUBSEQUENT          SERIES N CUMULATIVE CONVERTIBLE PREFERRED STOCK
    EVENTS
                        In January  2000,  the Company  sold an  additional  525
                        shares of Series N Preferred  Stock and 42,457  warrants
                        for proceeds of $0.5  million.  These shares of Series N
                        Preferred  Stock  were  immediately  converted,  at  the
                        holders'  option,  into 155,394  shares of the Company's
                        common stock at conversion prices from $3.51 to $3.72.


                                      F-91
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
16. SUBSEQUENT          The warrants are  exercisable one year from issuance and
    EVENTS              expire three years from  issuance.  The exercise  prices
    (CON'T)             vary from $3.00 to $7.50 per  share.  In  addition,  the
                        holders  may  elect to make a  cash-less  exercise.  The
                        value of the warrants  will be recorded as a dividend at
                        the issuance dates because the Series N Preferred  Stock
                        is  immediately  convertible.  See  Note 10 for  further
                        discussion of Series N Preferred Stock.

                        SERIES P CONVERTIBLE PREFERRED STOCK

                        On January 27, 2000, the Company issued 15,000 shares of
                        Series  P  Convertible   Preferred   Stock   ("Series  P
                        Preferred  Stock")  and  warrants  to  purchase  375,000
                        shares of common stock with an exercise  price of $12.04
                        per share for  proceeds  of $15.0  million  to Rose Glen
                        ("RGC"). The shares of Series P Preferred Stock carry an
                        effective   annual   interest   rate   of  5%  and   are
                        convertible,  at the  holder's  option,  into  shares of
                        common  stock.  The shares of Series P  Preferred  Stock
                        will  automatically  be converted  into shares of common
                        stock  on  January  26,  2003,   subject  to  delay  for
                        specified events.  The conversion price for the Series P
                        Preferred  Stock is $12.04  until  April 27,  2000,  and
                        thereafter  is equal to the  lesser  of 120% of the five
                        day average closing price of the Company's  common stock
                        on Nasdaq during the 22-day period prior to  conversion,
                        and $12.04.  The Company can force a  conversion  of the
                        Series P Preferred  Stock on any trading day following a
                        period in which the closing  bid price of the  Company's
                        common  stock has been  greater than $24.08 for a period
                        of at least 35 trading days after the earlier of (1) the
                        first  anniversary of the date the common stock issuable
                        upon  conversion  of the  Series P  Preferred  Stock and
                        warrants  are  registered   for  resale,   and  (2)  the
                        completion  of a  firm  commitment  underwritten  public
                        offering with gross  proceeds to the Company of at least
                        $45.0 million.


                                      F-92
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
16. SUBSEQUENT          The shares of Series P Preferred  Stock are  convertible
    EVENTS              into a maximum of 5,151,871 shares of common stock. This
    (CON'T)             maximum  share  amount is  subject  to  increase  if the
                        average closing bid prices of the Company's common stock
                        for the 20 trading  days ending on the later of June 30,
                        2000 and the 60th  calendar  day after the common  stock
                        issuable upon conversion of the Series P Preferred Stock
                        and warrants is registered is less than $9.375, provided
                        that under no circumstances  will the Series P Preferred
                        Stock be convertible  into more than 7,157,063 shares of
                        the Company's  common stock. In addition,  no holder may
                        convert  the Series P Preferred  Stock or  exercise  the
                        warrants  it owns for any  shares of common  stock  that
                        would  cause  it to own  following  such  conversion  or
                        exercise  in  excess  of  4.9%  of  the  shares  of  the
                        Company's common stock then outstanding.

                        Except  in the event of a firm  commitment  underwritten
                        public  offering of eGlobe's  securities or a sale of up
                        $15.0  million of common stock to a specified  investor,
                        the  Company  may  not  obtain  any  additional   equity
                        financing  without  the  Series  P  Preferred   holder's
                        consent for a period of 120 days  following the date the
                        common stock  issuable  upon  conversion of the Series P
                        Preferred  Stock and warrants is registered  for resale.
                        The  holder  also has a right of first  offer to provide
                        any additional  equity  financing that the Company needs
                        until the first anniversary of such registration.

                        The  Company  may be  required  to redeem  the  Series P
                        Preferred Stock in the following circumstances:

                        (a)     if  the  Company  fails  to  perform   specified
                                obligations   under  the   securities   purchase
                                agreement or related agreements;

                        (b)     if the Company or any of its  subsidiaries  make
                                an  assignment  for the benefit of  creditors or
                                becomes  involved  in  bankruptcy,   insolvency,
                                reorganization or liquidation proceedings;

                        (c)     if the Company  merges out of existence  without
                                the surviving  company  assuming the obligations
                                relating to the Series P Preferred Stock;

                        (d)     if  the  Company's  common  stock  is no  longer
                                listed on the Nasdaq National Market, the Nasdaq
                                Small Cap Market, the NYSE or the AMEX;


                                      F-93
<PAGE>


                                                                    eGLOBE, INC.
                         NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
16. SUBSEQUENT          (e)     if the  Series P  Preferred  Stock is no  longer
    EVENTS                      convertible  into common stock  because it would
    (CON'T)                     result  in an  aggregate  issuance  of more than
                                5,151,871 shares of common stock, as such number
                                may be adjusted,  and the Company has not waived
                                such limit or obtained stockholder approval of a
                                higher limit; or

                        (f)     if the  Series P  Preferred  Stock is no  longer
                                convertible  into common stock  because it would
                                result  in an  aggregate  issuance  of more than
                                7,157,063  shares of the Company's  common stock
                                and the  Company  has not  obtained  stockholder
                                approval of a higher limit.

                        SERIES Q CONVERTIBLE PREFERRED STOCK

                        On March 17,  2000,  the Company  issued 4,000 shares of
                        Series  Q  Convertible   Preferred   Stock   ("Series  Q
                        Preferred  Stock")  and  warrants  to  purchase  100,000
                        shares of eGlobe common stock with an exercise price per
                        share  equal  to  $12.04,   subject  to  adjustment  for
                        issuances  of shares of common  stock below market price
                        for proceeds of $4.0 million to RGC.

                        The Series Q Preferred  Stock  agreement  also  provides
                        that the Company may issue up to 6,000 additional shares
                        of Series Q Preferred  Stock and warrants to purchase an
                        additional  150,000 shares of common stock to RGC for an
                        additional  $6.0  million  at a  second  closing  to  be
                        completed  no later  than  July 15,  2000.  The  primary
                        condition to the second closing is the  effectiveness of
                        a  registration  statement  registering  the  resale  of
                        common stock underlying the Series Q Preferred Stock and
                        the  warrants  and the  Series  P  Preferred  Stock  and
                        warrants  issued  in  January  2000  to RGC  (see  above
                        discussion "Series P Convertible Preferred Stock").

                        The  shares  of  Series  Q  Preferred   Stock  carry  an
                        effective  annual  yield of 5%  (payable  in kind at the
                        time of conversion) and are convertible, at the holder's
                        option,  into  shares of  common  stock.  The  shares of
                        Series Q Preferred Stock will automatically be converted
                        into shares of common stock on March 15,  2003,  subject
                        to delay for specified events.  The conversion price for
                        the Series Q Preferred  Stock is $12.04  until April 26,
                        2000,  and thereafter is equal to the lesser of: (i) the
                        five day average  closing price of the Company's  common
                        stock  on  Nasdaq  during  the  22-day  period  prior to
                        conversion, and (ii) $12.04.


                                      F-94
<PAGE>

                                                                    eGLOBE, INC.
                         NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
16. SUBSEQUENT          The  Company  can  force a  conversion  of the  Series Q
     EVENTS             Preferred Stock on any trading day following a period in
     (CON'T)            which  the  closing  bid price of the  Company's  common
                        stock has been  greater  than  $24.08 for a period of at
                        least 20 trading days after the earlier of (1) the first
                        anniversary  of the date the common stock  issuable upon
                        conversion of the Series Q Preferred  Stock and warrants
                        is registered  for resale,  and (2) the  completion of a
                        firm commitment  underwritten public offering with gross
                        proceeds to us of at least $45.0 million.

                        The  Series  Q  Preferred  Stock is  convertible  into a
                        maximum  of  3,434,581  shares  of  common  stock.  This
                        maximum  share  amount is  subject  to  increase  if the
                        average closing bid prices of the Company's common stock
                        for the 20 trading  days ending on the later of June 30,
                        2000 and the 60th  calendar  day after the common  stock
                        issuable upon conversion of the Series Q Preferred Stock
                        and warrants is registered is less than $9.375, provided
                        that under no circumstances  will the Series Q Preferred
                        Stock be converted  into more than  7,157,063  shares of
                        common stock (the maximum  share amount will increase to
                        9,365,463  shares of the  Company's  common stock if the
                        Company  receives  written guidance from Nasdaq that the
                        issuance  of  the  Series  Q  Preferred  Stock  and  the
                        warrants  will not be  integrated  with the issuances of
                        the Series P Preferred  Stock and related  warrants.  In
                        addition,  no holder may  convert the Series Q Preferred
                        Stock or exercise the warrants it owns for any shares of
                        common stock that would cause it to own  following  such
                        conversion  or  exercise in excess of 4.9% of the shares
                        of the Company's common stock then outstanding.

                        The  Company  may be  required  to redeem  the  Series Q
                        Preferred Stock in the following circumstances:

                        (a)     if  the  Company  fails  to  perform   specified
                                obligations   under  the   securities   purchase
                                agreement or related agreements;


                                      F-95
<PAGE>

                                                                    eGLOBE, INC.
                         NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
16. SUBSEQUENT          (b)     if the Company or any of its subsidiaries  makes
    EVENTS                      an  assignment  for the benefit of  creditors or
    (CON'T)                     become   involved  in   bankruptcy   insolvency,
                                reorganization or liquidation proceedings;

                        (c)     if the Company  merges out of existence  without
                                the surviving  company  assuming the obligations
                                relating to the Series Q Preferred Stock;

                        (d)     if  the  Company's  common  stock  is no  longer
                                listed on the Nasdaq National Market, the Nasdaq
                                SmallCap Market, the NYSE or the AMEX;

                        (e)     if the  Series Q  Preferred  Stock is no  longer
                                convertible  into common stock  because it would
                                result  in an  aggregate  issuance  of more than
                                3,434,581 shares of common stock, as such number
                                may be adjusted,  and the Company has not waived
                                such limit or obtained stockholder approval of a
                                higher limit; or

                        (f)     if the  Series Q  Preferred  Stock is no  longer
                                convertible  into common stock  because it would
                                result  in an  aggregate  issuance  of more than
                                7,157,063  shares of the Company's  common stock
                                (the  maximum  share  amount  will  increase  to
                                9,365,463  shares of common stock if the Company
                                receives  written  guidance from Nasdaq that the
                                issuance of the Series Q Preferred Stock and the
                                warrants  will  not  be   integrated   with  the
                                issuances  of the Series P  Preferred  Stock and
                                related  warrants)   and  the  Company  has  not
                                obtained stockholder approval of a higher limit.

                        i1.COM

                        On December  31, 1999,  the Company  along with a former
                        IDX  executive  formed  i1.com.  i1.com is  developing a
                        distributed network of e-commerce applications that will
                        allow  small and  medium-sized  businesses  to  transact
                        business  over  the  Internet.   The  Company  initially
                        received  a 75%  interest  in  i1.com  in  exchange  for
                        providing  i1.com  access  to  the  Company's   IP-based
                        network infrastructure.

                        i1.com recently completed a $14.0 million equity private
                        placement. The Company now retains a 35% equity interest
                        and 45% voting interest in i1.com.


                                      F-96
<PAGE>

                                                                    eGLOBE, INC.
                         NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
16. SUBSEQUENT          CONVERSION OF PREFERRED STOCK INTO COMMON STOCK
    EVENTS
    (CON'T)             Subsequent to December 31, 1999, the remaining  Series D
                        Preferred Stock plus accrued  dividends through December
                        31,  2000,  all of Series E  Preferred  Stock,  Series F
                        Preferred  Stock,  Series  H  Preferred  Stock,  150,000
                        shares of the Series I  Preferred  Stock plus 8% accrued
                        value,  Series J  Preferred  Stock,  Series K  Preferred
                        Stock  and  the  remaining   Series  N  Preferred  Stock
                        converted into 14,391,271 shares of the Company's common
                        stock. See Note 10 for further discussion.


                                      F-97
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
17. SUPPLEMENTAL
    INFORMATION TO
    STATEMENTS OF
    CASH FLOWS
    AND NON-CASH
    INVESTING AND
    FINANCING
    ACTIVITIES

<TABLE>
<CAPTION>
                             ---------------------------------------------------------------------------------------------------
                                                                               Year          Nine Months          Year
                                                                              Ended             Ended             Ended
                                                                           December 31,      December 31,        March 31,
                                                                               1999             1998               1998
                             ---------------------------------------------------------------------------------------------------
                             <S>                                         <C>                <C>              <C>
                             Cash paid during the period for:
                                Interest                                 $ 1,368,000        $  208,000       $ 1,465,000
                                Income taxes                                 696,000           665,000         1,006,000
                             Non-cash investing and financing
                                activities:
                                Equipment acquired under
                                   capital lease obligations               1,036,000           329,000           312,000
                                Common stock issued for
                                   acquisition of equipment                        --               --           100,000
                                Exercise of stock options for
                                    notes receivable                        1,210,000               --                --
                                Value of warrants issued and
                                    reflected as debt discount             14,026,000               --                --
                                Value of warrants issued and
                                    reflected as stock offering
                                    cost                                      706,000               --                --
                                Unamortized debt discount
                                   related to warrants                      7,265,000          321,000           438,000
                                Stock issued as
                                   prepayment of debt                       5,616,000               --                --
                                Exchange of Notes for Series I
                                   Preferred Stock                          3,982,000               --                --
                                Preferred stock dividends                   7,330,000               --                --
                                Preferred stock dividend related
                                   to exchange of Series B
                                   Preferred Stock for Series H
                                   Preferred Stock                          4,600,000               --                --
                             ---------------------------------------------------------------------------------------------------
</TABLE>


                                      F-98
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
17. SUPPLEMENTAL
    INFORMATION TO
    STATEMENTS OF
    CASH FLOWS
    AND NON-CASH
    INVESTING AND
    FINANCING
    ACTIVITIES (CON'T)

<TABLE>
<CAPTION>
                             ---------------------------------------------------------------------------------------------------
                                                                                YEAR               NINE MONTHS
                                                                                ENDED                 ENDED          YEAR ENDED
                                                                             DECEMBER 31,           DECEMBER 31,      MARCH 31,
                                                                                 1999                  1998             1998
                             ---------------------------------------------------------------------------------------------------
                             <S>                                                   <C>               <C>                <C>
                             ACQUISITIONS, NET OF CASH ACQUIRED (NOTE 4):

                                 IDX:
                                  Working capital deficit, other
                                    than cash acquired                             $ (197,000)       $ (931,000)        $   --
                                  Property and equipment                                   --           975,000             --
                                  Intangible assets                                 6,510,000                --             --
                                  Purchase price in excess of the net
                                    assets acquired                                (4,536,000)       10,918,000             --
                                  Other assets                                             --           163,000             --
                                  Notes payable issued in acquisition                      --        (5,418,000)            --
                                  Series B Convertible Preferred Stock                     --            (1,000)            --
                                  Additional paid-in capital                       (1,485,000)       (3,499,000)            --

                                 UCI:
                                  Intangible assets                                   655,000                --             --
                                  Purchase price in excess of the net
                                   assets acquired                                   (698,000)        1,177,000
                                  Accrued cash payment paid in 1999                        --           (75,000)            --
                                  Note payable issued in acquisition                       --        (1,000,000)            --
                                  Common stock issued for
                                    acquisition                                            --          (102,000)            --

                                 TELEKEY:
                                  Working capital deficit, other than
                                    cash acquired                                  (1,281,000)               --             --
                                  Property and equipment                              481,000                --             --
                                  Intangible assets                                 2,975,000                --             --
                                  Purchase price in excess of the net
                                    assets acquired                                 2,131,000                --             --
                                  Acquired debt                                    (1,015,000)               --             --
                                  Notes payable issued in acquisition                (150,000)               --             --
                                  Issuance of Series F Convertible
                                    Preferred Stock                                    (1,000)               --             --
                                  Additional paid-in capital                       (1,956,000)               --             --
                                  Stock to be issued                                 (979,000)               --             --
</TABLE>


                                      F-99
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
17. SUPPLEMENTAL
    INFORMATION TO
    STATEMENTS OF
    CASH FLOWS
    AND NON-CASH
    INVESTING AND
    FINANCING
    ACTIVITIES (CON'T)

<TABLE>
<CAPTION>
                             ---------------------------------------------------------------------------------------------------
                                                                                YEAR               NINE MONTHS
                                                                                ENDED                 ENDED          YEAR ENDED
                                                                             DECEMBER 31,           DECEMBER 31,      MARCH 31,
                                                                                 1999                  1998             1998
                             ---------------------------------------------------------------------------------------------------
                             <S>                                                   <C>               <C>                <C>
                                 ACQUISITIONS, NET OF CASH ACQUIRED (NOTE 4) (CON'T)

                                 CONNECTSOFT:
                                  Working capital deficit, other than
                                    cash acquired                                  (2,142,000)                 --            --
                                  Property and equipment                              514,000                  --            --
                                  Intangible assets                                 9,120,000                  --            --
                                  Purchase price in excess of the net
                                    asset acquired                                  1,017,000                  --            --
                                  Acquired debt                                    (2,992,000)                 --            --
                                  Advances to Connectsoft prior to
                                    acquisition by eGlobe                            (971,000)                 --            --
                                  Issuance of Series G Preferred
                                    Stock exchanged for Series K
                                    Preferred Stock                                        --                  --            --
                                  Additional paid-in capital                       (3,000,000)                 --            --

                                 SWIFTCALL:
                                  Working capital deficit, other than
                                    cash acquired                                  (1,699,000)                 --            --
                                  Property and equipment                            5,144,000                  --            --
                                  Common stock                                         (1,000)                 --            --
                                  Additional paid-in capital                       (1,644,000)                 --            --
                                  Stock to be issued                               (1,645,000)                 --            --

                                 iGLOBE:
                                  Property and equipment                            6,686,000                  --            --
                                  Intangible assets                                 2,383,000                  --            --
                                  Purchase price in excess of net assets
                                    acquired                                        1,760,000                  --            --
                                  Deposits                                            900,000                  --            --
                                  Acquired debt                                    (1,786,000)                 --            --
                                  Issuance of Series M Preferred Stock                     --                  --            --
                                  Additional paid-in capital                       (9,643,000)                 --            --

                                 ORS:                                                                          --            --
                                  Working capital surplus, other than
                                    cash acquired                                      36,000                  --
                                  Property and equipment                              671,000                  --            --
                                  Intangible assets in LLC                          1,580,000                  --            --
                                  Other assets                                         40,000                  --            --
                                  Purchase price in excess of the net
                                    assets acquired                                   363,000                  --            --
                                  Minority interest                                (2,330,000)                 --            --
</TABLE>


                                     F-100
<PAGE>

                                                                    eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
17. SUPPLEMENTAL
    INFORMATION TO
    STATEMENTS OF
    CASH FLOWS
    AND NON-CASH
    INVESTING AND
    FINANCING
    ACTIVITIES  (CON'T)

<TABLE>
<CAPTION>
                             ---------------------------------------------------------------------------------------------------
                                                                                YEAR               NINE MONTHS
                                                                                ENDED                 ENDED          YEAR ENDED
                                                                             DECEMBER 31,           DECEMBER 31,      MARCH 31,
                                                                                 1999                  1998             1998
                             ---------------------------------------------------------------------------------------------------
                             <S>                                                   <C>               <C>                <C>
                                 ACQUISITIONS, NET OF CASH ACQUIRED (NOTE 4) (CON'T)

                                 COAST:
                                  Working capital surplus, other than
                                    cash acquired                                     938,000                --               --
                                  Property and equipment                            1,415,000                --               --
                                  Deposits                                             16,000                --               --
                                  Intangible assets                                 3,190,000                --               --
                                  Purchase price in excess of net assets
                                    acquired                                       14,344,000                --               --
                                  Acquired debt                                    (3,539,000)               --               --
                                  Common stock                                         (1,000)               --               --
                                  Issuance of Series O Convertible
                                    Preferred Stock                                        --                --               --
                                  Additional paid-in capital                      (16,379,000)               --               --
                             ---------------------------------------------------------------------------------------------------
                                 Net cash used to acquire companies               $ 2,799,000       $ 2,207,000         $     --
                             ---------------------------------------------------------------------------------------------------
</TABLE>

18. EVENTS              DEBT RENEGOTIATIONS
    SUBSEQUENT TO
    MARCH 24, 2000      On April 5, 2000,  the EXTL Note  Agreement  was amended
                        and EXTL  consented to the Company's  (1)  assumption of
                        the Coast notes  payable,  (2)  guarantee of these Coast
                        notes and (3)  granting  of a security  interest  in the
                        assets currently securing the Notes as well as the Coast
                        assets to the Coast noteholder.  The Coast notes payable
                        were  also  amended  on this  date  and  the  noteholder
                        consented  to (1) waive any  event of  default  that may
                        have  occurred  as a result  of the  Coast  merger,  (2)
                        permit  Coast to  guarantee  the EXTL Notes and Revolver
                        and to secure  such  guarantee,  and (3) revise the debt
                        covenants to be consistent with those in the EXTL Notes.
                        See Note 7 for further discussion.

                        SECURED ACCOUNTS PAYABLE

                        As of April 6, 2000,  the  Company's  subsidiary,  Trans
                        Global, is in arrears on its scheduled  payments to AT&T
                        and  is   currently   in   negotiations   with  AT&T  to
                        restructure  this  payable.  See  Note  13  for  further
                        discussion.

                                     F-101
<PAGE>

                                                                    eGLOBE, INC.
                                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
--------------------------------------------------------------------------------
ALLOWANCE FOR DOUBTFUL ACCOUNTS

<TABLE>
<CAPTION>
                                                   BALANCE AT       CHARGED TO                      TRANS GLOBAL      BALANCE
                                                    BEGINNING        COST AND                        ADJUSTMENT      AT END OF
DESCRIPTION                                         OF PERIOD        EXPENSES        DEDUCTIONS         (1)           PERIOD
------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>              <C>              <C>                <C>          <C>
YEAR ENDED DECEMBER 31, 1999                      $ 1,216,000      $ 2,528,000     $  538,000          $      --    $3,206,000
------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED DECEMBER 31, 1998               $ 1,702,000      $ 1,018,000     $1,504,000          $      --    $1,216,000
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MARCH 31, 1998                         $   373,000      $ 1,564,000     $  335,000          $ 100,000    $1,702,000
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  The accompanying  supplemental consolidated statements of operations do not
     include the results of Trans Global's operations for the three months ended
     March 31, 1998 as  discussed in the Summary of Accounting  Policies to the
     Supplemental  Consolidated Financial Statements. An adjustment is reflected
     above to account for the activity in the allowance account during this time
     period.


                                     F-102


<PAGE>




                                   SIGNATURES

Pursuant to the  requirements of Section 13 of 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed in its
behalf by the undersigned, thereunto duly authorized.

                                               eGlobe, Inc.
                                               (Registrant)

Date:  May  22 , 2000                           By       /S/    Anne Haas
                                                  ------------------------------
                                                            Anne Haas
                                                      Controller, Treasurer
                                                  (Principal Accounting Officer)
[{"type": "8-K", "sequence": "1", "description": "FORM 8-K", "secsgml_size_bytes": 480464}]
{"company-data": {"conformed-name": "EGLOBE INC", "cik": "0000842807", "assigned-sic": "7389", "irs-number": "133486421", "state-of-incorporation": "DE", "fiscal-year-end": "0331"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-10210", "film-number": "641276"}, "business-address": {"street1": "1250 24TH STREET NW", "street2": "SUITE 725", "city": "WASHINGTON", "state": "DC", "zip": "20037", "phone": "3036912115"}, "mail-address": {"street1": "1250 24TH STREET NW", "street2": "SUITE 725", "city": "WASHINGTON", "state": "DC", "zip": "20037"}, "former-company": {"former-conformed-name": "EXECUTIVE TELECARD LTD", "date-changed": "19920703"}}
SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K
                                 CURRENT REPORT
                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

    Date of Report (Date of                                 Commission File
   earliest event reported):                                    Number:
        March 23, 2000                                          1-10210

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

              DELAWARE                                          13-3486421
  (State or other jurisdiction of                             (IRS Employer
           incorporation)                                 Identification Number)

                         1250 24th Street, NW, Suite 725
                             Washington, D.C. 20037
               (Address of principal executive offices) (Zip Code)

              Registrant's telephone number, including area code:
                                 (202) 822-8981

          (Former name or former address, if changed since last report)

                                       NA
eGLOBE, INC.
--------------------------------------------------------------------------------

ITEM 5.  OTHER EVENTS

Effective  March 23,  2000,  pursuant  to an  Agreement  and Plan of Merger (the
"Merger")  entered  into on December  16, 1999,  a  wholly-owned  subsidiary  of
eGlobe,  Inc.  (the  "Company" or  "eGlobe"),  merged with and into Trans Global
Communications,  Inc.  ("Trans  Global")  with Trans  Global  continuing  as the
surviving corporation and becoming a wholly-owned subsidiary of the Company. The
Merger provided for the issuance of 40,000,000  shares of eGlobe common stock in
exchange for all of the outstanding common stock of Trans Global. The Merger has
been accounted for as a pooling of interests.

The Company's consolidated financial statements have been retroactively restated
as of December 31, 1999 and  December  31, 1998 and for the year ended  December
31, 1999,  the nine months ended  December 31, 1998 and the year ended March 31,
1998, to reflect the consummation of the Merger.  The supplemental  consolidated
financial  statements  included  herein give  retroactive  effect to the Merger,
which was accounted for using the pooling of interests method. As a result,  the
financial position,  results of operations, and statements of comprehensive loss
and cash flows are  presented as if Trans Global had been  consolidated  for all
periods  presented.  The supplemental  consolidated  statements of stockholders'
equity  reflect the  accounts of the  Company as if the common  stock  issued in
connection  with the  Merger  had been  issued  for all  periods  presented.  As
required  by  generally  accepted   accounting   principles,   the  supplemental
consolidated   financial   statements  will  become  the  historical   financial
statements  of the Company upon  issuance of the  financial  statements  for the
period that includes the consummation of the Merger.

In the supplemental consolidated balance sheets, the balance sheets of eGlobe as
of December 31, 1999 and 1998 have been  combined  with those of Trans Global as
of December  31, 1999 and 1998.  The  supplemental  consolidated  statements  of
operations,  supplemental  consolidated  statements of cash flows,  supplemental
consolidated  statements of stockholders'  equity and supplemental  consolidated
statements of comprehensive loss combine the results of the Company for the year
ended  December 31, 1999 and the nine months ended  December 31, 1998 with those
of Trans Global for the same periods. The supplemental consolidated statement of
operations,  supplemental  consolidated  statement  of cash flows,  supplemental
consolidated  statement of stockholders'  equity and  supplemental  consolidated
statement of  comprehensive  loss for the year ended March 31, 1998 combines the
results of the Company  for the year ended March 31, 1998 with  results of Trans
Global for the year ended December 31, 1997.

                                       2
Trans  Global's  net income for the three  months  ended March 31, 1998 has been
reflected in the supplemental consolidated statements of stockholders' equity as
an adjustment to accumulated  deficit. The cash activity during the three months
ended March 31, 1998 has been reflected as an adjustment in the year ended March
31,  1998  supplemental  consolidated  statement  of cash  flows.  There were no
seasonal trends in operations during the three months ended March 31, 1998.

The supplemental consolidated financial statements, including the notes thereto,
should  be  read in  conjunction  with  the  Company's  historical  consolidated
financial  statements  included  in its Annual  Report on Form 10-K for the year
ended December 31, 1999 and the financial statements of Trans Global included in
the Company's Current Report on Form 8-K/A filed on May 22, 2000.

The following is the Company's Management's Discussion and Analysis of Financial
Condition  and  Results of  Operations  relating to the  Company's  supplemental
consolidated financial statements set forth in Item 7 below.

                                       3
eGlobe, Inc.
--------------------------------------------------------------------------------

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.

The Management's  Discussion and Analysis of Financial  Condition and Results of
Operations  which  follows  is  reflective  of  the  supplemental   consolidated
financial statements referred to above.

GENERAL

During  1998  and 1999 we have  restructured  and  refocused  our  business  and
implemented  a new,  broader  services  strategy.  A  fundamental  part  of that
strategy  has been to actively  acquire  companies  which add new  services  and
technology which assist us in achieving our goal of becoming a premier outsource
provider of  applications  that globally  connect the telephone to the internet.
Most of the services and  technologies  needed to achieve our goal were acquired
through acquisitions.  As a result of the restructuring and the acquisitions, we
believe  that we are  reaching  our  goal  and can now  offer  services  such as
Internet protocol transmission services,  telephone portal and unified messaging
services.  We provide our global  outsourced  services  primarily to national or
former national telecommunications companies, to competitive telephone companies
in liberalized markets and to Internet service providers.

Beginning in December 1998 and throughout 1999, we completed eight  acquisitions
and in the first quarter of 2000 we completed a merger with Trans Global,  which
was  accounted  for using the pooling of interests  method.  As a result of this
merger,  all financial  information and Management's  Discussion and Analysis of
Financial  Condition  and Results of  Operations  have been  restated to include
Trans Global for all periods  presented.  The following  highlights  significant
business events for the Company primarily as a result of these acquisitions.

     o    In 1998 and 1999,  we  extended  our global  technology  platforms  to
          enable us to offer  multiple  products  that allow one to utilize  the
          internet through a telephone,  including IP voice and fax capabilities
          and unified messaging products and services.

     o    In 1998, we made two principal  investments  in technology to allow us
          to achieve  our  vision - the  acquisition  of IDX for our  underlying
          voice over the Internet  technology and the investment in a technology
          license  for  our  unified  messaging  service.   (see  discussion  of
          Connectsoft below).

                                       4
o    We changed our  year-end to a calendar  year-end,  beginning  with the
          nine month period ended December 31, 1998.

     o    To gain greater  control over the  development of the  technology,  we
          acquired  a  unified   messaging   technology   company,   Connectsoft
          Communications (now Vogo) in mid-1999.

     o    In 1999, we acquired  companies that added a network operating center,
          switches and call center  operations needed to expand our business and
          to offer the highest quality services to our customers.

     o    We acquired a specialty calling card business in early 1999.

     o    We  acquired  operations  in late 1999 that  allowed  us to expand our
          voice  over  Internet  protocol  operations  into Latin  American.  We
          acquired satellite  transponder space,  uplink and downlink facilities
          and  key  relationships  with  several  major  carriers  within  Latin
          America.

     o    Our merger with Trans  Global at the end of March 2000 has provided us
          with  significant  network,  revenues,  key  relationships  within the
          Caribbean  and the  Middle  East,  and a number of new  members of our
          senior  management  team.  The March  2000  Trans  Global  merger  was
          accounted  for as a pooling of interests  and  therefore the financial
          information  discussed  has been  restated  to combine  our  financial
          information with Trans Global's.

As a result of the acquisitions,  we now have the following  business  segments:
Network Services,  Customer Care, Retail Services and Enhanced Services. Network
Services  includes our  facilities-based,  direct  connection and resale network
with voice, fax and data termination  capabilities,  our Internet protocol voice
and fax capabilities and our toll free services.  Enhanced  Services consists of
global  IP-based  enhanced  services  including,  unified  messaging,  telephone
portal,  our clearing and settlement  services and our combined IVR (Interactive
Voice  Response) and IDR  (Interactive  Data  Response)  services and our legacy
global  card  services  enhancement  business.  Customer  Care,  consists of our
state-of-the-art  calling  center  for  eGlobe  services  and  other  customers,
including  customer care for a number of e-commerce  companies.  Retail Services
primarily  consists of our domestic  long-distance and Internet service provider
business  acquired  as part of the  Coast  acquisition.  All of  Trans  Global's
operations were in the Network Services segment.

The extensive acquisition activity,  the addition of new lines of business,  the
organic growth of these new lines, the change in year-end, the change in revenue
and expense mix, rate changes and the raising of new financing  discussed  below
have caused our  financial  information  to no longer be comparable to the prior
periods.  The  following  table  reflects  the  acquisitions  and the  merger in
chronological  order,  by  acquisition  date.  This  table also  identifies  the
acquisitions  and  merger  with a  segment  or  segments  and  provides  revenue
comparisons, after the elimination of inter-segment revenues, for the year ended
December 31, 1999 as compared to the nine month  period ended  December 31, 1998
and to the year ended March 31, 1998.

                                       5
REVENUE
                                                    ------------ ------------ -------------
                                                                    FOR THE
                                                    FOR THE YEAR  NINE MONTHS  FOR THE YEAR
                                                        ENDED        ENDED        ENDED
      (IN THOUSANDS)          DATE OF     BUSINESS  DECEMBER 31, DECEMBER 31,    MARCH 31,  DESCRIPTION OF
       COMPANY NAME         TRANSACTION    SEGMENT      1999         1998          1998     SERVICES
       ------------         -----------    -------      ----         ----          ----     --------
eGlobe-Card Services        Legacy       Enhanced   $  16,840       $21,360      $31,819       Pre Paid and Global
                                                                                               Post Paid Card Services

Executive TeleCard, Inc.    Legacy       Retail           394           553        1,304       Domestic long-distance
   (TeleCall)                                                                                  services

IDX International, Inc.     Dec.-98      Network        15,522          578           --       Internet protocol
                                                                                               transmission services

UCI                         Dec.-98      Enhanced           --           --           --       Development stage
                                                                                               company in
                                                                                               Mediterranean region

Telekey, Inc.               Feb.-99      Enhanced         2,968          --           --       Specialty calling card
                                                                                               services

Connectsoft (Vogo)          June-99      Enhanced           125          --           --       Global unified
                                                                                               messaging, telephone
                                                                                               portal services and a
                                                                                               technology license for
                                                                                               unified messaging
                                                                                               technology

Swiftcall                   July-99      Network             --          --           --       Network operating
                                                                                               center

iGlobe, Inc.                August-99    Network          3,608          --           --       Latin American Internet
                                                                                               protocol transmission
                                                                                               operations

Oasis Reservations          Sept.-99     Customer         1,637          --           --       Support services and
  Services (ORS)                         Care                                                  call center

Interactive Media           Dec.-99      Enhanced           133          --           --       Interactive voice and
  Works (IMW)                                                                                  Internet services

Coast International, Inc.   Dec.-99      Retail             607          --           --       Enhanced long-distance
                                                                                               services

                                                                                               Facilities-based, direct
Trans Global                                                                                   connection and resale
Communications, Inc.        March-00     Network        100,114      67,929       46,473       network
                                                      ---------    --------     --------

Total Revenue for the
   period                                             $ 141,948    $ 90,420     $ 79,596
                                                      =========    ========     ========
For a detailed discussion of each acquisition and segment information, see Notes
4 and 12 to the Supplemental Consolidated Financial Statements.

                                       6
We also completed  several debt and equity  financings during 1999 from which we
received  approximately $48.0 million in gross proceeds. In addition we received
approximately  $0.8  million from the  exercise of options and  warrants.  These
proceeds,  which total  approximately  $48.8  million were used to pay off debt,
further invest in the growth of the businesses, pay down outstanding liabilities
and provide other support for ongoing operations.  See further discussion of the
various debt  financings in Note 5, "Notes Payables and Long-Term Debt" and Note
7, "Related  Party  Transactions"  to the  Supplemental  Consolidated  Financial
Statements.  For  further  discussion  of the  various  equity  financings,  the
exercise of options and  warrants  and  purchase of common  stock by an existing
investor, see Note 10, "Stockholders'  Equity" to the Supplemental  Consolidated
Financial  Statements.  In January  2000,  we completed a $15.0  million  equity
financing  with Rose Glen and in March  2000 we  completed  $4.0  million  of an
additional  $10.0 million in equity  financing  with Rose Glen. We have received
$19.0 million of the total financing. The remaining balance of the $10.0 million
Rose  Glen  financing  will be  made  available  upon  the  registration  of the
underlying  stock.  See  Note  16,  "Subsequent   Events"  to  the  Supplemental
Consolidated Financial Statements.

OVERVIEW

We incurred a net loss of $55.1 million,  $6.0 million and $11.3 million for the
year ended  December 31, 1999,  the nine months ended  December 31, 1998 and the
year ended March 31, 1998,  respectively,  of which $29.1 million,  $6.9 million
and $16.0 million is attributable to the following charges to income:
(NINE MONTHS)
                                                                       DECEMBER 31,  DECEMBER 31,  MARCH 31,
                                                                           1999         1998          1998
                                                                           ----         ----          ----
Additional allowance for doubtful accounts                       $ 2.5          $1.0       $ 1.6
         Amortization of goodwill and other intangibles
            (primarily related to acquisitions)                             7.1           0.2         0.2
         Deferred compensation to employees of acquired
            companies                                                       1.5           0.4          --
         Depreciation and amortization                                      8.4           3.2         3.3
         Interest expense net of the amortization
           of debt discounts related to debt                                2.5           0.7         1.3
         Amortization of debt discounts                                     5.2           0.3         0.5
         Loss on early retirement of debt                                   1.9            --          --
         Settlement costs                                                    --           1.0          --
         Proxy-related litigation settlement costs                           --           0.1         3.9
         Corporate realignment costs                                         --            --         3.1
         Additional provision for taxes on income                            --            --         1.5
         Other items                                                         --            --         0.6
                                                                          -----          ----       -----
                           Total                                          $29.1          $6.9       $16.0
                                                                          =====          ====       =====
7
After deducting  these items,  the loss for the year ended December 31, 1999 was
$26.0 million,  compared to net income of $0.9 million for the nine months ended
December  31,  1998 and net income of $4.7  million for the year ended March 31,
1998.

The principal  factors for the losses  incurred for the year ended  December 31,
1999 are: (1) the  incurrence of upfront costs to build out capacity to meet our
anticipated  growth relating  primarily to the traffic that will result from the
Trans  Global   merger,   (2)  increased   competition   in  the   international
telecommunications  market,  (3) a change in pricing by Trans  Global's  primary
supplier during 1999 which increased costs and drove margins down, (4) the costs
of integrating  our  acquisitions,  (5) headcount  increases,  and (6) legal and
administrative   charges   principally   incurred  to  support  the  acquisition
operations.

REVENUE

During 1999,  14% of our revenue was generated  from  Enhanced  Services and 84%
from Network  Services.  The  predominant  contributors to revenue for 1999 were
card enhancement  services in Enhanced Services and voice and data over Internet
protocol transport and facilities-based, direct connection and resale network in
Network  Services.  Most of our  Enhanced  Services  revenue is  generated  from
providing  various card  services to customers  under  contracted  terms who are
charged on a per call basis. Certain new offerings such as unified messaging and
telephone portal and the interactive  voice and Internet protocol services often
have monthly  subscriber  charges in addition to per  transaction  charges.  The
transaction charge for service is on a per call basis,  determined  primarily by
minutes of use and  originating  and  terminating  points of call.  The charging
structure for Network Services transmissions revenues are based on the number of
minutes used upon the  completion of a call.  However,  some  contracts call for
monthly  minimums to be paid for the monthly services to be provided and limited
recurring  revenues  for  monthly  service  fees for  circuit  capacity  and for
co-location/switch partitioning services. Non-recurring charges to customers for
Network  Services  vary with the amount of minutes  utilized  and the country of
termination.  In prior  years we also  generated  revenue  from  other  sources,
generally  sales of billing  and  platform  systems  and  non-recurring  special
projects.

For the year ended  December 31, 1999,  Network  Services and Enhanced  Services
were the  principal  contributors  to  revenue.  However,  the card  enhancement
services element of the Enhanced Services segment has declined while the unified
messaging and telephone  portal services have begun to realize initial  revenues
to offset this decline.

COST

The  principal  component  of the cost of  revenue  is  transmission  costs  and
termination  charges by other U.S. and foreign  carriers to originate,  carry or
terminate  calls.  Transmission  expenses  are largely  fixed  monthly  payments
associated with capacity on domestic and international facilities and associated
switch  expenses.  Termination  expenses  consist  of  variable  cost per minute
charges paid to domestic and  international  carriers to terminate long distance
traffic. Traffic under resale arrangements is typically obtained on a

                                       8
variable,  per minute and short term basis  which  could  subject the Company to
unanticipated price increases and potential service  cancellations.  We continue
to pursue  strategies  for reducing  costs of  transmissions.  These  strategies
include purchasing underlying capacity, increasing minutes to generate economies
of  scale,   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 includes cost effective provisioning of our own IP
trunks.

Other  components of operating  costs are selling 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, which include goodwill and
intangibles arising principally from our acquisitions, over their useful lives.

RESULTS OF OPERATIONS

FOR THE YEAR ENDED  DECEMBER  31, 1999  COMPARED TO THE NINE MONTH  PERIOD ENDED
DECEMBER 31, 1998 AND THE YEAR ENDED MARCH 31, 1998

REVENUE.  Our revenues for 1999 have  increased to $141.9 million as compared to
$90.4  million for the nine months ended  December 31,  1998.  This  increase in
revenue  represents a 18% increase in revenues  when  compared on an  annualized
basis with the prior period, with Network Services ($119.2 million) and Enhanced
Services ($20.1 million) being the primary business segments contributing to the
increase.  Our  revenues  increased  to $90.4  million for the nine months ended
December  31,  1998 as  compared  to $79.6  million for the year ended March 31,
1998. When annualized for comparative purposes, we experienced a 51% increase in
revenue  for the nine  months  ended  December  31, 1998 as compared to the year
ended March 31,  1998.  The increase in revenue for 1999 as compared to the nine
months ended December 31, 1998 was primarily  attributable  to the growth in the
Network  Services  segments.  The growth in Network Services (from $68.5 million
for the nine months ended December 31, 1998 to $119.2 million for the year ended
December 31, 1999) can be principally attributed to the additions related to the
revenues of the IDX and iGlobe  acquisitions  and  increased  revenues for Trans
Global of $32.2  million.  The growth in Trans Global revenue from $67.9 million
for the nine  months  ended  December  31,  1998 to  $100.4  for the year  ended
December  31,  1999,   was  primarily  due  to  the  addition  of  over  15  new
wholesale-carrier  customers,  which  increased the number of customers to 40 at
December 31, 1999 as compared to  approximately  26 at December  31,  1998.  The
demand for  minutes  increased  at Trans  Global to  approximately  307  million
minutes at  December  31,  1999 from  approximately  228  million  minutes as of
December  31,  1998 as a result of  decreasing  prices.  This  increase in Trans
Global  revenue  approximates  an 11%  improvement in revenue (as annualized for
1998) or approximately a $10.0 million increase in revenue.  Also, $19.0 million
of the  increase  in  Network  Services  revenues  was due to  expansion  of the
facilities-based,  direct  connection and resale and Internet networks which are
now in 30 countries.  Other  increases in 1999 revenues  included  approximately
$3.0 million  attributable  to Telekey  which was acquired in February  1999 and
$1.6 million attributable

                                       9
to our call  center  operations  which  were  acquired  in  September  1999.  As
anticipated by management,  unified  messaging and telephone portal services did
not generate  material  revenues  during the two month period  subsequent to the
initial commercial launch of the service in October 1999.

The increase in revenues for the nine months ended December 31, 1998 as compared
to the year ended  March 31,  1998 was  primarily  due to the  increase in Trans
Global  revenues of $21.5 million ($44.1 million on an annualized  basis).  This
increase was due primarily to the addition of new  customers,  market growth and
an increased demand for services from existing clients.

Offsetting  a portion of the  increase in the 1999  revenue was a decline in the
card enhancement services revenue of 41% for the year ended December 31, 1999 as
compared to the nine month period ended  December 31, 1998 (as  annualized)  and
10% for the nine month  period  ended  December 31, 1998 as compared to the year
ended March 31, 1998 (as annualized).  The decline in the card services business
resulted  directly from a combination of a precipitous  decline in global prices
over 1999 and a series of management  policy decisions that removed us from most
aspects of the prepaid card business in North  America.  These  decisions led to
the  migration  of  customers  off our  platforms  and a decline in minutes  and
associated revenue as a result of contract  modifications to strengthen services
and control.

GROSS PROFIT.  For the year ended December 31, 1999, the nine month period ended
December  31,  1998,  and the year ended March 31,  1998,  gross profit was $5.0
million (representing less than 4% of sales), $16.5 million (representing 18% of
sales),  and  $20.8  million  (representing  26%  of  sales),  respectively.  An
anticipated increase in the cost of revenue related to leases of capacity in the
Network  Services  segment and other up-front  costs  necessary to implement new
routes and services were the key elements behind this margin decline in 1999. In
addition,  margins  were driven  down in 1999 by  increased  competition  in the
wholesale  telecommunications  markets and as the direct result of several major
carriers  demanding  lower prices.  Trans  Global's  circuit  costs  incurred in
transmitting  telecommunication services increased in 1999 by approximately $2.0
million  due to the  expansion  of its  international  network in Europe and the
Middle  East.  As long as the IP voice  network  of  Network  Services  is being
expanded with new routes and services  being added,  such up-front costs will be
incurred. It is also expected that costs to build out the network to accommodate
the anticipated  threefold  increase in traffic  resulting from the Trans Global
merger and the need to build out routes for Latin  America to grow iGlobe routes
and services  will  contribute  negatively  to gross  margins  through the first
quarter of 2000.  Also  included in the  difference  between the margins for the
year ended December 31, 1999, as compared to prior  periods,  are costs incurred
primarily  in the first  quarter of 1999 due to pricing  decisions  which led to
large negative margins in some card services  contracts.  During the nine months
ended  December  31,  1998 as compared  to the year ended  March 31,  1998,  the
reduction  in gross margin  percentage  was  primarily  due to the effect of the
increasingly  competitive  environment for international  wholesale services. We
believe margins will improve as we more  efficiently fill our routes and realize
the benefits of additional owned capacity through the Trans Global merger.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative  expenses totaled $35.0 million,  $16.3 million and $17.3 million
for the year ended  December 31, 1999,  the nine months ended  December 31, 1998
and the year ended March 31,  1998,  respectively.  Included in these costs is a
$2.5  million  provision  for  doubtful  accounts  compared  to a  $1.0  million
provision  for the nine  months  ended  December  31,  1998  and a $1.6  million
provision for the year ended March 31, 1998. Excluding these

                                       10
charges,  other  selling,  general  and  administrative  expenses,   principally
salaries  and related  expenses are  averaging  $8.1 million per quarter for the
year ended December 31, 1999, $5.1 million per quarter for the nine months ended
December  31,  1998 and $4.0  million  per  quarter for the year ended March 31,
1998.  The  principal  factors for the  increase in the 1999 and 1998  quarterly
average sales,  general and administrative costs were increases in headcount and
the related occupancy costs associated with the increase in headcount. Headcount
was 314 at December  31,  1999,  235 at  December  31, 1998 and 164 at March 31,
1998.  Most of the  increase  in 1999 was  related to the  acquisition  activity
through  which  approximately  95 employees  were added (before  adjustment  for
terminations/departures).  Most of these were added in the third quarter of 1999
related  to  the  iGlobe  (33  employees)   and  ORS  (3  full-time   employees)
acquisitions  and the fourth quarter of 1999 related to the Coast (59 employees)
acquisition. As included in the totals above, Trans Global's headcount was 38 at
December  31, 1999,  33 as of December 31, 1998 and 19 as of March 31, 1998.  As
the  operations of these  acquired  companies are  integrated,  these costs as a
percentage of revenue are expected to continue to decrease.

SETTLEMENT  COSTS.  As  described  in  Note 7 to the  Supplemental  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  Supplemental  Consolidated  Statement of Operations in
the quarter ended September 30, 1998.

CORPORATE  REALIGNMENT  COSTS. We incurred various  realignment costs during the
fiscal 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.  We did not  incur  realignment  costs  during  the nine  months  ended
December 31, 1998 nor for the year ended December 31, 1999.

DEFERRED COMPENSATION.  These non-cash charges totaled $1.5 million for the year
ended  December 31, 1999 and $0.4 million for the nine months ended December 31,
1998. This expense relates to stock allocated to employees of acquired companies
by  their  former  owners  out of  acquisition  consideration  paid by us.  Such
transactions, adopted by the acquired companies prior to acquisition, require us
to record the market value of the stock  issuable to employees as of the date of
acquisition as compensation expense with a corresponding credit to stockholders'
equity and to continue to record the effect of subsequent  changes in the market
price  of the  issuable  stock  until  actual  issuance.  Accordingly,  deferred
compensation  in future  reporting  periods will be reported based on changes in
the  market  price  of  our  common  stock.  See  Note  4  to  the  Supplemental
Consolidated   Financial   Statements  for  further   discussion  of  subsequent
renegotiations of certain of these issuances.

                                       11
DEPRECIATION AND AMORTIZATION EXPENSE. These expenses increased to $15.5 million
from $3.4  million and $3.5 million for the year ended  December  31, 1999,  the
nine  months  ended  December  31,  1998  and the year  ended  March  31,  1998,
respectively.  The increase is principally due to  amortization  charges of $7.1
million  related  to  goodwill  and  other   intangibles   associated  with  the
acquisitions  completed  since December 1, 1998. The balance of the increase was
primarily  attributable  to increases in the fixed assets of acquired  companies
and Trans Global.

PROXY RELATED  LITIGATION  EXPENSE.  During the nine month period ended December
31, 1998,  we incurred  $0.1  million in 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 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  related  to our  obligation  under the  Stipulation  of
Settlement to issue  additional  stock if the market price of our stock was less
than $10.00 per share during the defined periods.  We had 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.  In March 2000,  that  condition was satisfied and we
have no further  obligations  under the  Stipulation of  Settlement.  All shares
required to be issued under the  settlement  agreement  were issued to the class
action  litigants  and we have  no  further  obligations  under  the  settlement
agreement.

Additionally, we settled with another stockholder related to the same securities
class  action in May 1988 and issued that  stockholder  28,700  shares of common
stock  at the  market  price  at the  date of  settlement  for a total  value of
$81,000.

INTEREST  EXPENSE.  Interest  expense  totaled  $7.7  million for the year ended
December  31,  1999 as compared  to $1.0  million and $1.8  million for the nine
months ended December 31, 1998 and the year ended March 31, 1998,  respectively.
The increase was primarily due to amortization of the debt discounts  related to
the value of the warrants  associated with  acquisitions and financings,  and in
part due to an increase in debt.

OTHER EXPENSE.  We recorded a foreign currency  transaction loss of $0.1 million
during the year ended  December  31, 1999,  $0.1 million  during the nine months
ended  December 31, 1998 and $0.4 million for the year ended March 31, 1998. The
losses for all periods arose from foreign currency cash and accounts  receivable
balances we maintained during the period in which the U.S. dollar  strengthened.
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.

                                       12
INTEREST  INCOME.  Interest  income  totaled  $0.7  million  for the year  ended
December  31,  1999 as compared  to $0.5  million and $0.2  million for the nine
month  period ended  December  31, 1998 and the year ended March 31,  1998.  The
increase period to period is primarily due to higher interest income earned as a
result of the increased sales revenue and from cash received from various equity
and debt financings.

TAXES  (BENEFIT)  ON INCOME.  A tax benefit of  approximately  $1.0  million was
recorded for the year ended December 31, 1999 due to the operating loss incurred
by  Trans  Global  that  will be  carried  back to prior  years  as a  deduction
resulting in a federal income tax refund. This refund is expected to be received
during the second  quarter of 2000.  For the nine months ended December 31, 1998
and for the year ended March 31,  1998,  we  recorded a $0.6  million and a $2.0
million provision for income taxes, respectively. These provisions were based on
Trans Global having  operating  income in both periods  resulting in current tax
provisions.  Also,  we recorded an  additional  provision of $1.5 million in the
year ended March 31, 1998 based on the initial results of a restructuring study,
which identified  potential  international tax issues.  Settlements and payments
made with various tax  jurisdictions  have  decreased  our  estimated  remaining
liabilities  to $0.6 million as of December  31, 1999.  We continue to work with
various jurisdictions to settle outstanding tax obligations for prior years.

LOSS ON EARLY  RETIREMENT  OF DEBT. In August 1999, we repaid $4.0 million under
the $20.0  million  notes with EXTL  Investors  by issuing 40 shares of Series J
Preferred  Stock.  At the date of the exchange,  the carrying  value of the $4.0
million notes, net of the unamortized  discount of approximately  $1.9 million ,
was  approximately  $2.1  million.  The excess of the fair value of the Series J
Preferred  Stock of $4.0 million  over the  carrying  value of the notes of $1.9
million was recorded as an extraordinary loss on early retirement of debt during
1999.

LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA

As we continue  our  aggressive  growth plan into the year 2000 and we intend to
pursue that plan into the foreseeable future, it will require large cash demands
and  aggressive  cash  management.  In meeting  our  objectives,  we have raised
significant  financing  through a combination  of issuances of preferred  stock,
proceeds  from the  exercise of warrants  and  options  and a  significant  debt
placement with one of our major  stockholders.  Cash and cash  equivalents  were
$2.7 million at December 31, 1999 compared to $4.0 million at December 31, 1998.
Short-term  investments  were $1.5  million at December  31, 1999 as compared to
$12.3 million at December 31, 1998. The decrease in cash and cash equivalents of
$1.3 million and decrease in short-term investments of $10.8 million in 1999 was
primarily  due  to  growing  cash  and  investment  needs  as a  result  of  the
acquisition  activity  during the year and due to fixed asset purchases of $12.3
million  associated  with  the  expansion  and  development  of  Trans  Global's
international  network.  Accounts receivable,  net, increased by $4.9 million to
$15.1  million at December  31, 1999 from $10.2  million at December  31,  1998,
mainly due to increased  revenues and the  extension of credit to new  wholesale
carrier  customers.  Accounts payable and accrued expenses totaled $53.6 million
at  December  31,  1999 (as  compared to $36.8  million at  December  31,  1998)
resulting principally from

                                       13
liabilities assumed through  acquisitions for which the outstanding  balances as
of the year ended December 31, 1999 approximate $14.8 million. In addition,  the
increase  was in part due to  deferrals  of  payments to certain  vendors.  Cash
outflows from operating  activities for the year ended December 31, 1999 totaled
$23.7  million,  as compared to cash inflows of $14.1 million for the nine month
period ended  December 31, 1998.  This  decrease was due primarily to our growth
through  acquisitions  and the  effect  that  the  acquisition  activity  had on
operating  losses,  resulting in overall lower gross margins and higher  selling
general and  administrative  expenses.  Also,  we  experienced  lower margins in
wholesale  transmission  services and in some card services as discussed earlier
in "Results of Operations".

There was a net working capital deficiency of $44.7 million at December 31, 1999
compared to a deficiency of $25.5 million at December 31, 1998.

Cash outflows for investing  activities  during the year ended December 31, 1999
totaled $5.7 million, which was $9.3 million less than the cash outflows for the
nine months  ended  December 31, 1998.  This  decrease was due  primarily to net
purchases of short-term  investments  of $5.0 million in 1998 as compared to net
sales of these  investments  of $10.8  million in 1999 and no 1999  advances  to
non-affiliates  subsequently  acquired as compared to 1998. These decreases were
offset by higher  1999  purchases  of  property  and  equipment  and by our 1999
purchases  of  Telekey,  Connectsoft,  Swiftcall,  iGlobe,  ORS and Coast  which
required  approximately  $2.8 million,  as compared to $2.2 million  required to
purchase IDX in 1998. See Note 4, "Business  Acquisitions"  to the  Supplemental
Consolidated   Financial   Statements  for  further  discussion   regarding  the
acquisitions.

Cash generated from financing  activities  totaled $28.1 million during the year
ended  December  31,  1999  compared to less than $0.1  million  during the nine
months ended December 31, 1998. This increase of $28.0 million was primarily due
to our  receiving  a  financing  commitment  of  $20.0  million  in the  form of
long-term debt with our largest stockholder ("Lender").  Under this arrangement,
we  initially  received an  unsecured  loan of $7.0  million  until  stockholder
approval  was  received.  Upon  stockholder  approval  in June 1999,  the Lender
purchased  $20.0  million in secured notes with which we repaid the initial $7.0
million  loan.  Under this  agreement,  we could borrow up to $20.0 million with
monthly  principal and interest  payment of $377,000  with a balloon  payment of
$8.6 million due in June 2002. Also, under the agreement, the Lender provided an
accounts  receivable  revolver credit note  ("Revolver") for an amount up to the
lesser of (1) 50% of eligible  receivables  (as  defined)  or (2) the  aggregate
amount of principal that has been repaid to date.  Principal and interest on the
Revolver  are payable on the earliest to occur of (i) the third  anniversary  of
the  agreement,  June  30,  2002,  or (ii) the date of  closing  of a  Qualified
Offering as defined in the  agreement.  In August 1999 we agreed to issue to the
Lender 40 shares of Series J Preferred  Stock as  prepayment  of $4.0 million of
the  outstanding  $20.0  million.  The exchange was finalized in November  1999.
Pursuant to the  exchange  agreement,  the $4.0 million is not subject to redraw
under the Revolver.  As of December 31, 1999, we have drawn down $1.2 million on
the Revolver.

                                       14
We also  received  proceeds  of $0.8  million  from the  exercise of options and
warrants,  $12.7 million in proceeds from  equity-based  financings of preferred
stock and $0.3 million from the sale of common stock. Additionally, Trans Global
entered into a financing agreement with a telecommunications  vendor to fund the
purchase of switch  hardware and software for a total of $3.3 million payable in
36 monthly  payments of $0.1 million  through  June 2002.  These  proceeds  were
offset  by  principal  payments  of $18.2  million  on notes  payable  primarily
consisting  of the payment of $7.0 million on the  unsecured  loan, as discussed
earlier,   and  payment  of  $7.5  million  on  an  unsecured   note  due  to  a
telecommunications  company. In addition,  we have made payments of $0.9 million
on various capital leases. See Notes 5, "Notes Payable and Long-Term Debt" and 7
"Related  Party  Transactions"  to  the  Supplemental   Consolidated   Financial
Statement for further discussion.

In the nine month  period  ended  December  31,  1998,  in  addition to the $2.2
million paid in connection  with the  acquisition of IDX, the Company  purchased
property and equipment of approximately $5.0 million and made other investments,
principally  net  purchases of  short-term  investments  by Trans Global of $6.7
million and advances  totaling $1.0 million to Connectsoft prior to acquisition.
The  property  and  equipment  expenditures  were  principally  for upgrades and
additions to the global  network of operating  platforms.  Cash  generated  from
financing activities totaled less than $0.1 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 was payable in December 1999
and subsequently  extended to April 2000 offset by payments on capital leases of
$0.2 million and payments on notes of $0.7 million.

On an operating level, we are continuing to renegotiate our relationship with an
entity that was formerly one of our largest customers.  As of December 31, 1999,
7.7% of our net accounts receivable of $15.1 million was due from this entity to
which  extended  credit  terms  have been  granted.  The new  arrangement,  once
finalized, will establish payment terms and sales growth, which will assure more
effective and timely collection of receivables from the customer and will permit
renewed growth in the customer's business.  This arrangement will also assist in
the collection of certain amounts due to us under the extended credit terms.

On December 14, 1999,  Trans Global entered into an agreement  with AT&T,  Trans
Global's largest supplier, regarding the payment of various past due 1999 switch
and circuit costs.  Pursuant to that  agreement,  Trans Global has agreed to pay
AT&T  approximately  $13.8 million in  consecutive  monthly  installments  at 9%
interest through January 1, 2001. As of December 31, 1999, the remaining balance
due to AT&T was $13.5 million.  As part of the agreement with AT&T, Trans Global
entered into a security agreement (Security  Agreement) granting AT&T a security
interest in certain  fixed assets owned by Trans Global as of December 14, 1999.
As of April 6,  2000,  Trans  Global  has not paid  $1.5  million  of  scheduled
payments that were due in April 2000.  Trans Global is currently in  discussions
with AT&T  regarding  alternative  options  for  settlement  of the  outstanding
obligation.  There  can be no  assurances  that  Trans  Global  will  be able to
satisfactorily  resolve this matter. Should this not be resolved and should AT&T
take possession of the assets held as security, Trans Global believes that their
business will not be adversely impacted. There is no guarantee that Trans Global
and  therefore  our business  will not have its  operations  affected  adversely
should a satisfactory resolution between the parties not be reached.

CURRENT FUNDING REQUIREMENTS

Current  funds  will not  permit  us to  achieve  the  growth,  both  short  and
long-term,  that  management is targeting.  That growth will require  additional
capital.  The plan under which we are currently  operating requires  substantial
additional  funding  from April 2000  through  the end of the year 2000 of up to
$48.0 million.  We anticipate  that this capital will come from a combination of
financings  that  could  consist of debt,  private  equity,  a public  follow-on
offering,  or a line of credit  facility  during the year,  with the possibility
that the amount of  financing  could be  diminished  by secured  equipment-based
financings.

                                       15
Even if we meet our projections for becoming EBITDA  (Earnings  Before Interest,
Taxes,  Depreciation and Amortization)  positive at the end of third quarter  of
2000, we will still have capital  requirements through December 2000. We need to
fund the pre-existing liabilities and notes payable obligations and the purchase
of capital  equipment,  along with financing our growths plans to meet the needs
of our announced acquisition program.

For the first  quarter of 2000, we have met our initial cash  requirements  from
(1)  proceeds  from the exercise of options and  warrants of $2.4  million,  (2)
proceeds of $0.5 million from the sale of Series N Preferred Stock, (3) proceeds
of $15.0 million from the sale of Series P Convertible  Preferred Stock, and (4)
proceeds of $4.0 million from the sale of Series Q Convertible  Preferred Stock.
These capital transactions are discussed below.

     o    During January 2000 and thereafter, we received proceeds totaling $2.4
          million,  from the  exercise of various  options and  warrants.  These
          exercises  occurred  primarily as a result of the  improvement  in our
          stock  price  during  the  month  of  January  2000  and as  sustained
          thereafter.

     o    In January 2000, we received  proceeds of  approximately  $0.5 million
          from the sale of Series N Preferred  Stock.  See Note 16,  "Subsequent
          Events" to the  Supplemental  Consolidated  Financial  Statements  for
          further discussion.

     o    On January 27, 2000,  we received  proceeds of $15.0  million from the
          sale of Series P Convertible Preferred Stock. See Note 16, "Subsequent
          Events" to the  Supplemental  Consolidated  Financial  Statements  for
          further discussion.

     o    On March 17, 2000, we received  proceeds of $4.0 million from the sale
          of Series Q Convertible  Preferred  Stock. We will receive an addition
          $6.0 million in proceeds  immediately  upon the  effectiveness  of the
          registration of the common stock underlying this Preferred Stock.

In addition to the firm commitments discussed previously, we are proceeding with
other financing opportunities,  which have not been finalized. We have a variety
of opportunities in both the debt and equity market to raise the necessary funds
which we need to achieve our growth plan through the end of the year 2000.

The Company  anticipates that increased sales in the  international  market with
higher margins will reduce its net working capital  deficiency and contribute to
its funding requirements during the remainder of 2000. However, the Company will
be required to borrow or raise  additional  capital in order to meet its funding
requirements through December 31, 2000.

                                       16
There is a risk that we will not reach  breakeven as projected and will continue
to incur operating  losses.  If this occurs and should we be unsuccessful in our
efforts to raise  additional  funds to cover such losses,  then our growth plans
would have to be sharply curtailed and our business would be adversely affected.

TAXES. During 1998, we undertook a study to simplify eGlobe's 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
findings.  The IRS has  accepted  our returns and has decided not to audit these
returns.  We have paid all taxes  associated with these returns and all interest
invoiced by the IRS to date.  Neither the final  outcome of this  process or the
outcome of any other issues can be predicted with certainty.

As of December  31,  1999,  we have  recorded a net  deferred tax asset of $26.5
million and have  approximately  $57.7 million U.S. and $2.0 million foreign 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 U.S. and foreign tax provisions.  The U.S. carryforwards
expire in various  years  through 2019 and are subject to  limitation  under the
Internal  Revenue  Code of 1986,  as amended.  The foreign  net  operating  loss
carryforwards  expire in various  years  through  2004 and are  subject to local
limitations on use.

                                       17
A receivable for a federal income tax refund of  approximately  $1.0 million was
recorded as of December 31, 1999  relating to Trans  Global's  loss  carrybacks.
This refund is expected to be received  during the second  quarter of 2000.  See
Note 11, "Taxes  (Benefit) on Income  (Loss)" to the  Supplemental  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 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, as extended by SFAS No. 137, is effective for
fiscal years beginning after June 15, 2000 and is currently not applicable to us
because we do not enter into hedging or derivative transactions.

                                       18
eGLOBE, INC.
                                      ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS
                         INDEX TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS

         The following are the supplemental  consolidated  financial  statements
         and exhibits of eGlobe,  Inc. and subsidiaries  which are filed as part
         of this report:
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Certified Public Accountants                                               F-2

         Report of Independent Auditors                                                                   F-3

         Supplemental Consolidated Balance Sheets as of December 31, 1999 and 1998                        F-4 - F-5

         Supplemental Consolidated Statements of Operations for the Year Ended
           December 31, 1999, the Nine Months Ended December 31, 1998 and the
           Year Ended March 31, 1998                                                                      F-6 - F-7

         Supplemental Consolidated Statements of Stockholders' Equity for the Year
           Ended December 31, 1999, the Nine Months Ended December 31, 1998
           and the Year Ended March 31, 1998                                                              F-8 - F-9

         Supplemental Consolidated Statements of Comprehensive Loss for the Year
           Ended December 31, 1999, the Nine Months Ended December 31, 1998
           and the Year Ended March 31, 1998                                                              F-10

         Supplemental Consolidated Statements of Cash Flows for the Year Ended
           December 31, 1999, the Nine Months Ended December 31, 1998 and the
           Year Ended March 31, 1998                                                                      F-11

         Summary of Accounting Policies                                                                   F-12 - F-26

         Notes to Supplemental Consolidated Financial Statements                                          F-27 - F-101

SUPPLEMENTAL SCHEDULE -

         II - Valuation and Qualifying Accounts                                                           F-102

All other  schedules  are omitted  because the  required  information  is either
inapplicable  or  is  included  in  the  supplemental   consolidated   financial
statements or the notes thereto.

Exhibit 23.1      Consent of Independent Certified Public Accountants

Exhibit 23.2      Consent of Independent Auditors
F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
eGlobe, Inc.
Washington, D.C.

We have audited the  accompanying  supplemental  consolidated  balance sheets of
eGlobe,  Inc. and  subsidiaries as of December 31, 1999 and 1998 and the related
supplemental  consolidated  statements  of  operations,   stockholders'  equity,
comprehensive loss and cash flows for the year ended December 31, 1999, the nine
months  ended  December  31,  1998  and the  year  ended  March  31,  1998.  The
supplemental  consolidated  financial  statements give retroactive effect to the
merger of eGlobe, Inc. and Trans Global Communications,  Inc. on March 23, 2000,
which has been  accounted  for as a pooling of  interests  as  described  in the
Summary  of  Accounting  Policies  to the  supplemental  consolidated  financial
statements.  These financial  statements and schedule are the  responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial  statements  based  on our  audits.  We did not  audit  the  financial
statements of Trans Global  Communications,  Inc.,  which  financial  statements
reflect total assets of approximately $27,988,000 and $28,087,000 as of December
31,  1999  and  1998,   respectively,   and  total  revenues  of   approximately
$100,445,000,  $85,119,000 and $46,473,000 for each of three years in the period
ended December 31, 1999,  respectively.  Those financial statements were audited
by another  auditor  whose  report has been  furnished  to us, and our  opinion,
insofar as it relates to the amounts  included for Trans Global  Communications,
Inc., is based solely on the report of the other auditor.

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 and the report of the other  auditor  provide a reasonable  basis for our
opinion.

In our  opinion,  based on our audits and the report of the other  auditor,  the
supplemental consolidated financial statements referred to above present fairly,
in  all  material  respects,   the  financial  position  of  eGlobe,   Inc.  and
subsidiaries at December 31, 1999 and 1998, and the results of their  operations
and their cash flows for the year ended December 31, 1999, the nine months ended
December  31, 1998 and the year ended March 31, 1998,  after giving  retroactive
effect to the merger referred to above,  in conformity  with generally  accepted
accounting principles.

                                            /s/ BDO SEIDMAN, LLP

March 24, 2000, except for Notes 10 and 18,
which  are as of April 6, 2000
Denver, Colorado

                                      F-2
Report of Independent Auditors

Board of Directors
Trans Global Communications, Inc.
New York, New York

We have audited the consolidated balance sheets of Trans Global  Communications,
Inc.  and  subsidiaries  as of  December  31,  1999 and  1998,  and the  related
consolidated  statements of operations,  stockholders' equity (deficit) and cash
flows for each of the three years in the period ended  December 31, 1999.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of the
Company at December  31, 1999 and 1998,  and the  consolidated  results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States.

                                            /s/ Ernst & Young LLP

February 25, 2000
New York, New York

                                      F-3
eGLOBE, INC.
                                        SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
DECEMBER 31,                                                           1999                     1998
----------------------------------------------------------------------------------------------------------------
ASSETS (Notes 7 and 13)
CURRENT:
   Cash and cash equivalents                                           $  2,659,000             $ 4,031,000
   Restricted cash                                                          158,000                 101,000
   Short-term investments                                                        --              11,167,000
   Restricted short-term investments                                      1,492,000               1,131,000
   Accounts receivable, less
        allowance of $3,206,000 and
        $1,216,000 for doubtful accounts                                 15,142,000              10,226,000
   Other receivables                                                      1,406,000                 651,000
   Prepaid expenses                                                       1,584,000               1,628,000
   Other current assets                                                     639,000                 245,000
----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                     23,080,000              29,180,000

PROPERTY AND EQUIPMENT,
   net of accumulated depreciation
   and amortization (Notes 1, 5 and 13)                                  42,078,000              20,198,000

GOODWILL, net of accumulated amortization
   of $1,572,000 and $140,000 (Note 4)                                   24,904,000              11,865,000

OTHER INTANGIBLE ASSETS,
   net of accumulated amortization
   of $6,466,000 and $786,000 (Note 2)                                   21,674,000                 241,000

OTHER:

   Advances to non-affiliate, subsequently
        acquired (Note 4)                                                        --                 971,000
   Deposits                                                               1,659,000                 519,000
   Other assets                                                             400,000               1,405,000
----------------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS                                                        2,059,000               2,895,000
================================================================================================================
TOTAL ASSETS                                                           $113,795,000             $64,379,000
================================================================================================================
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements.

                                      F-4
eGLOBE, INC.
                            SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS (CONTINUED)
--------------------------------------------------------------------------------
DECEMBER 31,                                                          1999                   1998
----------------------------------------------------------------------------------------------------------------
LIABILITIES, MINORITY INTEREST, REDEEMABLE COMMON STOCK AND
 STOCKHOLDERS' EQUITY
 CURRENT:

     Accounts payable (Note 13)                                            $41,558,000            $ 29,913,000
     Accrued expenses (Note 3)                                              10,992,000               6,915,000
     Income taxes payable (Note 11)                                            560,000               1,915,000
     Notes payable and current maturities of long-
        term debt (Note 5)                                                   7,868,000              13,685,000
     Notes payable and current maturities of long-
        term debt-related parties (Note 7)                                   4,676,000               1,154,000
     Deferred revenue                                                        1,331,000                 486,000
     Other liabilities                                                         797,000                 567,000
----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                                   67,782,000              54,635,000
ACCOUNTS PAYABLE - LONG-TERM (Note 13)                                       1,000,000                       -
LONG-TERM DEBT, net of current maturities (Note 5)                           5,194,000               1,237,000
LONG-TERM DEBT - RELATED PARTIES, net of current
     maturities (Note 7)                                                     8,301,000                       -
----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                           82,277,000              55,872,000
----------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
     (Notes 3, 4, 9, 10, 11, 13, 14 and 16)
MINORITY INTEREST (Note 4)                                                   2,800,000                      --
REDEEMABLE COMMON STOCK (Note 7)                                               700,000                      --
STOCKHOLDERS' EQUITY (Note 10):
     Preferred stock, all series, $.001 par value,
        10,000,000 and 5,000,000 shares
        authorized, 1,927,791 and 500,075 shares
        outstanding                                                              2,000                   1,000
     Common stock, $.001 par value, 100,000,000
         Shares authorized, 69,580,604 and 56,362,966
         Shares outstanding                                                     70,000                  56,000
     Stock to be issued                                                      2,624,000                      --
     Notes receivable                                                       (1,210,000)                     --
     Additional paid-in capital                                            106,718,000              34,117,000
     Accumulated deficit                                                   (80,682,000)            (25,578,000)
     Accumulated other comprehensive income (loss)                             496,000                 (89,000)
----------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                                  28,018,000               8,507,000
================================================================================================================
TOTAL LIABILITIES, MINORITY INTEREST,
    REDEEMABLE COMMON STOCK AND STOCKHOLDERS'
    EQUITY                                                                $113,795,000             $64,379,000
================================================================================================================
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements.

                                      F-5
eGLOBE, INC.
                              SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
YEAR               NINE MONTHS             YEAR
                                                                 ENDED                  ENDED               ENDED
                                                              DECEMBER 31,          DECEMBER 31,           MARCH 31,
                                                                  1999                 1998                 1998
---------------------------------------------------------------------------------------------------------------------
REVENUE  (Note 12)                                           $141,948,000         $  90,420,000         $ 79,596,000

COST OF REVENUE                                               136,941,000            73,929,000           58,751,000
---------------------------------------------------------------------------------------------------------------------
GROSS PROFIT                                                    5,007,000            16,491,000           20,845,000
---------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
    Selling, general and administrative                        34,967,000            16,333,000           17,255,000
    Deferred compensation related to
        acquisitions (Note 4)                                   1,485,000               420,000                   --
    Depreciation and amortization                               8,356,000             3,196,000            3,342,000
    Amortization of goodwill and other
        intangible assets                                       7,112,000               201,000              186,000
    Settlement costs (Note 7)                                          --               996,000                   --
    Corporate realignment expense (Note 3)                             --                    --            3,139,000
---------------------------------------------------------------------------------------------------------------------
TOTAL COSTS AND EXPENSES                                       51,920,000            21,146,000           23,922,000
---------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS                                          (46,913,000)           (4,655,000)          (3,077,000)
---------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
      Interest expense                                         (7,733,000)           (1,039,000)          (1,818,000)
      Interest income                                             686,000               482,000              247,000
      Foreign currency transaction loss                           (99,000)             (131,000)            (410,000)
      Minority interest in income (Note 4)                        (78,000)                   --                   --
      Proxy related litigation expense (Note 8)                        --              (119,000)          (3,901,000)
      Other income (expense), net                                 (28,000)               82,000             (337,000)
---------------------------------------------------------------------------------------------------------------------
TOTAL OTHER EXPENSE                                            (7,252,000)             (725,000)          (6,219,000)
---------------------------------------------------------------------------------------------------------------------
LOSS BEFORE TAXES (BENEFIT) ON INCOME AND
      EXTRAORDINARY ITEM                                      (54,165,000)           (5,380,000)          (9,296,000)

TAXES (BENEFIT) ON INCOME (LOSS) (Note 11)                       (962,000)              578,000            1,961,000
=====================================================================================================================
NET LOSS BEFORE EXTRAORDINARY ITEM                            (53,203,000)           (5,958,000)         (11,257,000)
=====================================================================================================================
F-6
eGLOBE, INC.
                  SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
--------------------------------------------------------------------------------
YEAR            NINE MONTHS             YEAR
                                                                        ENDED              ENDED                ENDED
                                                                     DECEMBER 31,       DECEMBER 31,           MARCH 31,
                                                                        1999                1998                 1998
--------------------------------------------------------------------------------------------------------------------------
LOSS ON EARLY RETIREMENT OF DEBT (Note 7)                            (1,901,000)                  --                   --
--------------------------------------------------------------------------------------------------------------------------
NET LOSS                                                            (55,104,000)          (5,958,000)         (11,257,000)

PREFERRED STOCK DIVIDENDS (Note 10)                                 (11,930,000)                  --                   --
--------------------------------------------------------------------------------------------------------------------------
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS                       $(67,034,000)         $(5,958,000)       $ (11,257,000)
--------------------------------------------------------------------------------------------------------------------------
NET LOSS PER SHARE (BASIC AND DILUTED) (Note 6):

      Net loss before extraordinary item                           $      (1.08)         $     (0.10)       $       (0.20)
      Loss on early retirement of debt                                    (0.03)                  --                   --
--------------------------------------------------------------------------------------------------------------------------
      NET LOSS PER SHARE (Note 6)                                  $      (1.11)         $     (0.10)       $       (0.20)
==========================================================================================================================
      WEIGHTED AVERAGE SHARES OUTSTANDING (Note 6)                   60,610,548           57,736,654           57,082,495
==========================================================================================================================
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements.

                                      F-7
eGLOBE, INC.
                    SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
   FOR THE YEAR ENDED DECEMBER 31, 1999, THE NINE MONTHS ENDED DECEMBER 31, 1998
                                               AND THE YEAR ENDED MARCH 31, 1998
--------------------------------------------------------------------------------
PREFERRED STOCK            COMMON STOCK                                   ADDITIONAL
                                              ---------------            ------------       STOCK TO BE      NOTES       PAID- IN
                                            SHARES      AMOUNT       SHARES      AMOUNT       ISSUED      RECEIVABLE     CAPITAL
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT BEGINNING OF PERIOD                --       $  --      55,861,240   $ 56,000     $       --     $     --   $16,190,000
Stock issued in lieu of cash payments         --          --          42,178         --             --           --       244,000
Stock issued in connection with
  private placement, net (Notes 7 and 10)     --          --       1,425,000      1,000             --           --     7,481,000
Stock to be issued (Note 8)                   --          --              --         --      3,500,000           --            --
Exercise of stock appreciation rights         --          --          18,348         --             --           --       138,000
Issuance of warrants to purchase
  stock (Note 10)                             --          --              --         --             --           --     1,136,000
Foreign currency translation adjustment       --          --              --         --             --           --            --
Net loss for the year                         --          --              --         --             --           --            --
Trans Global net income for the three
     months ended March 31, 1998              --          --              --         --             --           --            --
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1998                       --          --      57,346,766     57,000      3,500,000           --    25,189,000
Stock issued in connection with
  litigation settlement (Note 8)              --          --          28,700         --             --           --        81,000
Stock issued to common
  escrow (Note 8)                             --          --         350,000         --     (3,500,000)          --     3,500,000
Issuance of warrants to purchase stock
  (Note 7)                                    --          --              --         --             --           --       328,000
Stock issued in connection with
  acquisitions (Notes 4 and  10)         500,000       1,000          62,500         --             --           --     3,601,000
Exchange of common stock for Series C
  Preferred Stock (Notes 7 and 10)            75          --      (1,425,000)    (1,000)            --           --       998,000
Deferred compensation costs   (Note 4)        --          --              --         --             --           --       420,000
Foreign currency translation adjustment       --          --              --         --             --           --            --
Net loss for the period                       --          --              --         --             --           --            --
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998               500,075       1,000      56,362,966     56,000             --           --    34,117,000
====================================================================================================================================
ACCUMULATED
                                                             OTHER            TOTAL
                                          ACCUMULATED    COMPREHENSIVE    STOCKHOLDERS
                                            DEFICIT       INCOME (LOSS)       EQUITY
---------------------------------------------------------------------------------------
BALANCE AT BEGINNING OF PERIOD           $ (8,779,000)       $  82,000     $7,549,000
Stock issued in lieu of cash payments              --               --        244,000
Stock issued in connection with
  private placement, net (Notes 7 and 10)          --               --      7,482,000
Stock to be issued (Note 8)                        --               --      3,500,000
Exercise of stock appreciation rights              --               --        138,000
Issuance of warrants to purchase
  stock (Note 10)                                  --               --      1,136,000
Foreign currency translation adjustment            --          (50,000)       (50,000)
Net loss for the year                     (11,257,000)              --    (11,257,000)
Trans Global net income for the three
     months ended March 31, 1998              416,000               --        416,000
-------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1998                   (19,620,000)          32,000      9,158,000
Stock issued in connection with
  litigation settlement (Note 8)                   --               --         81,000
Stock issued to common
  escrow (Note 8)                                  --               --             --
Issuance of warrants to purchase stock
  (Note 7)                                         --               --        328,000
Stock issued in connection with
  acquisitions (Notes 4 and 10)                    --               --      3,602,000
Exchange of common stock for Series C
  Preferred Stock (Notes 7 and 10)                 --               --        997,000
Deferred compensation costs   (Note 4)             --               --        420,000
Foreign currency translation adjustment            --         (121,000)      (121,000)
Net loss for the period                    (5,958,000)              --     (5,958,000)
-------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                (25,578,000)         (89,000)     8,507,000
=====================================================================================
F-8
eGLOBE, INC.
                    SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
   FOR THE YEAR ENDED DECEMBER 31, 1999, THE NINE MONTHS ENDED DECEMBER 31, 1998
                                   AND THE YEAR ENDED MARCH 31, 1998 (CONTINUED)
--------------------------------------------------------------------------------
PREFERRED STOCK         COMMON STOCK
                                                         ---------------         ------------       STOCK TO BE   NOTES
                                                         SHARES     AMOUNT     SHARES     AMOUNT      ISSUED    RECEIVABLE
------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                                500,075    $1,000  56,362,966    $56,000   $      --  $       --
Issuance of warrants to purchase stock (Notes 4, 5,
  7 and 10)                                                    --        --          --         --          --          --
Stock issued in connection with acquisitions, net of
  $135,000 premium amortization (Note 4)                1,026,101     1,000   1,161,755      1,000          --          --
Stock to be issued in connection with acquisitions
  (Note 4)                                                     --        --          --         --   2,624,000          --
Stock issued in connection with debt repayments, net
  of cost of $40,000 (Notes 5 and 7)                           40        --     697,328      1,000          --          --
Stock issued in connection with private placements,
  net of costs of $2,084,000 (Note 10)                      2,770        --     160,257         --          --          --
Value of beneficial conversion feature on Preferred
  Stocks and debt, net of unamoritized portion of
  $1,085,000 (Notes 7 and 10)                                  --        --          --         --          --          --
Value of increase in conversion feature of Series B
  Preferred (Note 4)                                           --        --          --         --          --          --
Exchange of Series C Preferred for common  stock,
  net of dividend of $2,215,000 and costs of
  $118,000 (Note 7)                                           (75)       --   3,000,000      3,000          --          --
Exchange of Series G Preferred  for
  Series K Preferred (Note 4 and 10)                           30        --          --         --          --          --
Exchange of Series B Preferred and Notes for Series H
  and I Preferred, net of dividends of $4,600,000 and
  $18,000 (Note 4)                                        400,000        --          --         --          --          --
Deferred compensation costs  (Notes 4 and 10)                  --        --          --         --          --          --
Exercise of stock options and warrants (Note 10)               --        --   1,638,163      2,000          --  (1,210,000)
Conversion of Series D and N  Preferred into common
  stock, including coversion of dividends of
  $240,000 (Note 10)                                       (1,150)       --   1,544,662      2,000          --          --
Stock to be issued for dividends                               --        --          --         --          --          --
Cumulative Preferred Stock dividends                           --        --          --         --          --          --
Amortization of discounts (premium) on Preferred
Stocks                                                         --        --          --         --          --          --
Other issuances and registration costs                         --        --   5,015,473      5,000          --          --
Foreign currency translation adjustment                        --        --          --         --          --          --
Net loss for the year                                          --        --          --         --          --          --
------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                              1,927,791   $ 2,000  69,580,604    $70,000  $2,624,000 $(1,210,000)
==============================================================================================================================
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements
ACCUMULATED
                                                        ADDITIONAL                      OTHER         TOTAL
                                                         PAID-IN     ACCUMULATED   COMPREHENSIVE   STOCKHOLDERS'
                                                          CAPITAL       DEFICIT     INCOME (LOSS)      EQUITY
-----------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                              $34,117,000   $(25,578,000)  $ (89,000)   $   8,507,000
Issuance of warrants to purchase stock (Notes 4, 5,
  7 and 10)                                              18,474,000             --          --       18,474,000
Stock issued in connection with acquisitions, net of
  $135,000 premium amortization (Note 4)                 28,788,000             --          --       28,790,000
Stock to be issued in connection with acquisitions
  (Note 4)                                                       --             --          --        2,624,000
Stock issued in connection with debt repayments, net
  of cost of $40,000 (Notes 5 and 7)                      5,615,000             --          --        5,616,000
Stock issued in connection with private placements,
  net of costs of $2,084,000 (Note 10)                   10,836,000             --          --       10,836,000
Value of beneficial conversion feature on Preferred
  Stocks and debt, net of unamoritized portion of
  $1,085,000 (Notes 7 and 10)                               835,000             --          --          835,000
Value of increase in conversion feature of Series B
  Preferred (Note 4)                                      1,485,000             --          --        1,485,000
Exchange of Series C Preferred for common  stock,
  net of dividend of $2,215,000 and costs of
  $118,000 (Note 7)                                        (121,000)            --          --         (118,000)
Exchange of Series G Preferred  for
  Series K Preferred (Note 4 and 10)                      3,000,000             --          --        3,000,000
Exchange of Series B Preferred and Notes for Series H
  and I Preferred, net of dividends of $4,600,000 and
  $18,000 (Note 4)                                        3,982,000             --          --        3,982,000
Deferred compensation costs  (Notes 4 and 10)             1,485,000             --          --        1,485,000
Exercise of stock options and warrants (Note 10)          1,990,000             --          --          782,000
Conversion of Series D and N  Preferred into common
  stock, including coversion of dividends of
  $240,000 (Note 10)                                        238,000             --          --          240,000
Stock to be issued for dividends                          1,043,000             --          --        1,043,000
Cumulative Preferred Stock dividends                     (2,300,000)            --          --       (2,300,000)
Amortization of discounts (premium) on Preferred
Stocks                                                   (2,797,000)            --          --       (2,797,000)
Other issuances and registration costs                       48,000             --          --           53,000
Foreign currency translation adjustment                          --             --     585,000          585,000
Net loss for the year                                            --    (55,104,000)         --      (55,104,000)
----------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                             $106,718,000   $(80,682,000)   $496,000     $ 28,018,000
================================================================================================================
F-9
eGLOBE, INC.
                      SUPPLEMENTAL CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
   FOR THE YEAR ENDED DECEMBER 31, 1999, THE NINE MONTHS ENDED DECEMBER 31, 1998
                                               AND THE YEAR ENDED MARCH 31, 1998
--------------------------------------------------------------------------------
YEAR              NINE MONTHS             YEAR
                                                                              ENDED                 ENDED                ENDED
                                                                            DECEMBER 31,         DECEMBER 31,          MARCH 31,
                                                                              1999                  1998                  1998
                                                                         -----------------------------------------------------------
NET LOSS                                                                 $ (55,104,000)          $(5,958,000)        $ (11,257,000)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS                                       585,000              (121,000)              (50,000)
                                                                         ===========================================================
COMPREHENSIVE NET LOSS                                                   $ (54,519,000)          $(6,079,000)        $ (11,307,000)
                                                                         ===========================================================
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements.

                                      F-10
eGLOBE, INC.
                              SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
YEAR            NINE MONTHS             YEAR
                                                                            ENDED               ENDED                ENDED
                                                                         DECEMBER 31,        DECEMBER 31,          MARCH 31,
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            1999                 1998                 1998
-------------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
  Net loss                                                             $(55,104,000)         $ (5,958,000)        $(11,257,000)
  Adjustments to reconcile net loss to cash
      Provided by (used in) operating activities:

      Depreciation and amortization                                      15,468,000             3,397,000            3,528,000
      Provision for bad debts                                             2,528,000             1,018,000            1,564,000
      Non-cash interest expense                                             889,000                    --                   --
      Minority interest in income                                            78,000                    --                   --
      Settlement costs (Note 7)                                                  --               996,000                   --
      Common stock issued in lieu of cash payments                               --                    --              144,000
      Issuance of options and warrants for services (Note 10)               181,000               190,000              220,000
      Compensation costs related to acquisitions (Note 4)                 1,485,000               420,000                   --
      Amortization of debt discounts (Notes 5 and 7)                      5,182,000               255,000              479,000
      Proxy related litigation expense  (Note 8)                                --                 81,000            3,500,000
      Loss on early retirement of debt (Note 7)                           1,901,000                    --                   --
      Other, net                                                                 --               (57,000)             281,000
      Changes in operating assets and liabilities (net of changes
         from acquisitions - Note 4):
         Accounts receivable                                             (5,445,000)           (1,202,000)          (1,716,000)
         Other receivables                                                 (755,000)             (350,000)            (159,000)
         Prepaid expenses                                                   946,000              (216,000)            (206,000)
         Other current assets                                               (37,000)             (611,000)            (351,000)
         Other assets                                                       303,000               407,000              (10,000)
         Accounts payable                                                10,750,000            14,447,000            5,011,000
         Income tax payable                                                (815,000)              (90,000)           1,500,000
         Accrued expenses                                                (1,193,000)            1,035,000            2,635,000
         Deferred revenue                                                  (153,000)              311,000               19,000
         Other liabilities                                                   87,000                26,000              (89,000)
-------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                         (23,704,000)           14,099,000            5,093,000
-------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
  Purchases of property and equipment                                   (13,203,000)           (5,044,000)          (6,131,000)
    Net sales (purchases) of short-term investments                      10,806,000            (6,677,000)          (2,275,000)
  Proceeds from sale of property and equipment                                   --               126,000                   --
  Advances to non-affiliate, subsequently acquired (Note 4)                      --              (971,000)                  --
  Purchase of intangibles                                                  (299,000)                   --                   --
  Acquisitions of companies, net of cash acquired (Notes 4 and 17)       (2,799,000)           (2,207,000)                  --
  Increase in restricted cash                                                (4,000)             (100,000)                  --
  Other assets                                                             (224,000)             (109,000)              26,000
-------------------------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES                                        (5,723,000)          (14,982,000)          (8,380,000)
-------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
  Proceeds from notes payable (Notes 4 and 5)                             6,835,000               250,000            7,810,000
  Proceeds from notes payable-related party (Note 7)                     28,258,000             1,200,000                   --
  Proceeds from issuance of preferred stock                              12,670,000                    --                   --
  Stock issuance costs                                                   (1,582,000)                   --                   --
  Proceeds from exercise of warrants                                        721,000                    --                   --
  Proceeds from exercise of options                                          61,000                    --              138,000
  Proceeds from issuance of common stock                                    250,000                    --            7,345,000
  Deferred financing and acquisition costs                                       --              (524,000)                  --
  Distribution to minority interest holder                                  (52,000)                   --                   --
  Payments on capital leases                                               (860,000)             (198,000)            (448,000)
  Payments on notes payable                                             (10,180,000)             (716,000)         (10,864,000)
  Payments on notes payable - related party (Note 7)                     (8,066,000)                   --                   --
-------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES                                    28,055,000                12,000            3,981,000
-------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH                                          (1,372,000)             (871,000)             694,000
TRANS GLOBAL CASH ACTIVITY FOR THE THREE MONTHS ENDED MARCH 31, 1998             --                    --            1,466,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                            4,031,000             4,902,000            2,742,000
===============================================================================================================================
CASH AND CASH EQUIVALENTS, END OF PERIOD                                $ 2,659,000           $ 4,031,000          $ 4,902,000
===============================================================================================================================
See Note 17 for Supplemental Cash Flow Information.
See  accompanying  summary  of  accounting  policies  and notes to  supplemental
consolidated financial statements.

                                      F-11
eGLOBE, INC.
                                                  SUMMARY OF ACCOUNTING POLICIES
--------------------------------------------------------------------------------
ORGANIZATION            eGlobe,  Inc.  and  subsidiaries,   (collectively,   the
AND BUSINESS            "Company")   is   a   global    supplier   of   enhanced
                        telecommunications  and information services,  including
                        Internet   Protocol   ("IP")   transmission    services,
                        international  and  domestic  long  distance   telephone
                        services,  switching  services,   co-location  services,
                        telephone  portal,   unified   messaging   services  and
                        international  voice  and  data  services.  The  Company
                        operates in  partnership  with  telephone  companies and
                        Internet service providers around the world. Through the
                        Company's World Direct network,  the Company  originates
                        traffic in 90  territories  and countries and terminates
                        traffic  anywhere  in  the  world  and  through  its  IP
                        network,   the  Company  can   originate  and  terminate
                        IP-based  telecommunication services in 30 countries and
                        5 continents. In addition, the Company can transport and
                        terminate voice, fax or data calls to any country with a
                        hard  wire  or  cell-based  communications  system.  The
                        Company  provides  its  services  principally  to  large
                        national  telecommunications  companies, card providers,
                        Internet  service  providers and financial  institutions
                        around the world.

                        In   December   1998,    the   Company    acquired   IDX
                        International,   Inc.   ("IDX"),   a   supplier   of  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 4 for further discussion).

                        In February 1999, the Company  completed the acquisition
                        of Telekey, Inc.  ("Telekey"),  a provider of card-based
                        telecommunications  services. In June 1999, the Company,
                        through its newly formed subsidiary,  Vogo Networks, LLC
                        ("Vogo"),  purchased substantially all of the assets and
                        assumed     certain     liabilities    of    Connectsoft
                        Communications  Corporation  and  Connectsoft  Holdings,
                        Corp. (collectively "Connectsoft"),  which developed and
                        continues to enhance a server based communication system
                        that integrates various forms of messaging, Internet and
                        web content,  personal services,  and provides telephone
                        access  to  Internet   content   (including   email  and
                        e-commerce   functions).   In  July  1999,  the  Company
                        completed  the  acquisition  of Swiftcall  Equipment and
                        Services (USA) Inc., ("Swiftcall"), a telecommunications
                        company, and certain network operating equipment held by
                        an affiliate of Swiftcall. Effective August 1, 1999, the
                        Company   assumed   operational   control  of  Highpoint
                        International  Telecom,  Inc.  and  certain  assets  and
                        operations  of  Highpoint  Carrier  Services,  Inc.  and
                        Vitacom,  Inc.  (collectively  "Highpoint").  The  three
                        entities were majority owned  subsidiaries  of Highpoint
                        Telecommunications   Inc.  ("HGP"),  a  publicly  traded
                        company on the Canadian Venture Exchange. On October 14,
                        1999,  substantially  all of  the  operating  assets  of
                        Highpoint were transferred to iGlobe, Inc. ("iGlobe"), a
                        newly  formed   subsidiary   of  HGP,  and  the  Company
                        concurrently  acquired all of the issued and outstanding
                        common   stock   of   iGlobe.    iGlobe   possesses   an
                        infrastructure supplying IP services, particularly voice
                        over IP,  throughout  Latin America.  In September 1999,
                        the Company,  acting through a newly formed  subsidiary,
                        acquired control of Oasis  Reservations  Services,  Inc.
                        ("ORS"), a Miami based transaction  support services and
                        call center to the travel industry, from its

                                      F-12
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
ORGANIZATION            sole  stockholder,  Outsourced  Automated  Services  and
AND BUSINESS            Integrated  Solutions,  Inc. ("Oasis").  The Company and
(CON'T)                 Oasis formed eGlobe/Oasis Reservations LLC ("LLC") which
                        is  responsible  for  conducting  ORS'  operations.  The
                        Company  manages and controls the LLC. In December 1999,
                        the  Company   completed   the   acquisition   of  Coast
                        International,  Inc.  ("Coast"),  a provider of enhanced
                        long-distance  interactive voice and internet  services.
                        See Notes 4, 5, 7 and 10 for further discussion.

                        Pursuant to an Agreement and Plan of Merger entered into
                        on December 16, 1999,  and  effective  March 23, 2000, a
                        wholly-owned  subsidiary  of eGlobe merged with and into
                        Trans Global Communications, Inc. ("Trans Global"), with
                        Trans Global continuing as the surviving corporation and
                        becoming  a  wholly-owned   subsidiary  of  eGlobe  (the
                        "Merger").    Trans    Global   is   a    provider    of
                        facilities-based,  direct  connection and resale network
                        services.  The  Merger  provided  for  the  issuance  of
                        40,000,000 shares of the eGlobe common stock in exchange
                        for all of the outstanding common stock of Trans Global.
                        Pursuant to the merger  agreement,  the Company withheld
                        and  deposited  into  escrow  2,000,000  shares  of  the
                        40,000,000  shares  of its  common  stock  issued to the
                        Trans Global stockholders in the Merger.  These escrowed
                        shares  cover  the  indemnification  obligations  of the
                        Trans Global  stockholders  under the merger  agreement.
                        The Company deposited an additional  2,000,000 shares of
                        its   common    stock   into   escrow   to   cover   its
                        indemnification  obligations under the merger agreement.
                        The merger was  accounted for as a pooling of interests,
                        and as such, the 40,000,000  shares of common stock have
                        been treated as if outstanding for all periods presented
                        in the supplemental consolidated financial statements.

                        The Company's  consolidated  financial  statements  have
                        been retroactively  restated as of December 31, 1999 and
                        December  31, 1998 and for the year ended  December  31,
                        1999,  the nine months  ended  December 31, 1998 and the
                        year ended March 31, 1998,  to reflect the  consummation
                        of   the   Trans   Global   merger.   The   supplemental
                        consolidated  financial  statements included herein give
                        retroactive effect to the Trans Global merger, which was
                        accounted for using the pooling of interests  method. As
                        a result, the financial position, results of operations,
                        and statements of  comprehensive  income (loss) and cash
                        flows  are   presented  as  if  Trans  Global  had  been
                        consolidated for all periods presented. The supplemental
                        consolidated  statements of stockholders' equity reflect
                        the  accounts of eGlobe as if the common stock issued in
                        connection  with the Trans Global merger had been issued
                        for all periods  presented.  As  required  by  generally
                        accepted   accounting   principles,   the   supplemental
                        consolidated   financial   statements  will  become  the
                        historical  financial  statements  of the  Company  upon
                        issuance of the financial statements for the period that
                        includes the consummation of the Trans Global merger.

                                      F-13
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
ORGANIZATION            In the  supplemental  consolidated  balance sheets,  the
AND BUSINESS            balance  sheets of eGlobe as of  December  31,  1999 and
(CON'T)                 1998 have been combined with those of Trans Global as of
                        December   31,   1999   and   1998.   The   supplemental
                        consolidated   statements  of  operations   combine  the
                        results of eGlobe for the year ended  December  31, 1999
                        and the nine months  ended  December 31, 1998 with those
                        of Trans  Global for the same  periods.  The  results of
                        operations for the year ended March 31, 1998 include the
                        combined  results  of  eGlobe's  results  for the twelve
                        months ended March 31, 1998 and Trans  Global's  results
                        for the year ended December 31, 1997. Trans Global's net
                        income for the three  months  ended  March 31,  1998 has
                        been   reflected   in  the   supplemental   consolidated
                        statements of  stockholders'  equity as an adjustment to
                        accumulated  deficit.  In  addition,  the cash  activity
                        during the three  months  ended  March 31, 1998 has been
                        reflected as an  adjustment  in the year ended March 31,
                        1998 supplemental  consolidated statement of cash flows.
                        There were no seasonal  trends in operations  during the
                        three months ended March 31, 1998.

                        The  supplemental   consolidated  financial  statements,
                        including   the  notes   thereto,   should  be  read  in
                        conjunction   with  eGlobe's   historical   consolidated
                        financial  statements  included in its Annual  Report on
                        Form 10-K for the year ended  December  31, 1999 and the
                        financial  statements  of Trans  Global  included in the
                        Company's  Current  Report on Form 8-K/A dated March 23,
                        2000 and filed on May 22, 2000.

                                      F-14
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
ORGANIZATION            Revenue, extraordinary loss on early retirement of debt,
AND BUSINESS            net  income  (loss),  net loss  attributable  to  common
(CON'T)                 stockholders  and net loss per common  share  previously
                        reported  by eGlobe and Trans  Global  and the  combined
                        amounts  presented  in  the  accompanying   supplemental
                        consolidated  financial  statements  for the year  ended
                        December  31, 1999,  the nine months ended  December 31,
                        1998 and the year ended March 31, 1998 are as follows:
DECEMBER 31,        DECEMBER 31,          MARCH 31,
                                                                           1999                1998                 1998
                                                                        -------------------------------------------------------
REVENUE:

                        eGlobe as previously presented in Form
                           10-K                                         $  42,002,000         $22,491,000        $ 33,123,000

                        Trans Global as previously presented in
                           Form 8-K/A                                     100,445,000          85,119,000          46,473,000

                        Adjustments:

                        Intercompany revenue                                 (499,000)                 --                  --
                        Trans Global revenue for the three
                           months ended March 31, 1998                             --         (17,190,000)                 --
                                                                        -------------------------------------------------------
                        eGlobe, as restated combined                    $ 141,948,000         $90,420,000        $ 79,596,000
                                                                        =======================================================
                        EXTRAORDINARY LOSS ON EARLY
                           RETIREMENT OF DEBT:

                        eGlobe, as previously presented in              $ (1,901,000)         $        --        $         --
                           Form 10-K
                        Trans Global as previously reported
                           in Form 8-K/A                                          --                   --                  --
                                                                        -------------------------------------------------------
                        eGlobe, as restated combined                    $ (1,901,000)         $        --        $         --
                                                                        =======================================================
                        NET INCOME (LOSS):

                        eGlobe as previously presented in
                          Form 10-K                                     $(51,468,000)         $(7,090,000)       $(13,290,000)

                        Trans Global as previously presented in
                          Form 8-K/A                                      (3,383,000)           1,406,000           1,565,000

                        Adjustments:
                          Deferred tax adjustment                           (253,000)             142,000             468,000
                          Trans Global net income for the
                            three months ended March 31,
                            1998                                                  --             (416,000)                 --
                                                                        -------------------------------------------------------
                        eGlobe, as restated combined                    $(55,104,000)         $(5,958,000)       $(11,257,000)
                                                                        =======================================================
F-15
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
ORGANIZATION
AND BUSINESS
(CON'T)
DECEMBER 31,        DECEMBER 31,          MARCH 31,
                                                                           1999                1998                 1998
                                                                        -------------------------------------------------------
NET LOSS ATTRIBUTABLE TO COMMON
                          STOCKHOLDERS:

                        eGlobe net loss, as restated combined            $ (55,104,000)         $(5,958,000)       $(11,257,000)

                        eGlobe preferred stock dividends as
                          previously reported in Form 10-K                 (11,930,000)                  --                  --
                                                                        -------------------------------------------------------
                        eGlobe, as restated combined                     $ (67,034,000)         $(5,958,000)       $(11,257,000)
                                                                        =======================================================
                        NET LOSS PER SHARE:

                        As previously presented in Form 10-K:
                             Basic and diluted                                  $(3.08)              $(0.40)             $(0.78)

                        Restated combined:
                             Basic and diluted                                  $(1.11)              $(0.10)             $(0.20)
Adjustments  were made to reflect  deferred income taxes
                        on a  combined  basis in the  supplemental  consolidated
                        results of  operations  for the year ended  December 31,
                        1999,  the nine months  ended  December 31, 1998 and the
                        year ended March 31, 1998.

                        An   adjustment   was  made  to  decrease   consolidated
                        stockholders'  equity as of the beginning of the periods
                        presented of $183,000 to record the deferred  income tax
                        adjustment  for the previous  periods.  An adjustment of
                        $416,000   was  also  made  to   increase   consolidated
                        stockholders'  equity  as of March 31,  1998 to  reflect
                        Trans  Global's  net income for the three  months  ended
                        March 31, 1998.

                                      F-16
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
MANAGEMENT'S            As of December 31,  1999,  the Company had a net working
PLAN                    capital  deficiency of $44.7  million.  This net working
                        capital deficiency resulted principally from a loss from
                        operations  of $46.9  million  (including  depreciation,
                        amortization  and other  non-cash  charges) for the year
                        ended  December  31,  1999.  Also  contributing  to  the
                        working  capital  deficiency  was $7.9  million in notes
                        payable and current  maturities of long-term  debt, $4.7
                        million  in notes  payable  and  current  maturities  of
                        long-term debt due to related parties, and $53.9 million
                        in  accounts  payable,  accrued  expenses  and  deferred
                        revenue. The $7.9 million current maturities consists of
                        $4.2 million primarily related to acquisition debt, $1.1
                        million  related to a note  collatoralized  by equipment
                        and $2.6 million  related to capital lease  payments due
                        over the one year period ending  December 31, 2000.  The
                        $4.7  million  current   maturities  due  to  a  related
                        parties,  net of  unamortized  discount of $3.0 million,
                        consists  of a $0.9  million  note,  net of  unamortized
                        discount of $0.1 million,  due to a stockholder on April
                        18,  2000,  term  payments  of  $3.5  million,   net  of
                        unamortized  discount  of  $2.9  million,  due  to  EXTL
                        Investors, the Company's largest stockholder,  and notes
                        payable  of $3.2  million  due to an  affiliate  of EXTL
                        Investors.

                        On an  operating  level,  the Company is  continuing  to
                        renegotiate  its  relationship  with an entity  that was
                        formerly  one of the  Company's  largest  customers.  At
                        December 31, 1999,  7.7% of the  Company's  net accounts
                        receivable  of $15.1 million was due from this entity to
                        which extended  credit terms have been granted.  The new
                        arrangement,  once  finalized,  will  establish  payment
                        terms and sales growth, which will assure more effective
                        and timely  collection of receivables  from the customer
                        and  will  permit   renewed  growth  in  the  customer's
                        business.  This  arrangement  will  also  assist  in the
                        collection  of certain  amounts due to the Company under
                        the extended credit terms.

                        If  the  Company  meets  its  projections  for  reaching
                        breakeven at the end of the second  quarter of 2000, the
                        Company will still have additional capital  requirements
                        through  December  2000  of up  to  $66.0  million.  The
                        Company will need to fund  pre-existing  liabilities and
                        note  payable  obligations  and the  purchase of capital
                        equipment,  along with  financing the  Company's  growth
                        plans.

                        Thus far in 2000,  the Company has met its initial  cash
                        requirements  from (1)  proceeds  from the  exercise  of
                        options and  warrants of $2.4  million,  primarily  as a
                        result of the  improvement in the Company's  stock price
                        during  the  month  of  January  2000  and as  sustained
                        thereafter,  (2)  proceeds of $0.5 million from the sale
                        of  Series N  Convertible  Preferred  Stock  ("Series  N
                        Preferred"), (3) proceeds of $15.0 million from the sale
                        of  Series P  Convertible  Preferred  Stock  ("Series  P
                        Preferred"),  (4) proceeds of $4.0 million from the sale
                        of  Series  Q  Convertible  Preferred  Stock ("Series  Q
                        Preferred")  with  an  additional  $6.0  million  to  be
                        received upon  registration of the underlying  shares of
                        common stock.  These capital  transactions are discussed
                        in Note 16.

                                      F-17
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
MANAGEMENT'S            In   addition   to  the   firm   commitments   discussed
PLAN (CON'T)            previously,   the  Company  is  proceeding   with  other
                        financing opportunities,  which have not been finalized.
                        The  Company is working  on several  different  debt and
                        equity fund raising  efforts to raise the funds that the
                        Company  will require to achieve its growth plan through
                        the end of the year 2000.

                        There is some  risk  that  the  Company  will not  reach
                        breakeven  as  projected  and  will  continue  to  incur
                        operating  losses. If this occurs and should the Company
                        be unsuccessful in its efforts to raise additional funds
                        to cover such  losses,  then its growth plans would have
                        to be  sharply  curtailed  and  its  business  would  be
                        adversely affected.

                        As discussed in Note 13, in December 1999,  Trans Global
                        entered  into an  agreement  with AT&T,  Trans  Global's
                        largest supplier,  regarding the payment of various past
                        due 1999  switch and  circuit  costs.  Pursuant  to that
                        agreement,   Trans   Global   has  agreed  to  pay  AT&T
                        approximately   $13.8  million  in  consecutive  monthly
                        installments at 9% interest  through January 1, 2001. As
                        of December 31, 1999, the remaining  balance due to AT&T
                        was $13.5  million.  As part of the agreement with AT&T,
                        Trans Global entered into a security agreement (Security
                        Agreement)  granting AT&T a security interest in certain
                        fixed  assets  owned by Trans  Global as of December 14,
                        1999.  As of April 6,  2000,  Trans  Global has not paid
                        $1.5  million  of  scheduled  payments  that were due in
                        April 2000.  Trans Global is  currently  in  discussions
                        with AT&T regarding  alternative  options for settlement
                        of  the   outstanding   obligation.   There  can  be  no
                        assurances   that   Trans   Global   will   be  able  to
                        satisfactorily  resolve this matter.  Should this not be
                        resolved and should AT&T take  possession  of the assets
                        held as  security,  Trans  Global  believes  that  their
                        business  will not be  adversely  impacted.  There is no
                        guarantee  that Trans Global and therefore the Company's
                        business will not have its operations affected adversely
                        should a satisfactory resolution between the parties not
                        be reached.

CHANGE OF               Effective  with the period ended  December 31, 1998, the
FISCAL YEAR             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  December 31, 1999 and March 31,
                        1998.

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

                        Revenue                                     $63,102,000
                        Gross profit                                $16,746,000
                        Taxes on income                             $   436,000
                        Net loss                                    $(3,352,000)
                        Net loss per common share-
                             Basic and diluted                      $     (0.06)

CHANGE OF               At the annual meeting of the stockholders of the Company
COMPANY                 on June 16, 1999, the stockholders  approved and adopted
NAME                    a proposal for amending the Certificate of Incorporation
                        to  change  the  name  of  the  Company  from  Executive
                        TeleCard,  Ltd. to eGlobe,  Inc. The amended Certificate
                        of Incorporation has been filed with and accepted by the
                        State of Delaware.

BASIS OF                The consolidated financial statements have been prepared
PRESENTATION            in  accordance   with  generally   accepted   accounting
AND                     principles and include the accounts of the Company,  its
CONSOLIDATION           wholly-owned subsidiaries, and its controlling  interest
                        in a limited  liability  company  ("LLC").  All material
                        intercompany   transactions   and  balances   have  been
                        eliminated in consolidation. As the Company controls the
                        operations  of the LLC, the LLC has been included in the
                        supplemental, consolidated financial statements with the
                        other member's interests recorded as Minority Interest.

                                      F-18
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
USE OF                  The  preparation  of financial  statements in conformity
ESTIMATES               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.

FOREIGN                 For subsidiaries whose functional  currency is the local
CURRENCY                currency and which do not operate in highly inflationary
TRANSLATION             economies,  all net monetary and non-monetary assets and
                        liabilities are translated into U.S.  dollars 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.
                        Cumulative  translation gains and losses are reported as
                        accumulated  other  comprehensive  income  (loss) in the
                        supplemental  consolidated  statements of  stockholders'
                        equity and are included in comprehensive loss.

FINANCIAL               Financial  instruments,  which  potentially  subject the
INSTRUMENTS             Company  to   concentrations   of  credit  risk  consist
AND                     principally  of cash  and cash  equivalents,  short-term
CONCENTRATIONS          investments and trade accounts receivable.
OF CREDIT RISK
                        The  Company   places  its  cash  and   temporary   cash
                        investments  with  quality  financial  institutions.  At
                        times,   these  amounts  may  exceed  federally  insured
                        limits.

                        Concentrations  of  credit  risk with  respect  to trade
                        accounts  receivable  are  generally  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.  In  certain
                        circumstances,   the   Company  has   purchased   credit
                        insurance on its accounts receivables.

                        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.  In  certain  circumstances  the  Company  will
                        require  security  deposits;   however,  generally,  the
                        Company does not require collateral or other security to
                        support customer  receivables.  As of December 31, 1999,
                        the  Company  had  approximately  16.2%  and 7.7% in net
                        trade  accounts  receivable  from  two  customers.   The
                        Company  is  negotiating  with  the one  customer  whose
                        account is 7.7% of net trade  accounts  receivable for a
                        long-term payment  agreement.  There is no assurance the
                        Company will receive full payment of this receivable.

                                      F-19
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
FINANCIAL               Some of the Company's  customers are permitted to choose
INSTRUMENTS AND         the currency in which they pay for calling services from
CONCENTRATIONS          among  several  different  currencies  determined by the
OF CREDIT RISK          Company.  Thus, the Company's earnings may be materially
(CON'T)                 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  majority  of  the
                        Company's  largest  customers  settle their  accounts in
                        U.S. Dollars.

                        The carrying amounts of financial instruments, including
                        cash  and  cash  equivalents,   short-term  investments,
                        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 deposits  with a financial
                        institution  to  secure a letter  of  credit issued to a
                        transmission  vendor related to an agreement whereby the
                        Company will perform platform and transmission services.
                        In addition,  a 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.

RESTRICTED              Restricted    short-term    investments    consist    of
SHORT-TERM              certificates of deposits with a financial institution to
INVESTMENTS             secure letters of credit issued to transmission  vendors
                        related to an agreement whereby the vendors will perform
                        transmission services.

PROPERTY,               Property and equipment are recorded at the lower of cost
EQUIPMENT,              or fair market value. Additions,  installation costs and
DEPRECIATION            major   improvements   of  property  and  equipment  are
AND                     capitalized.  Expenditures  for  maintenance and repairs
AMORTIZATION            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  supplemental   consolidated
                        statement of operations.

                        Depreciation  and  amortization  is  computed  using the
                        straight-line  method over the estimated useful lives of
                        the related  assets  ranging from three to twenty years.
                        Leasehold  improvements  are amortized over the terms of
                        the  respective  leases  and/or  service  lives  of  the
                        improvements,  whichever is shorter.  See  discussion of
                        impairment policy under "Long-Lived Assets".

                                      F-20
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
SOFTWARE                Statement of Financial Accounting Standards ("SFAS") No.
DEVELOPMENT             86, "Accounting for the Costs of Computer Software to be
COSTS                   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  expenses  all costs  incurred to  establish
                        technological  feasibility of computer software products
                        to  be  sold  or  leased  or  otherwise  marketed.  Upon
                        establishing  technological  feasibility  of a  software
                        product,  the Company  capitalizes  direct and  indirect
                        costs  related to the product up to the time the product
                        is available for sale to customers. Capitalized software
                        development   costs  are   generally   amortized   on  a
                        product-by-product   basis  each  year  based  upon  the
                        greater of: (1) the amount  computed  using the ratio of
                        current  year gross  revenue  to the sum of current  and
                        anticipated  future gross revenue for that  product,  or
                        (2) five year  straight-line  amortization.  The Company
                        acquired $8.4 million of software  development costs for
                        which   technological   feasibility   had  already  been
                        established  in  connection   with  the  acquisition  of
                        Connectsoft as discussed in Note 4. Additional  software
                        development  costs of $573,000 were  capitalized  during
                        1999.

                        Under  the  provisions  of  the  American  Institute  of
                        Certified  Public  Accountants'  ("AICPA")  Statement of
                        Position  ("SOP")  98-1,  "Accouting  for the  Costs  of
                        Computer  Software  Developed  or Obtained  for Internal
                        Use",   the  Company   expenses  cost  incurred  in  the
                        preliminary project stage and,  thereafter,  capitalizes
                        costs   incurred  in  the  developing  or  obtaining  of
                        internal   use   software.   Certain   costs,   such  as
                        maintenance  and  training,  are  expensed as  incurred.
                        Capitalized  costs  are  amortized  over a period of not
                        more than five years.  The Company acquired $2.9 million
                        of internally  developed software in connection with the
                        acquisition of Telekey, Connectsoft and Coasts discussed
                        in  Note  4.  These   amounts  are   included  in  other
                        intangible  assets  in  the  supplemental   consolidated
                        balance  sheet as of  December  31,  1999.  The  Company
                        recorded   amortization   expense  related  to  software
                        development  costs  of  $1.1  million  during  1999.  No
                        related   amortization   expense  was  recorded  in  the
                        December  1998  and  March  1998  periods.  The  Company
                        assesses the carrying  amount of  capitalized  costs for
                        impairment based upon the impairment policy as discussed
                        under "Long-Lived Assets".

RESEARCH AND            Research  and  development  costs and costs  related  to
DEVELOPMENT             significant  improvements  and  refinements  of existing
                        products are  expensed as  incurred.  For the year ended
                        December 31, 1999,  the nine month period ended December
                        31,  1998  and  the  year  ended  March  31,  1998  the
                        Company's  expensed research and  development costs were
                        nominal.

                                     F-21
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
GOODWILL AND OTHER      As of  December  31,  1999 and  1998,  the  Company  has
INTANGIBLE ASSETS       recorded    goodwill   in   connection    with   certain
                        acquisitions,  as discussed in Note 4, of $26.5  million
                        and  $12.0  million,   respectively.   Certain  goodwill
                        amounts  recorded  in 1998 were based  upon  preliminary
                        information  and during 1999 goodwill  adjustments  were
                        recorded   to   reflect   the  final   asset   appraisal
                        information.  In  addition,  as  discussed in Note 4, an
                        adjustment was recorded in 1999 to increase the goodwill
                        related  to  the  IDX  acquisition  as a  result  of  an
                        increase  in the  value of the  purchase  consideration.
                        Amortization of goodwill is provided over seven years on
                        a straight-line  method.  Goodwill  amortization expense
                        for the year ended December 31, 1999 and the nine months
                        ended  December  31,  1998  was  $1.4  million  and $0.1
                        million,  respectively.  There was no goodwill  recorded
                        prior to March 31, 1998.

                        As of December 31, 1998,  the Company had recorded  $1.0
                        million in other intangible assets, consisting primarily
                        of licenses  and  trademarks.  During  1999,  intangible
                        assets of $26.4 million were recorded in connection with
                        the  acquisitions  discussed in Note 4. These intangible
                        assets were recorded based on third party appraisals and
                        consist of the value  related to  assembled  and trained
                        work  forces,  customer  contract  bases,   distribution
                        partnership network, non-compete agreements,  internally
                        developed   software,   long  distance   infrastructure,
                        licenses  and  existing  technologies.  Intangibles  are
                        being  amortized  on  a  straight-line  basis  over  the
                        estimated useful lives from one to ten years.

                        The carrying value of goodwill and other intangibles are
                        reviewed on a periodic basis for recoverability based on
                        the undiscounted  cash flows of the businesses  acquired
                        over  the  remaining  amortization  period.  Should  the
                        review indicate that these amounts are not  recoverable,
                        the  Company's  carrying  value of the  goodwill  and/or
                        other  intangibles  would be  reduced  by the  estimated
                        shortfall of the cash flows.  In  addition,  the Company
                        assesses the carrying amount of these intangible  assets
                        for  impairment  based upon the policy  discussed  under
                        "Long-Lived  Assets" below.  No reduction of goodwill or
                        intangibles  for  impairment  was  necessary  in 1999 or
                        1998.

LONG-LIVED ASSETS       The  Company  follows  the  provisions  of SFAS No. 121,
                        "Accounting  for the Impairment of Long-Lived  Assets to
                        be  Disposed  Of"  for  long-lived  assets  and  certain
                        identifiable  intangibles  to be  held  and  used by the
                        Company.   These  assets  are  reviewed  for  impairment
                        whenever  events or  changes in  circumstances  indicate
                        that  the  carrying  amount  of  an  asset  may  not  be
                        recoverable. If the fair value is less than the carrying
                        amount  of the  asset,  a loss  is  recognized  for  the
                        difference.

DEPOSITS                The Company provides  long-term cash deposits to certain
                        vendors  to  secure  contracts  for   telecommunications
                        services.

                                      F-22
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
DEFERRED                Deferred  financing and  acquisition  costs  included in
FINANCING AND           other   assets   in   the   accompanying    supplemental
ACQUISITION             consolidated  balance sheets represent third party costs
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.   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                 Some revenues from the Company's card services  business
RECOGNITION             come from  supplying  underlying  services to issuers of
                        prepaid  cards.  Those issuers prepay some or all of the
                        services provided. Payments received in advance for such
                        services are recorded in the  accompanying  supplemental
                        consolidated   balance   sheets  as  deferred   revenue.
                        Consequently, revenues from such services are recognized
                        as the cards are used and  service is  provided.  Direct
                        costs associated with these revenues are also recognized
                        when the  related  services  are  provided  or  expired.
                        Payments  related to unrecognized  revenues are included
                        as a  reduction  to  deferred  revenue.  When a card for
                        which service has been contracted  expires without being
                        fully used (cards  generally have effective  lives of up
                        to one year),  then the unused  value is  referred to as
                        breakage   and  recorded  as  revenue  at  the  date  of
                        expiration.

                        In   addition,   the  Company,   following   its  recent
                        acquisition  of  ORS,  has  recorded   deferred  revenue
                        related  to  certain   reservations  service  contracts.
                        Customers   are   required   to  pay  the   Company  for
                        reservation  services  in  advance  based on  forecasted
                        amounts.  These  advance  payments  are  recorded by the
                        Company  as  deferred  revenue,  which  is  subsequently
                        recognized  as revenue  when the  related  services  are
                        performed.

                        Revenue for all services is  recognized on an individual
                        product basis as provided to the customer.  Revenue from
                        the  provision  of the  Calling  Card  and  transmission
                        services is  recognized as utilized by customers or upon
                        the  completion  of  telephone  calls  by the end  user.
                        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.

                        For Vogo, the Company's  provider of software  products,
                        revenue   is   recognized   from  the   license  of  its
                        proprietary  software in accordance  with the provisions
                        of SOP 97-2,  "Software  Revenue  Recognition." SOP 97-2
                        provides   guidelines   concerning  the  recognition  of
                        revenue of software products.  This statement  requires,
                        among  other  things,  the  individual   elements  of  a
                        contract  for  the  sale  of  software  products  to  be
                        identified and accounted for separately.

                                      F-23
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
REVENUE                 IDX  operates  and  manages   Cyberpost   equipment  and
RECOGNITION             associated  software  licenses to its Internet  Backbone
(CON'T)                 Providers.  Under  such  licensing  agreements,  IDX  is
                        generally  obligated to provide maintenance and upgrades
                        and Internet Backbone  Providers 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.  IDX'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.   IDX
                        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.

                        Coast  recognizes  revenue upon  completion of telephone
                        calls by the end users.  Interactive Media Works ("IMW")
                        and  ISPN,  divisions  of  Coast,  as  well  as  iGlobe,
                        recognize revenue as service is provided.

TAXES ON                The  Company  accounts  for income  taxes under SFAS No.
INCOME                  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            The Company  applies SFAS No. 128,  "Earnings Per Share"
(LOSS)                  for the  calculation  of "Basic" and "Diluted"  earnings
PER SHARE               (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.

                                      F-24
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
STOCK                   The Company applies Accounting  Principles Board ("APB")
OPTIONS                 Opinion 25,  "Accounting for Stock Issued to Employees,"
                        and related  Interpretations in accounting for all stock
                        option  plans.  Compensation  cost of stock  options  is
                        measured  as the excess,  if any,  of the quoted  market
                        price of the  Company's  stock at the date of grant over
                        the option  exercise  price and is charged to operations
                        over the vesting period.

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

SHORT-TERM              Short-term investments include funds invested in a money
INVESTMENTS             market  fund  which  invests  in a broad  range of money
                        market  securities,   including,  but  not  limited  to,
                        short-term U.S.  government and agency securities,  bank
                        certificates of deposit and corporate  commercial paper.
                        Short-term  investments  are carried at amortized  cost,
                        which approximates fair value.

COMPREHENSIVE           The   Company   applies   SFAS   No.   130,   "Reporting
INCOME (LOSS)           Comprehensive  Income".  Comprehensive  income (loss) is
                        comprised  of net  income  (loss)  and  all  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   net  loss  in  a   separate
                        supplemental  consolidated  statement  of  comprehensive
                        loss.

                                      F-25
eGLOBE, INC.
                                      SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------
FAIR VALUE              The estimated  fair value of financial  instruments  has
OF FINANCIAL            been determined  using available  market  information or
INSTRUMENTS             other  appropriate  valuation  methodologies.   However,
                        considerable judgment is required in interpreting market
                        data to develop  estimates of fair value.  Consequently,
                        the  estimates  are not  necessarily  indicative  of the
                        amounts  that  could be  realized  or would be paid in a
                        current market  exchange.  The carrying amounts reported
                        on  the   supplemental   consolidated   balance   sheets
                        approximate their respective fair values.

SEGMENT                 The  Company  follows  the  provisions  of SFAS No. 131,
INFORMATION             "Disclosures about Segments of an Enterprise and Related
                        Information".  This statement  establishes standards for
                        the reporting of information about operating segments in
                        annual  and  interim  financial  statements.   Operating
                        segments are defined as components of an enterprise  for
                        which separate  financial  information is available that
                        is evaluated  regularly by the chief operating  decision
                        maker(s) in deciding  how to allocate  resources  and in
                        assessing  performance.   SFAS  No.  131  also  requires
                        disclosures  about  products  and  services,  geographic
                        areas  and  major   customers.   The  Company  has  four
                        operating  reporting  segments  consisting  of  Enhanced
                        Services,  Network  Services,  Customer  Care and Retail
                        Services.

RECENT                  The Financial  Accounting  Standards  Board ("FASB") has
ACCOUNTING              recently issued SFAS No. 133, "Accounting for Derivative
PRONOUNCEMENT           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, as extended by SFAS
                        No. 137, is effective for fiscal years  beginning  after
                        June 15, 2000 and is  currently  not  applicable  to the
                        Company.

RECLASSIFICATIONS       Certain   consolidated   financial   amounts  have  been
                        reclassified for consistent presentation.

                                      F-26
eGLOBE, INC.
                         NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. PROPERTY AND         Property and equipment consist of the following:
   EQUIPMENT
DECEMBER 31,                                                 1999                    1998
                           --------------------------------------------------------------------------------------------
Land                                                        $  122,000           $   122,000
                           Buildings and improvements                                   1,985,000             1,920,000
                           Calling card platform equipment                             14,722,000            13,480,000
                           Telecom equipment                                            8,628,000             1,140,000
                           IP transmission equipment                                    4,229,000               888,000
                           Operations center equipment and furniture                   13,255,000             8,789,000
                           Call diverters                                              18,016,000             8,175,000
                           Equipment under capital leases (Note 5)                      4,910,000             1,279,000
                           Internet communications equipment                              563,000               562,000
                           --------------------------------------------------------------------------------------------
                                                                                       66,430,000            36,355,000
                           Less accumulated depreciation and amortization              24,352,000            16,157,000
                           --------------------------------------------------------------------------------------------
                                                                                      $42,078,000           $20,198,000
                           ============================================================================================
Depreciation  expense  for the year ended  December  31,
                        1999,  the nine months  ended  December 31, 1998 and the
                        year ended March 31, 1998 was $8.4 million, $3.2 million
                        and $3.3 million, respectively.

2. OTHER                Other intangible assets consist of the following:
   INTANGIBLE
   ASSETS
DECEMBER 31,                                                      1999                      1998
                       ---------------------------------------------------------------------------------------------------
Existing technology                                             $ 8,400,000              $       --
                       Distribution partnership network                                  5,290,000                      --
                       Assembled and trained workforce                                   4,391,000                      --
                       Internally developed software                                     3,488,000                      --
                       Long distance infrastructure                                      1,580,000                      --
                       Non-compete agreements                                            1,540,000                      --
                       Customer contract base                                            1,343,000                      --
                       Licenses                                                          1,143,000                 433,000
                       Trademarks                                                          549,000                 518,000
                       Other                                                               416,000                  76,000
                       ---------------------------------------------------------------------------------------------------
                                                                                        28,140,000               1,027,000
                       Less accumulated amortization                                     6,466,000                 786,000
                       ---------------------------------------------------------------------------------------------------
                                                                                       $21,674,000              $  241,000
                       ===================================================================================================
F-27
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
2. OTHER                Intangible  assets  amortization  expense  for the  year
   INTANGIBLE           ended  December  31,  1999,  the nine month period ended
   ASSETS               December  31, 1998 and the year ended March 31, 1998 was
   (CON'T)              $5.7   million,   $0.1   million   and   $0.2   million,
                        respectively.  Included in internally developed software
                        is  approximately  $0.6 million of  additional  software
                        development   costs   capitalized  in  1999  related  to
                        enhancements for the existing technology acquired in the
                        Connectsoft acquisition.

3. ACCRUED              Accrued expenses consist of the following:
   EXPENSES
DECEMBER 31,                                                       1999                     1998
                        -----------------------------------------------------------------------------------------------------
Telephone carriers                                            $  2,658,000              $ 3,091,000
                          Accrued telecom taxes                                            1,930,000                       --
                          External development costs                                       1,582,000                       --
                          Dividends on preferred stock                                     1,277,000                       --
                          Legal and professional fees                                      1,165,000                  479,000
                          Salaries and benefits                                              895,000                  737,000
                          Interest                                                           313,000                  647,000
                          Costs associated with acquisitions                                 296,000                  697,000
                          Other                                                              876,000                1,264,000
                        -----------------------------------------------------------------------------------------------------
                                                                                        $ 10,992,000              $ 6,915,000
                        =====================================================================================================
The Company incurred $3.1 million of various realignment
                        expenses,  including primarily employee severance, legal
                        and  consulting  fees  and the  write  down  of  certain
                        investments  during the year ended March 31, 1998. As of
                        December  31,  1999,  there was a  remaining  accrual of
                        $281,000  included in other accrued  expenses related to
                        litigation  with a former  employee  that was settled in
                        October 1999.  Final payment to the former  employee was
                        made subsequent to December 31, 1999.

4. BUSINESS             As discussed  previously,  the Company  acquired IDX and
   ACQUISITIONS         UCI  in   December   1998  and   Telekey,   Connectsoft,
                        Swiftcall, iGlobe, ORS and Coast in 1999. The results of
                        operations  of the acquired  businesses  are included in
                        the supplemental  consolidated financial statements from
                        the date of acquisition.

                                      F-28
eGLOBE, INC.
              NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             IDX
   ACQUISITIONS
   (CON'T)              On December 2, 1998,  the  Company  acquired  all of the
                        common and preferred stock of IDX, for an original value
                        of approximately $10.8 million consisting of (a) 500,000
                        shares of the Company's  Series B Convertible  Preferred
                        Stock ("Series B Preferred")  originally  valued at $3.5
                        million which were  convertible  into  2,500,000  shares
                        (2,000,000   shares  until   stockholder   approval  was
                        obtained on June 16, 1999 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
                        which was obtained on June 16, 1999 and an 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
                        $40,000;   (e)   $418,000    convertible    subordinated
                        promissory note for IDX dividends  accrued and unpaid on
                        IDX's  Preferred  Stock and (f) direct costs  associated
                        with  the  acquisition  of $0.4  million  (another  $0.3
                        million of direct  costs were  recorded  in 1999).  This
                        acquisition  was accounted for using the purchase method
                        of accounting.  The shares of Series B Preferred  Stock,
                        IDX  Warrants  and IDX Notes  were  subject  to  certain
                        adjustments  related to IDX's ability to achieve certain
                        performance  criteria,  working capital levels and price
                        guarantees  for the  Series B  Preferred  Stock  and IDX
                        Warrants providing IDX met its performance objectives.

                        At the  Company's  annual  meeting  in  June  1999,  the
                        stockholders approved the increase of the convertibility
                        of the  Series B  Preferred  Stock and IDX  Warrants  as
                        discussed  in (a)  and  (b)  above,  respectively.  As a
                        result,  the acquired  goodwill  associated with the IDX
                        purchase was increased by approximately  $1.5 million in
                        the  second  quarter to  reflect  the higher  conversion
                        feature approved in June 1999.

                        The Company  obtained a final  appraisal of IDX's assets
                        from  independent  appraisers  in the third  quarter  of
                        1999.    This    appraisal    resulted    in   a   gross
                        reclassification  of approximately $6.5 million of IDX's
                        goodwill  to  other   identifiable   intangibles  as  of
                        December 31, 1999. As a result, the purchase  allocation
                        as of  December  31,  1999  resulted in goodwill of $6.4
                        million  (including final  allocations of other acquired
                        assets of $0.2  million) and other  intangibles  of $6.5
                        million. These other identifiable intangibles consist of
                        assembled and trained workforce, partnership network and
                        non-compete  agreements  and are  being  amortized  on a
                        straight-line basis from one to four years.  Goodwill is
                        being  amortized  on a  straight-line  basis  over seven
                        years.

                        In July 1999, the Company  renegotiated the terms of the
                        IDX  purchase  agreement  with the IDX  stockholders  as
                        follows:

                                      F-29
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             (a)     The 500,000  shares of Series B Preferred  Stock
   ACQUISITIONS                 were  reacquired  by the Company in exchange for
   (CON'T)                      500,000 shares of Series H Convertible Preferred
                                Stock ("Series H Preferred").

                        (b)     The Company reacquired the original IDX Warrants
                                in  exchange  for new  warrants to acquire up to
                                1,250,000  shares of the Company's common stock,
                                subject to IDX meeting certain revenue,  traffic
                                and EBITDA  ("Earnings  Before Interest,  Taxes,
                                Depreciation and Amortization") levels at either
                                September  30, 2000 or December  31, 2000 if not
                                achieved by September 30, 2000.

                        (c)     The Company reacquired the outstanding IDX Notes
                                of $4.0 million in exchange  for 400,000  shares
                                of  Series  I  Convertible  Optional  Redemption
                                Preferred  Stock  ("Series I  Preferred").  (See
                                Note 10 for further discussion) .

                        (d)     The   maturity    date   of   the    convertible
                                subordinated  promissory  note,  face  value  of
                                $418,000, was extended to July 15, 1999 from May
                                31, 1999, and  subsequently  paid by issuance of
                                140,599 shares of common stock.

                        (e)     The  Company  waived  its  right to  reduce  the
                                principal  balance  of  the  $2.5  million  note
                                payable by certain  claims as provided for under
                                the   terms  of  the   original   IDX   purchase
                                agreement.

                        As a result of the July  1999  exchange  agreement,  the
                        Company  recorded the excess of the fair market value of
                        the new preferred  stock issuances and the warrants over
                        the carrying  value of the reacquired  preferred  stock,
                        warrants  and notes  payable as a  dividend  to Series B
                        Preferred  Stock   stockholders  of  approximately  $6.0
                        million  (subsequently  reduced  by  $1.4  million,  see
                        discussion below).

                        The Company will  determine  the final  goodwill  amount
                        when the contingent purchase element is resolved and the
                        contingent   warrants   are   exercised.   Goodwill  may
                        materially increase when this contingency is resolved.

                        At  the  acquisition   date,  the  stockholders  of  IDX
                        originally   received   Series  B  Preferred  Stock  and
                        warrants  as  discussed  above,  which  were  ultimately
                        convertible into common stock subject to IDX meeting its
                        performance  objectives.   These  stockholders  in  turn
                        granted preferred stock and warrants,  each of which was
                        convertible  into a  maximum  of  240,000  shares of the
                        Company's  common stock,  to certain IDX employees.  The
                        increase  in the  market  price  during  the year  ended
                        December 31, 1999 and the nine months ended December 31,
                        1998 of the  underlying  common stock granted by the IDX
                        stockholders to certain  employees  resulted in a charge
                        to   income   of  $0.6   million   and   $0.4   million,
                        respectively.  The stock grants were  performance  based
                        and were adjusted each  reporting  period (but not below
                        zero)  for the  changes  in the  stock  price  until the
                        shares  and/or   warrants  (if  and  when)  issued  were
                        converted to common stock.

                                      F-30
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             In December 1999,  the Company and the IDX  stockholders
   ACQUISITIONS         agreed  to  reduce  the  Series H  Preferred  Stock  and
   (CON'T)              warrant  consideration  paid by the  Company  by a value
                        equivalent to the consideration  paid by the Company for
                        4,500 shares of IDX. In exchange,  the IDX  stockholders
                        will not issue the original preferred stock and warrants
                        to the above IDX employees or other parties. The Company
                        agreed to issue eGlobe  options to these  employees  and
                        others related to IDX. The options will have an exercise
                        price of $1.20 and a three year term.  The options  will
                        vest 75% at March  31,  2000 and the other 25% will vest
                        on an accelerated  basis if IDX meets its earn out or in
                        three years if it does not.  These  options were granted
                        by eGlobe on January 7, 2000. The Company also agreed to
                        issue  150,000  shares of common stock as payment of the
                        original    consideration    allocated    as    purchase
                        consideration  for an acquisition of a subsidiary by IDX
                        prior to the Company's purchase of IDX.

                        As a result of the above  renegotiation,  which resulted
                        in the  reduction  of the  fair  value  of the  Series H
                        Preferred Stock and the new warrants and the issuance of
                        eGlobe's options,  the Company recorded the reduction in
                        consideration of  approximately  $1.4 million to be paid
                        to  the  IDX   stockholders   as  a  negative   dividend
                        (offsetting   the  dividend   recorded   from  the  July
                        renegotiation)  and reduced the net loss attributable to
                        common stockholders in the fourth quarter of 1999.

                        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 a value of  approximately
                        $1.2  million  for 125,000  shares of common  stock (50%
                        delivered at the  acquisition  date (valued at $102,000)
                        and 50% to be  delivered  February  1, 2000,  subject to
                        adjustment),  and $2.1 million  payable as follows:  (a)
                        $75,000 paid in cash in January  1999;  (b) $1.0 million
                        in the form of two notes;  (c) $1.0  million in the form
                        of a non-interest bearing note payable only depending on
                        the percentage of projected revenue achieved, subject to
                        adjustment;  and (d) warrants to purchase  50,000 shares
                        of  common  stock  with an  exercise  price of $1.63 per
                        share.  See Note 5 for the terms and  conditions  of the
                        notes. This acquisition has been accounted for under the
                        purchase method of accounting.

                        In 1999, the Company obtained a final appraisal of UCI's
                        assets from  independent  appraisers  which  resulted in
                        acquired  goodwill  of  $0.5  million  and  an  acquired
                        intangible   of  $0.7   million   related  to   customer
                        contracts.    Goodwill   is   being   amortized   on   a
                        straight-line  basis over seven  years and the  acquired
                        intangible is being amortized on a  straight-line  basis
                        over  two  years.   The  Company  may  issue  additional
                        purchase  consideration  (see  discussion  above of $1.0
                        million  note)  if UCI  meets  certain  defined  revenue
                        targets.  The  Company is  currently  renegotiating  the
                        original   agreement  and  timing  of  the   performance
                        measurement.  The  goodwill  amount  will  be  finalized
                        pending    resolution    of   these    purchase    price
                        contingencies.  As a result,  goodwill may increase when
                        these contingencies are resolved.

                                      F-31
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             TELEKEY
   ACQUISITIONS
   (CON'T)              On  February  12,  1999,   the  Company   completed  the
                        acquisition of Telekey for a value of approximately $3.4
                        million for which it: (i) paid $0.1  million at closing;
                        (ii) issued a promissory  note for  $150,000  payable in
                        equal monthly  installments  over one year; (iii) issued
                        1,010,000 shares of Series F Convertible Preferred Stock
                        ("Series F Preferred") valued at $2.0 million;  and (iv)
                        agreed to issue at least 505,000 and up to an additional
                        1,010,000  shares of Series F Preferred  Stock 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;  and (v)  direct  costs
                        associated  with the  acquisition  of $0.2 million.  See
                        Notes 5 and 10 for  further  discussion.  The  value  of
                        $979,000  for the  above  505,000  shares  of  Series  F
                        Preferred  Stock  has  been  included  in  the  purchase
                        consideration.

                        This  acquisition  was  accounted for using the purchase
                        method of  accounting.  The  purchase  price  allocation
                        based on management's  review and third party appraisals
                        resulted  in  goodwill  of  $2.1  million  and  acquired
                        intangibles of approximately $3.0 million related to the
                        value  of  certain  distribution  networks,   internally
                        developed  software and assembled and trained workforce.
                        Goodwill is being  amortized  on a  straight-line  basis
                        over seven  years.  The acquired  intangibles  are being
                        amortized on a straight-line basis over the useful lives
                        of three to seven years.  The final purchase amount will
                        be  determined  when  the  contingent  purchase  element
                        related to Telekey's  ability to achieve certain revenue
                        and EBITDA  objectives  is resolved  and the  additional
                        shares  are  issued.  Goodwill  may  increase  when this
                        contingency is resolved.

                        At the  acquisition  date, the  stockholders  of Telekey
                        received  Series F Preferred  Stock as discussed  above,
                        which is ultimately  convertible  into common stock.  In
                        addition, the stockholders may receive additional shares
                        of Series F Preferred  Stock subject to Telekey  meeting
                        its performance  objectives.  These stockholders in turn
                        agreed  to  grant  upon   conversion  of  the  Series  F
                        Preferred  Stock  a  total  of  240,000  shares  of  the
                        Company's common stock to certain Telekey employees.  Of
                        this total, 60,000 shares will be issued only if Telekey
                        meets certain performance objectives. As of December 31,
                        1999, the value of the underlying non-contingent 180,000
                        shares  of  common   stock   granted   by  the   Telekey
                        stockholders  to certain  employees  has  resulted  in a
                        charge to income of $0.8  million.  The stock grants are
                        performance  based and will be adjusted  each  reporting
                        period  (but not less than zero) for the  changes in the
                        stock   price   until  the  shares  are  issued  to  the
                        employees.   As   discussed  in  Note  10,  the  Telekey
                        stockholders   converted   their   shares  of  Series  F
                        Preferred  Stock  on  January  3,  2000;  therefore,  no
                        additional compensation expense will be recorded for the
                        non-contingent shares after this date.

                                      F-32
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             In  February  2000,  the Company  reached a  preliminary
   ACQUISITIONS         agreement  with the  former  stockholders  of Telekey to
   (CON'T)              restructure  certain  terms of the original  acquisition
                        agreement.  Such  restructuring,  which  is  subject  to
                        completion   of   final   documentation,   includes   an
                        acceleration of the original earn out provisions as well
                        as  the   termination   dates  of   certain   employment
                        agreements.

                        CONNECTSOFT

                        In June 1999, the Company,  through its subsidiary Vogo,
                        purchased  substantially  all the assets of Connectsoft,
                        for a value of approximately  $5.3 million consisting of
                        the following:  (a) one share of the Company's 6% Series
                        G  Cumulative  Convertible  Redeemable  Preferred  Stock
                        ("Series G Preferred") valued at $3.0 million;  (b) $1.8
                        million  in  advances  (includes  $971,000  in  1998) to
                        Connectsoft made by the Company prior to the acquisition
                        which were converted into part of the purchase price and
                        (c) direct costs associated with the acquisition of $0.5
                        million.  This  acquisition  was accounted for under the
                        purchase   method  of   accounting   and  the  financial
                        statements of the Company  reflect the final  allocation
                        of the purchase price based on appraisals performed by a
                        third party. The final  allocation  resulted in goodwill
                        of  $1.0  million  and  acquired   intangibles  of  $9.1
                        million.  The acquired intangibles consist of internally
                        developed  software,   existing  technology,   assembled
                        workforce  and  customer  base.  Intangibles  are  being
                        amortized on a straight-line  basis over useful lives of
                        three to five years.  Goodwill is being  amortized  on a
                        straight-line basis over seven years.

                        The Company also  borrowed  $0.5 million from the seller
                        which  bears  interest  at  a  variable  rate  (8.5%  at
                        December 31, 1999).  Principal and interest payments are
                        due in twelve (12) equal monthly payments  commencing on
                        September 1, 1999.  The remaining  principal and accrued
                        interest  also become due on the first date on which (i)
                        the  Company  receives in any  transaction  or series of
                        transactions  any equity or debt  financing  of at least
                        $50.0 million or (ii) Vogo  receives in any  transaction
                        or series of  transactions  any equity or debt financing
                        of at  least  $5.0  million.  See  Note  5  for  further
                        discussion.

                                      F-33
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             In August 1999, the Company issued 30 shares of Series K
   ACQUISITIONS         Cumulative   Convertible   Preferred  Stock  ("Series  K
   (CON'T)              Preferred Stock") in exchange for its Series G Preferred
                        Stock  held by the seller of  Connectsoft.  (See Note 10
                        for further discussion).

                        SWIFTCALL

                        In July 1999, the Company  acquired all the common stock
                        of  Swiftcall,   a   privately-held   telecommunications
                        company, and certain network operating equipment held by
                        an affiliate of Swiftcall.  The aggregate purchase price
                        equaled  $3.3  million,  due in two  equal  payments  on
                        December  3,  1999  and  June  1,  2000.  The  agreement
                        provided  that  payments  could be made at the option of
                        the Company, in whole or in part, (i) in cash or (ii) in
                        stock,  by issuing to the  stockholder  of Swiftcall the
                        number of shares of common stock of the Company equal to
                        the first payment amount or the second  payment  amount,
                        as the  case  may be,  divided  by the  market  price as
                        defined. On August 12, 1999, the Company elected to make
                        both payments by issuing common stock. In December 1999,
                        the Company issued 526,063 shares of common stock valued
                        at  $1,645,000  as  payment  for  the  first  of the two
                        installment payments.  The final payment is payable June
                        1, 2000 in shares of common stock.

                        As part of the  transaction,  the former  stockholder of
                        Swiftcall,  who  also  owns  VIP  Communications,  Inc.,
                        ("VIP") a calling  card  company in  Herndon,  Virginia,
                        agreed  to  cause  VIP to  purchase  services  from  the
                        Company's IDX  subsidiary,  of the type presently  being
                        purchased  by VIP from  the  Company's  IDX  subsidiary,
                        which  results  in  revenue  to the  Company of at least
                        $500,000 during the 12 months ending August 3, 2000. Any
                        revenue  shortfall  will be paid by a  reduction  in the
                        number of shares of common  stock  issued to the  former
                        stockholder  of  Swiftcall.  The Company may deposit the
                        applicable portion of the second payment of the purchase
                        price of shares of common  stock into  escrow on June 1,
                        2000  if  it  appears  that  there  will  be  a  revenue
                        shortfall under the arrangement with VIP.

                        The  acquisition  was  accounted  for using the purchase
                        method of  accounting.  The financial  statements of the
                        Company  reflect the final  allocation  of the  purchase
                        price based on  appraisals  performed  by a third party.
                        The final allocation  resulted in acquired  property and
                        equipment valued at  approximately  $5.1 million that is
                        being  depreciated on a  straight-line  basis over seven
                        years.

                                      F-34
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------

4. BUSINESS             iGLOBE
   ACQUISITIONS
   (CON'T)              Effective   August  1,   1999,   the   Company   assumed
                        operational  control of  Highpoint,  owned by  Highpoint
                        Telecommunications,  Inc. ("HGP").  On October 14, 1999,
                        substantially  all of the operating  assets of Highpoint
                        were transferred to iGlobe, a newly formed subsidiary of
                        HGP,  and the  Company  acquired  all of the  issued and
                        outstanding  common  stock  of  iGlobe  for a  value  of
                        approximately  $9.9 million..  In July 1999, the Company
                        and  Highpoint  agreed that the Company would manage the
                        business of iGlobe and would take responsibility for the
                        ongoing  financial  condition  of iGlobe  from August 1,
                        1999,  pursuant to a Transition  Services and Management
                        Agreement  ("TSA").  Pursuant  to  this  agreement,  HGP
                        financed  working  capital  through the closing  date to
                        iGlobe for which the Company  issued a  short-term  note
                        payable of $1.8  million  (see Note 5). The  acquisition
                        closed October 14, 1999. The purchase price consisted of
                        (i) one  share  of 20%  Series M  Convertible  Preferred
                        Stock  ("Series  M  Preferred  Stock")  valued  at  $9.6
                        million  (see  Note  10 for  further  discussion),  (ii)
                        direct  acquisition costs of approximately $0.3 million;
                        and  (iii)  HGP was given a  non-voting  beneficial  20%
                        interest of the equity  interest  subscribed  or held by
                        the Company in a yet-to-be-completed joint venture known
                        as IP Solutions B.V.

                        The  acquisition  was  accounted  for using the purchase
                        method of accounting.  This initial preliminary purchase
                        price allocation based on management's  review and third
                        party  appraisals  has  resulted  in  goodwill  of  $1.8
                        million and acquired intangibles of $2.4 million related
                        to a customer base, licenses and operating agreements, a
                        sales agreement and an assembled workforce.  Goodwill is
                        being  amortized  on a  straight-line  basis  over seven
                        years. The acquired intangibles are being amortized on a
                        straight-line  basis over the estimated  useful lives of
                        three  years.  The  Company  will  determine  the  final
                        purchase  price   allocation   based  on  completion  of
                        management's review.

                                      F-35
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------

4. BUSINESS             ORS
   ACQUISITIONS
   (CON'T)              In September 1999, the Company  acquired  control of ORS
                        from its sole stockholder,  Oasis. The Company and Oasis
                        formed eGlobe/Oasis  Reservations LLC, ("LLC"), which is
                        responsible  for conducting  the business  operations of
                        ORS.  The  Company  manages  and  controls  the  LLC and
                        receives  90%  of  the  profits  and  losses  from  ORS'
                        business.  The LLC was funded by contributions  effected
                        by  the   members   under   a   Contribution   Agreement
                        ("Contribution  Agreement").  Oasis  contributed all the
                        outstanding  shares of ORS valued at approximately  $2.3
                        million  as its  contribution  to the LLC.  The  Company
                        contributed  1.5  million  shares  of its  common  stock
                        valued  at $3.0  million  on the  date of  issuance  and
                        warrants  to  purchase  additional  shares of its common
                        stock to the LLC. The warrants are  exercisable  for the
                        shares of common stock as discussed below:

                        (a)     shares  equal  to the  difference  between  $3.0
                                million  and  the  value  of the  Company's  1.5
                                million share  contribution on the date that the
                                shares of common  stock  (including  the  shares
                                underlying the warrants)  contributed to the LLC
                                are registered  with the SEC if the value of the
                                1.5  million  shares  on that  date is less than
                                $3.0 million;

                        (b)     shares equal to $100,000 of the Company's common
                                stock  for each  30-day  period  beyond  90 days
                                following  the  date of  contribution  that  the
                                shares of the Company's  common stock (including
                                the shares underlying the warrants)  contributed
                                to the LLC remain unregistered;

                        (c)     shares  up to  $2.0  million  of  the  Company's
                                common stock,  subject to adjustment  based upon
                                ORS achieving certain revenue and EBITDA targets
                                during the measurement  period of August 1, 1999
                                to January  31,  2000:  provided  however,  that
                                Oasis may select a different  period if: (i) ORS
                                obtains  a new  customer  contract  at any  time
                                between the closing date and March 31, 2000, and
                                (ii) the Company enters into a new contract with
                                a  specific  customer  at any time  between  the
                                closing  date and March 31,  2000.  If either of
                                these events occur, then Oasis may select as the
                                measurement  period,  in its discretion,  any of
                                the  following;  (x) the period  from  August 1,
                                1999 to January  31,  2000,  (y) the period from
                                September  1, 1999 to  February  29, 2000 or (z)
                                the  period  from  October  1, 1999 to March 31,
                                2000;

                                      F-36
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             (d) additional  shares  based  upon  (1)  ORS  achieving
   ACQUISITIONS             certain revenue and  EBITDA  targets,  and  (2)  the
   (CON'T)                  Company's   share  price at the date of registration
                            of the shares for this  transaction.  Under  certain
                            circumstances,  these  shares  may be  equal  to the
                            greater of (A) 50% of the  incremental  revenue  for
                            the Second  Measurement  Period  (as  defined in the
                            agreements)  over $9.0 million or (B) four times the
                            incremental  Adjusted  EBITDA  (as  defined  in  the
                            agreements) for the Second  Measurement  Period over
                            $1.0 million provided,  however, that such number of
                            shares   shall  not  exceed  the   greater  of;  (i)
                            1,000,000  shares of the  Company's  common stock or
                            (ii) that the  number  of  shares  of the  Company's
                            common stock  determined by dividing $8.0 million by
                            the Second  Measurement Period Date Market Value (as
                            defined in the  agreements);  and provided  further,
                            that if the basis  for  issuance  of such  shares is
                            incremental  revenue  over $9.0  million then EBITDA
                            for the Second  Measurement  Period must be at least
                            $1.0  million for the revenue  between  $9.0 million
                            and  $12.0  million  or at least  $1.5  million  for
                            revenue above $12.0  million.  In addition,  the LLC
                            may  receive  0.5  million  shares of the  Company's
                            common   stock  if  the   revenue   for  the  Second
                            Measurement Period is equal to or greater than $37.0
                            million  and the  Adjusted  EBITDA  for  the  Second
                            Measurement  Period is equal to or greater than $5.0
                            million.

                        According to the  Operating  Agreement,  the net profits
                        and  net  losses  of the LLC  are  allocated  90% to the
                        Company and 10% to Oasis.  Proceeds from the sale of the
                        Company's  common  stock or warrants  would be allocated
                        90% to the Company and 10% to Oasis.  Proceeds  from the
                        sale of the ORS stock or its  assets  will be  allocated
                        100% to Oasis until Oasis has received  distributions of
                        at least $9.0  million  and then 90% to Oasis and 10% to
                        the Company.  Pursuant to the LLC's Operating Agreement,
                        the LLC is an interim  step to full  ownership of ORS by
                        the  Company.  Once the Company has either  raised $10.0
                        million in new capital or  generated  three  consecutive
                        months of positive cash flow and  registered  the shares
                        issued in this  transaction,  the LLC will be  dissolved
                        and ORS will  become a  wholly-owned  subsidiary  of the
                        Company. Under these circumstances,  Oasis would receive
                        the shares of common stock and warrants  contributed  to
                        the LLC by the  Company.  Additionally,  even  if  these
                        conditions  are not  fulfilled,  Oasis  has the right to
                        redeem its  interest  in the LLC at any time in exchange
                        for the shares of common stock and the  warrants  issued
                        to the LLC by eGlobe.

                        In January  2000,  the  Company  raised  more than $10.0
                        million in new capital.  Once the Company  registers the
                        shares  issued  in this  transaction,  the  LLC  will be
                        dissolved and ORS will become a wholly-owned  subsidiary
                        of the Company.

                                      F-37
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             This  acquisition  was  accounted for using the purchase
   ACQUISITIONS         method of accounting.  The purchase  allocation based on
   (CON'T)              management's  review and third party appraisals resulted
                        in goodwill of $0.4 million and acquired  intangibles of
                        $1.6 million related to assembled and trained  workforce
                        and customer contracts.  The goodwill is being amortized
                        on a straight-line  basis over seven years. The acquired
                        intangibles are being amortized on a straight-line basis
                        over the estimated  useful lives of three to five years.
                        The Company has not  determined  at this time if certain
                        performance  measures have been met. The purchase amount
                        may  increase  upon  resolution  of  the   contingencies
                        discussed earlier.

                        As the Company  controls the  operations of the LLC, the
                        LLC has been included in the  supplemental  consolidated
                        financial  statements  with  Oasis'  interest in the LLC
                        recorded as Minority Interests.

                        In  connection  with the  purchase and  installation  of
                        equipment  and  leasehold   improvements   at  ORS'  new
                        facility in Miami, Florida,  Oasis agreed to loan ORS up
                        to  $451,000.  The loan is  required to be repaid in six
                        equal   quarterly   principal   installments   beginning
                        November  30,   1999.   The  Company   guaranteed   ORS'
                        obligations under this loan and granted Oasis a security
                        interest  in its  ownership  interest  in the LLC. As of
                        December 31, 1999, there was $451,000  outstanding under
                        this commitment. See Note 5 for further discussion.

                        Subsequent  to the  acquisition,  $1.0  million of costs
                        were incurred  related to the purchase and  installation
                        of  equipment  and  leasehold  improvements  at this new
                        facility. Of these costs, $0.6 million was paid by Oasis
                        and  contributed  to the LLC resulting in an increase in
                        the Minority Interests.

                                      F-38
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             COAST
   ACQUISITIONS
   (CON'T)              On December 2, 1999, the Company acquired all the common
                        shares  of  Coast  which  was  majority   owned  by  the
                        Company's largest stockholder (See Note 7). The purchase
                        consideration  valued  at  approximately  $16.7  million
                        consisted  of: (a) 16,100 shares of Series O Convertible
                        Preferred  Stock ("Series O Preferred  Stock") valued at
                        approximately  $13.4  million;  (b)  882,904  shares  of
                        common stock valued at approximately  $3.0 million;  and
                        (c) direct  costs  associated  with the  acquisition  of
                        approximately $0.3 million. The Series O Preferred Stock
                        is  convertible  into a maximum of  3,220,000  shares of
                        common stock. See Note 10 for further discussion.

                        The  acquisition  was  accounted  for using the purchase
                        method of  accounting.  The financial  statements of the
                        Company  reflect  the  preliminary   allocation  of  the
                        purchase   price  based  on   management's   review  and
                        preliminary  third  party  appraisals.  The  preliminary
                        purchase price allocation  resulted in goodwill of $14.3
                        million and  intangibles of $3.2 million  related to the
                        value of certain  distribution  networks,  certain  long
                        distance  infrastructure,  internally developed software
                        and assembled and trained  workforce.  Goodwill is being
                        amortized on a straight-line basis over seven years, and
                        the  acquired  intangibles  are  being  amortized  on  a
                        straight-line  basis over the estimated  useful lives of
                        five years.  The final purchase price allocation has not
                        been finalized  pending final third party appraisals and
                        completion of management's review.

                        PRO FORMA RESULTS OF OPERATIONS

                        The IDX and UCI  acquisitions  as well as the subsequent
                        increase  in  the   preferred   conversion   factor  for
                        preferred shares  originally issued to IDX stockholders,
                        the  renegotiations  of the  terms  of the IDX  purchase
                        agreement  and the  1999  reclassification  of  acquired
                        goodwill   to  other   identifiable   intangibles,   are
                        reflected   in  the   following   unaudited   pro  forma
                        supplemental consolidated results of operations assuming
                        the  acquisitions  had occurred at the  beginning of the
                        year ended March 31,  1998.  The  Telekey,  Connectsoft,
                        Swiftcall, iGlobe, ORS, and Coast acquisitions,  as well
                        as the exchange of the Series G Preferred  Stock for the
                        Series K Preferred Stock, are reflected in the following
                        unaudited pro forma supplemental consolidated results of
                        operations assuming the acquisitions had occurred at the
                        beginning of the nine month  period  ended  December 31,
                        1998.

                                      F-39
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. BUSINESS             The  unaudited  pro  forma   supplemental   consolidated
   ACQUISITIONS         results of operations  for the year ended March 31, 1998
   (CON'T)              include IDX's  results of operations  for the year ended
                        December 31, 1997 and eGlobe's results of operations for
                        the year ended March 31, 1998.  The IDX,  UCI,  Telekey,
                        Connectsoft, Swiftcall, iGlobe, ORS and Coast results of
                        operations  for the nine months ended  December 31, 1998
                        are estimated  based on annualized  results for the year
                        ended   December  31,  1998  and   seasonal   trends  in
                        operations.
Unaudited Pro Forma Results
                                                           -----------------------------------------------------------------
                                                             Year Ended            Nine Months Ended         Year Ended
                                                            December 31,                December 31,            March 31,
                                                               1999                       1998                    1998
                        ----------------------------------------------------------------------------------------------------
Revenue                            $ 163,103,000          $ 116,630,000              $   80,164,000
                        Net loss before
                             extraordinary item            $ (66,533,000)         $ (22,085,000)             $  (19,615,000)
                        Net loss                           $ (68,434,000)         $ (22,085,000)             $  (19,615,000)
                        Net loss attributable to
                             common stockholders           $ (77,215,000)         $ (24,764,000)             $  (24,527,000)
                        Basic and diluted net
                             loss per share                $       (1.20)         $       (0.40)             $        (0.43)
In  management's  opinion,  these  unaudited  pro  forma
                        amounts  are not  necessarily  indicative  of  what  the
                        actual combined results of operations might have been if
                        the  acquisitions had been effective at the beginning of
                        each respective period, as presented above.

                                      F-40
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
5. NOTES PAYABLE        Notes  payable  and   long-term   debt  consist  of  the
   AND LONG-            following:
   TERM DEBT
DECEMBER 31,                                                            1999               1998
                     ----------------------------------------------------------------------------------------------------
Promissory note to a telecommunications company, net of
                     unamortized discount of $0 and $206,000  (1)                           $    --          $ 7,294,000

                     Promissory notes for acquisition of IDX (2)                                 --            5,418,000

                     Promissory note for acquisition of UCI, net of unamortized
                     discount of $0 and $43,000 (3)                                         250,000              457,000

                     Promissory note for acquisition of UCI (4)                             500,000              500,000

                     Promissory note to an investor, net of unamortized
                     discount of $0 and $26,000 (5)                                         282,000              224,000

                     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              299,000              305,000

                     Promissory note of Telekey payable to a telecommunication
                     company (6)                                                            454,000                   --

                     Promissory note for acquisition of Connectsoft (7)                     500,000                   --

                     Promissory note for acquisition of Telekey (8)                          25,000                   --

                     Promissory note due to seller of iGlobe (9)                          1,831,000                   --

                     Promissory note due to seller of ORS (10)                              451,000                   --

                     Promissory note secured by certain equipment (11)                    2,720,000                   --

                     Capitalized lease obligations (12)                                   5,750,000              724,000
                     ----------------------------------------------------------------------------------------------------
                     Total                                                               13,062,000           14,922,000

                     Less current maturities, net of unamortized discount
                         of $0 and $275,000                                               7,868,000           13,685,000
                     ----------------------------------------------------------------------------------------------------
                     Total notes payable and long-term debt                              $5,194,000           $1,237,000
                     ====================================================================================================
F-41
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
5. NOTES PAYABLE        (1)     In  February  1998,  the Company  borrowed  $7.5
   AND LONG-                    million from a  telecommunications  company. The
   TERM DEBT                    note was  unsecured and bore interest at 8.875%.
   (CON'T)                      In connection with this transaction,  the lender
                                was granted warrants  expiring February 23, 2001
                                to  purchase  500,000  shares  of the  Company's
                                common stock at a price of $3.03 per share.  The
                                value of approximately  $0.5 million assigned to
                                such warrants  when granted in  connection  with
                                the  above  note  agreement  was  recorded  as a
                                discount to long-term  debt and  amortized  over
                                the term of the  note as  interest  expense.  In
                                January  1999,  pursuant  to  the  anti-dilution
                                provisions of the loan  agreement,  the exercise
                                price of the  warrants  was  adjusted to $1.5125
                                per share, resulting in additional debt discount
                                of $0.2 million.  This amount was amortized over
                                the  remaining  term of the note.  In July 1999,
                                this note plus  accrued  interest was repaid and
                                the remaining  unamortized discount was recorded
                                as interest expense.

                        (2)     In  connection  with  the IDX  acquisition,  the
                                Company originally issued $5.0 million unsecured
                                convertible  subordinated promissory notes and a
                                $418,000  convertible   subordinated  promissory
                                note for  accrued but unpaid  dividends  owed by
                                IDX. The notes bore interest at LIBOR plus 2.5%.
                                Each of the notes, plus accrued interest,  could
                                be  paid  in cash  or  shares  of the  Company's
                                common  stock,  at the  sole  discretion  of the
                                Company.  In March 1999, the Company  elected to
                                pay the first  note,  which had a face  value of
                                $1.0 million,  plus accrued interest,  in shares
                                of common  stock and  issued  431,729  shares of
                                common stock to discharge this indebtedness.  In
                                connection    with   the   discharge   of   this
                                indebtedness,  the IDX stockholders were granted
                                warrants  expiring  March 23,  2002 to  purchase
                                43,173 shares of the Company's common stock at a
                                price of $2.37 per share.  The value assigned to
                                the warrants of $62,000 was recorded as interest
                                expense in March 1999.

                                In July 1999, the Company renegotiated the terms
                                of  the   purchase   agreement   with   the  IDX
                                stockholders. As a result of the renegotiations,
                                the  Company   exchanged  the  remaining   notes
                                payable totaling $4.0 million for 400,000 shares
                                of  Series  I  Preferred  Stock  valued  at $4.0
                                million.  In addition,  the maturity date of the
                                $418,000  note was extended and repaid in August
                                1999 with 140,599  shares of common  stock.  See
                                Notes 4 and 10 for further discussion.

                        (3)     On December 31, 1998, the Company  acquired UCI.
                                In connection with this transaction, the Company
                                issued a $0.5 million unsecured  promissory note
                                bearing   interest  at  8%  with  principal  and
                                interest   originally  due  June  27,  1999.  In
                                connection   with  the  note,  UCI  was  granted
                                warrants   expiring  in  December  31,  2003  to
                                purchase  50,000 shares of the Company's  common
                                stock at a price of $1.63 per  share.  The value
                                assigned to the warrants of $43,000 was recorded
                                as a  discount  to the  note  and was  amortized
                                through   June  1999  as   additional   interest
                                expense.  In August 1999, the Company  completed
                                renegotiation of the terms of this note pursuant
                                to which the Company  paid  $250,000 in November
                                1999 with the  remaining  $250,000  plus accrued
                                interest  payable  on  December  31,  1999.  The
                                remaining  note was paid in full  subsequent  to
                                year end.

                        (4)     In  connection  with  the UCI  acquisition,  the
                                Company   issued   a  $0.5   million   unsecured
                                promissory note with 8% interest payable monthly
                                due no later than September 30, 2000.

                                      F-42
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
5. NOTES PAYABLE        (5)     In September  1998, a subsidiary  of the Company
   AND LONG-                    entered  into  a  12%   unsecured   bridge  loan
   TERM DEBT                    agreement  with an investor for $250,000 and the
   (CON'T)                      proceeds were advanced to Connectsoft, a company
                                acquired in September  1999 as discussed in Note
                                4. 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 $34,000  was  recorded as a discount
                                to the note and has been fully  amortized  as of
                                December   31,  1999  as   additional   interest
                                expense.   As   part  of  the   acquisition   of
                                Connectsoft,  the Company renegotiated the terms
                                of this note  with the  investor  in July  1999.
                                Pursuant  to the  renegotiations,  the  original
                                note was replaced  with a new note due September
                                12, 1999  representing  principal  plus  accrued
                                interest due on the original note. In connection
                                with  this new  note,  the  lender  was  granted
                                warrants  to  purchase   25,000  shares  of  the
                                Company's  common  stock at a price of $2.82 per
                                share.  The  value of  $34,000  assigned  to the
                                warrants  was recorded as a discount to the note
                                and  amortized  over  the term of the  loan.  In
                                December 1999, the lender  extended the note and
                                was granted  warrants to purchase  10,000 shares
                                of the  Company's  common  stock  at a price  of
                                $2.82  per  share.  The  value  of  $15,000  was
                                recorded as interest  expense in December  1999.
                                On  January  28,  2000,  the  Company  paid  the
                                principal and interest in full.

                        (6)     Telekey has an outstanding  promissory  note for
                                $454,000 bearing interest,  payable quarterly at
                                10% with principal due on December 31, 2000. The
                                note  is  secured  by  certain   assets  of  the
                                previous stockholders of Telekey.

                        (7)     In   connection    with   the   acquisition   of
                                Connectsoft,  the Company  issued a $0.5 million
                                note to the seller. The note bears interest at a
                                variable  rate (8.5% at December  31,  1999) and
                                principal  and  interest  payments  are  due  in
                                twelve  equal  monthly  payments  commencing  on
                                September 1, 1999.  The remaining  principal and
                                accrued  interest  also  become due on the first
                                date on which (i) the  Company  receives  in any
                                transaction or series of transactions any equity
                                or debt  financing of at least $50.0  million or
                                (ii) Vogo receives in any  transaction or series
                                of transactions  any equity or debt financing of
                                at least  $5.0  million.  The note is secured by
                                all  the   acquired   assets  and   property  of
                                Connectsoft.  The  Company  repaid  the note and
                                accrued  interest  subsequent  to  December  31,
                                1999.
(8)     In connection  with the  acquisition of Telekey,
                                the     Company     issued     an     unsecured,
                                non-interest-bearing    note    for    $150,000.
                                Principal  payments  are  due in  equal  monthly
                                payments through February 2000. Telekey also had
                                a $1.0  million line of credit due on demand and
                                bearing   interest   at  a   variable   rate  to
                                facilitate operational financing needs. The line
                                of credit was personally  guaranteed by previous
                                stockholders  of Telekey  and was due on demand.
                                This line of credit  expired in October 1999 and
                                the balance was repaid on November 2, 1999.

                        (9)     Effective  August 1, 1999, the Company  acquired
                                iGlobe.  In  connection  with this  transaction,
                                Highpoint  financed  working  capital for iGlobe
                                through the  closing  date for which the Company
                                has  issued  an   unsecured   note  payable  for
                                approximately  $1.8 million which was subject to
                                adjustment.  The  outstanding  past due  balance
                                bears interest at 15% per annum. As of March 24,
                                2000,  the  Company  has repaid  $713,000 of the
                                note and the parties are  currently  negotiating
                                payment terms on the remaining balance.

                        (10)    In  connection  with the  purchase  of ORS,  the
                                seller loaned ORS up to $451,000  which was used
                                to purchase and install  equipment and leasehold
                                improvements  at ORS'  new  facility  in  Miami,
                                Florida.  The  note  bears  interest  at 7%  and
                                principal  and  interest  are  due in six  equal
                                quarterly  installments  beginning  November 30,
                                1999. The Company  guaranteed  ORS'  obligations
                                under  this  loan  and   granted  the  seller  a
                                security  interest in its ownership  interest in
                                the LLC.

                                      F-43
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
5. NOTES PAYABLE        (11)    Effective  June 11, 1999,  Trans Global  entered
   AND LONG-                    into a financing  agreement to fund the purchase
   TERM DEBT                    of certain  switch  hardware and  software.  The
   (CON'T)                      note is payable  for a total of $3.3  million in
                                36   consecutive    monthly    installments   of
                                approximately  $105,000 (principal and interest)
                                at a fixed  interest rate of 8.88%.  The note is
                                collateralized  by the equipment which has a net
                                carrying  value of $2.9  million at December 31,
                                1999.

                        (12)    During  1999,  the  Company   acquired   certain
                                capital lease obligations of approximately  $5.0
                                million  through  its  acquisitions  of Telekey,
                                Connectsoft,  iGlobe and Coast as  discussed  in
                                Note 4. The Company is committed  under  various
                                capital   leases  for   certain   property   and
                                equipment.  These  leases  are for  terms  of 18
                                months to 36 months  and bear  interest  ranging
                                from 8.52% to 28.0%. Accumulated depreciation on
                                equipment   held   under   capital   leases  was
                                $1,395,000 and $150,000 at December 31, 1999 and
                                1998, respectively.

                                Notes  payable,  future  maturities of long-term
                                debt and future  minimum  lease  payments  under
                                capital lease  obligations  at December 31, 1999
                                are as follows:
NOTES PAYABLE
                                                                                AND
                                                                              LONG-TERM            CAPITAL
                           YEARS ENDING DECEMBER 31,                            DEBT                LEASES            TOTAL
                        ------------------------------------------------------------------------------------------------------
2000                                               $ 5,280,000       $ 3,252,000        $ 8,532,000
                           2001                                                 1,237,000         2,427,000          3,664,000
                           2002                                                   521,000           915,000          1,436,000
                           2003                                                     9,000                --              9,000
                           2004                                                    10,000                --             10,000
                           Thereafter                                             255,000                --            255,000
                        ------------------------------------------------------------------------------------------------------
                           Total payments                                       7,312,000         6,594,000         13,906,000
                           Less amounts
                             representing interest                                     --           844,000            844,000
                        ------------------------------------------------------------------------------------------------------
                           Principal payments                                   7,312,000         5,750,000         13,062,000
                           Less current maturities                              5,280,000         2,588,000          7,868,000
                        ------------------------------------------------------------------------------------------------------
                           Total long-term debt                               $ 2,032,000       $ 3,162,000        $ 5,194,000
                        ======================================================================================================
F-44
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
6. EARNINGS (LOSS)              Earnings per share are  calculated in accordance
   PER SHARE                    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 are  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
                                of   5,245,468,   2,538,159  and  2,020,822  and
                                warrants of  9,188,974,  4,093,167 and 1,391,667
                                were not included in diluted  earning (loss) per
                                share for the year ended  December 31, 1999, the
                                nine months ended December 31, 1998 and the 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, including dividends
                                payable in shares of common  stock,  stock to be
                                issued, and convertible  subordinated promissory
                                notes  convertible into 26,223,940 and 5,323,926
                                shares  of common  stock  were not  included  in
                                diluted  earnings  (loss) per share for the year
                                ended  December  31, 1999 and for the nine month
                                period ended  December  31, 1998,  respectively,
                                due to the loss for the  periods.  There  was no
                                convertible  preferred stock or convertible debt
                                outstanding at March 31, 1998.

                                Subsequent  to December  31,  1999,  the Company
                                issued  additional  preferred stock and warrants
                                convertible  into  shares of common  stock.  See
                                Note  10  for  discussion.   Also,  the  Company
                                renegotiated  the  terms  of a  preferred  stock
                                issuance   and  certain   preferred   stock  was
                                converted  into common  stock.  (See Note 16 for
                                discussion).  The shares of common stock and the
                                contingent  warrants  held  by the  LLC  and the
                                2,000,000  shares of common stock held in escrow
                                to  cover  eGlobe's  potential   indemnification
                                obligations   under  the  Trans  Global   merger
                                agreement,  are not included in the  computation
                                of basic and diluted loss per share.

                                      F-45
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
6. EARNINGS (LOSS)
   PER SHARE (CON'T)
YEAR                  NINE                 YEAR
                                                                           ENDED             MONTHS ENDED             ENDED
                                                                       DECEMBER 31,          DECEMBER 31,           MARCH 31,
                                                                           1999                  1998                 1998
--------------------------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:

      NUMERATOR

        Net loss before extraordinary item                              $(53,203,000)         $ (5,958,000)       $ (11,257,000)
        Preferred stock dividends                                        (11,930,000)                   --                   --
                                                                        --------------------------------------------------------
        Net loss before extraordinary item
          attributable to common stockholders                            (65,133,000)           (5,958,000)         (11,257,000)
        Loss on early retirement of debt                                  (1,901,000)                   --                   --
                                                                        --------------------------------------------------------
        Net loss attributable to common stockholders                    $(67,034,000)         $ (5,958,000)       $ (11,257,000)
                                                                        --------------------------------------------------------
      DENOMINATOR
        Weighted average shares outstanding                               60,610,548            57,736,654           57,082,495
                                                                        --------------------------------------------------------
      PER SHARE AMOUNTS (BASIC AND DILUTED)

        Net loss before extraordinary item                                $    (1.08)            $    (0.10)          $    (0.20)
        Loss on early retirement of debt                                       (0.03)                    --                   --
                                                                        =========================================================
        Net loss per share                                                $    (1.11)            $   (0.10)          $    (0.20)
                                                                        =========================================================
F-46
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
-------------------------------------------------------------------------------
7. RELATED PARTY        NOTES PAYABLE AND LONG-TERM DEBT
   TRANSACTIONS
                        Notes  payable and long-term  debt with related  parties
                        consist of the following:
DECEMBER 31,                                                           1999                  1998
                        ---------------------------------------------------------------------------------------------------
Accounts receivable revolving credit note (1)                       $1,058,000           $       --
                        Secured notes, net of unamortized discount of
                             $7,128,000 and $0 (1)                                           7,806,000                   --

                        Promissory note of Coast (2)                                         3,000,000                   --

                        Promissory note of Coast (2)                                           250,000                   --

                        Promissory note payable to a stockholder, net of
                             unamoritized discount of $137,000 and $46,000 (3)                 863,000              954,000

                        Short-term loan from two officers and an investor (4)                       --              200,000
                        ---------------------------------------------------------------------------------------------------
                        Total, net of unamortized discount of $7,265,000
                             and $46,000                                                    12,977,000            1,154,000
                        Less current maturities, net of unamortized discount
                              of $2,988,000 and $46,000.                                     4,676,000            1,154,000
                        ---------------------------------------------------------------------------------------------------
                        Total long-term debt, net of unamortized discount
                        of  $4,277,000 and $0                                               $8,301,000           $       --
                        ===================================================================================================
(1)     In April 1999,  the Company  entered into a loan
                                and note purchase  agreement with EXTL Investors
                                ("EXTL"),  which together with its affiliates is
                                the  Company's  largest  stockholder.  Under the
                                terms of this Loan and Note  Purchase  Agreement
                                ("Agreement"),   in  April  1999,   the  Company
                                initially received an unsecured loan ("Loan") of
                                $7.0  million  bearing  interest  at 8%  payable
                                monthly with  principal and  remaining  interest
                                due on the earlier of (i) April  2000,  (ii) the
                                date of closing of an  offering  by the  Company
                                from which the Company  received net proceeds of
                                $30.0  million or more,  or (iii) the closing of
                                the $20.0  million  purchase of the Company's 5%
                                Secured Notes. As additional consideration, EXTL
                                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  were   immediately   exercisable   and
                                1,000,000  warrants were exercisable only in the
                                event that the  stockholders did not approve the
                                repayment of the $20.0 million  credit  facility
                                committed  by EXTL in  shares  of the  Company's
                                common  stock and grant of  warrants to purchase
                                5,000,000  shares of the Company's  common stock
                                or the Company  elected not to draw it down. The
                                1,000,000  warrants  did not become  exercisable
                                because  both  the   stockholder   approval  was
                                received  and the  Company  elected to draw down
                                the funds as discussed below.

                                The value of approximately $2.9 million assigned
                                to  the  500,000  warrants  was  recorded  as  a
                                discount  to  the  note  payable  and  amortized
                                through July 1999 when the note was repaid.

                                      F-47
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. RELATED PARTY        Under the Agreement,  in July 1999, EXTL purchased $20.0
   TRANSACTIONS         million of 5%  Secured  Notes  ("Notes")  dated June 30,
   (CON'T)              1999  at  the  Company's   request.   The   transactions
                        contemplated  by  the  Agreement  were  approved  by the
                        Company's   stockholders  at  the  annual   stockholders
                        meeting in June 1999.  The initial $7.0 million note was
                        repaid from the proceeds of the Notes along with accrued
                        interest of $0.1 million.

                        As  additional  consideration  for the  Notes,  EXTL was
                        granted  warrants  vesting  over two years  expiring  in
                        three  years,  to  purchase   5,000,000  shares  of  the
                        Company's common stock at an exercise price of $1.00 per
                        share. The value assigned such warrants of approximately
                        $10.7  million  was  recorded as a discount to the Notes
                        and is being  amortized  over  the term of the  Notes as
                        additional interest expense.

                        Principal  and  interest on the Notes are  payable  over
                        three years in monthly installments commencing August 1,
                        1999 with a balloon  payment for the  remaining  balance
                        due on the  earlier  to occur of (i) June 30,  2002,  or
                        (ii)  the date of  closing  of an  offering  ("Qualified
                        Offering") by the Company of debt or equity  securities,
                        in  a  single   transaction   or   series   of   related
                        transactions,   from  which  the  Company  receives  net
                        proceeds of $100.0 million or more.  Alternatively,  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 or more 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.

                        Also, under the Agreement,  EXTL agreed to make advances
                        to the Company under a 5% Accounts Receivable  Revolving
                        Credit Note  ("Revolver") for an amount up to the lesser
                        of (1) 50% of eligible  receivables  (as defined) or (2)
                        the aggregate  amount of principal  that has been repaid
                        to date  ($1,066,000 as of December 31, 1999).  Interest
                        payments are due monthly with the unpaid  principal  and
                        interest on the Revolver due on the earliest to occur of
                        (i) the third  anniversary  of the  agreement,  June 30,
                        2002,  or  (ii)  the  date  of  closing  of a  Qualified
                        Offering as defined above.

                        In August 1999,  the Company and EXTL agreed to exchange
                        $4.0  million  of the  Notes  for 40  shares of Series J
                        Cumulative   Convertible   Preferred  Stock  ("Series  J
                        Preferred"). At the date of exchange, the carrying value
                        of the  $4.0  million  Notes,  net  of  the  unamortized
                        discount   of    approximately    $1.9   million,    was
                        approximately $2.1 million. The excess of the fair value
                        of the Series J Preferred Stock of $4.0 million over the
                        carrying value of the Notes of $1.9 million was recorded
                        as an  extraordinary  loss on early  retirement of debt.
                        The transaction  does not result in a tax benefit to the
                        Company. As a result of this agreement, the $4.0 million
                        is not subject to redraw under the  Revolver.  (See Note
                        10 for further discussion.)

                                      F-48
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. RELATED PARTY                These   Notes  and   Revolver   are  secured  by
   TRANSACTIONS                 substantially all of eGlobe's existing operating
   (CON'T)                      assets (excluding Trans Global) and eGlobe's and
                                IDX's accounts receivables, although the Company
                                can   pursue   certain   additional    permitted
                                financing,  including  equipment and  facilities
                                financing, for certain capital expenditures. The
                                Agreement  contains  certain debt  covenants and
                                restrictions by and on the Company,  as defined.
                                The  Company  was  in  arrears  on  a  scheduled
                                principal payment under this debt facility as of
                                December 31, 1999 for which it received a waiver
                                from EXTL through  January 1, 2001.  In addition
                                the Company was in default  under certain of its
                                other   debt   agreements   as   a   result   of
                                non-payments  of scheduled  payments at December
                                31, 1999 and obtained a waiver through  February
                                14,  2000 from EXTL.  The Company  repaid  these
                                other notes by February  14,  2000.  The Company
                                was  technically  in default under the Notes due
                                to the Company's  assumption of the Coast notes,
                                as  discussed  below in (2).  However,  in April
                                2000,  the  Agreement was amended and this event
                                of default was permanently cured as discussed in
                                Note 18.

                        (2)     Coast,   acquired  in  December  1999,  has  two
                                outstanding  unsecured  promissory notes with an
                                affiliate of EXTL for $3.0 million and $250,000.
                                The notes bear  interest at a variable rate (10%
                                at  December  31,  1999) and 11%,  respectively.
                                Interest on both notes is payable  monthly  with
                                the  principal due July 1, 2000 and November 29,
                                2000,  respectively.  A  change  of  control  is
                                considered   an  event  of  default   under  the
                                existing $3.0 million  note. In April 2000,  the
                                agreement  was  amended and the event of default
                                was permanently cured as discussed in Note 18.
(3)     In June 1998, the Company  borrowed $1.0 million
                                from an  existing  stockholder  under an  8.875%
                                unsecured   note.   In   connection   with  this
                                transaction,  the  lender was  granted  warrants
                                expiring   September  2001  to  purchase  67,000
                                shares of the Company's  common stock at a price
                                of  $3.03  per  share.   The  stockholder   also
                                received  as  consideration  for the  loan,  the
                                repricing and  extension of an existing  warrant
                                for 55,000 shares  exercisable  before  February
                                2001 at a price of $3.75  per  share.  The value
                                assigned  to  such   warrants,   including   the
                                revision of terms, of approximately $69,000, was
                                recorded as a discount  to the note  payable and
                                was  amortized  over  the  term  of the  note as
                                interest  expense through  December 31, 1999. In
                                January 1999,  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 of $57,000  assigned
                                to  the   revision  in  terms  was  recorded  as
                                additional  debt  discount and was  amortized as
                                interest expense through December 31, 1999.

                                In August 1999, the Company entered into a stock
                                purchase  agreement with the lender.  Under this
                                agreement, the lender agreed to purchase 160,257
                                shares of common stock of the Company at a price
                                per share of $1.56  and  received  a warrant  to
                                purchase  60,000  shares of common  stock of the
                                Company   at  a  price   per   share  of  $1.00.
                                Additionally,  the lender  acquired an option to
                                exchange  the  principal  of the  note  (up to a
                                maximum  amount of $500,000)  for: (1) shares of
                                common stock of the Company at a price per share
                                of $1.56 and (2) warrants to purchase  shares of
                                common  stock of the Company at a price of $1.00
                                (60,000 shares per $250,000 of debt  exchanged).
                                The value of the maximum number of warrants that
                                would be issued  upon  exercise of the option of
                                approximately $71,000 was recorded as additional
                                debt  discount  and was  amortized  as  interest
                                expense through December 31, 1999.

                                      F-49
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. RELATED PARTY                Effective  December 16, 1999 the Company and the
   TRANSACTIONS                 lender extended the maturity date of the note to
   (CON'T)                      April 18, 2000 and  increased  the interest rate
                                on the balance  outstanding  from  December  18,
                                1999  to  maturity  to  14%.  Additionally,  the
                                option to  exchange  up to 50% of the  principal
                                balance for shares of common stock was increased
                                to  75%  under  the  same  terms  as   discussed
                                earlier.   As  a   result,   the  value  of  the
                                additional  60,000 warrants that would be issued
                                upon  exercise  of the  option of  $137,000  was
                                recorded as additional debt discount and will be
                                amortized as interest  expense through April 18,
                                2000.  The  value  of  $313,000  related  to the
                                excess  of the  market  value  of the  Company's
                                common stock over the conversion price under the
                                option was recorded as interest  expense because
                                the debt is  convertible  at the election of the
                                lender until April 2000.

                                During 1999,  the same  stockholder  loaned $0.2
                                million to the  Company  for short  term  needs.
                                This note was converted  into 125,000  shares of
                                common stock during 1999. Upon  conversion,  the
                                stockholder  was  issued  warrants  to  purchase
                                40,000  shares  of common  stock at an  exercise
                                price  of  $1.60  per  share  and   warrants  to
                                purchase  40,000  shares of  common  stock at an
                                exercise price of $1.00 per share.  The value of
                                $102,000  related to these warrants was recorded
                                as interest expense.

                        (4)     On  December  31,  1998,  two  officers  of  the
                                Company  each  loaned  $50,000  and an  investor
                                loaned  $100,000 to the  Company for  short-term
                                needs. The loans were repaid in 1999.

                        Future  maturities of notes  payable and long-term  debt
                        with  related  parties  at  December  31,  1999  are  as
                        follows:
YEARS ENDING DECEMBER 31,                                                                TOTAL
                        ----------------------------------------------------------------------------------------------------
2000                                                                                   $7,664,000
                           2001                                                                                    3,076,000
                           2002                                                                                    9,502,000
                        ----------------------------------------------------------------------------------------------------
                           Total principal payments                                                               20,242,000
                           Less unamortized discount                                                               7,265,000
                        ----------------------------------------------------------------------------------------------------
                           Total debt                                                                             12,977,000
                           Less current maturities, net of unamortized discount of $2,988,000                      4,676,000
                        ----------------------------------------------------------------------------------------------------
                           Total long-term debt, net of unamortized discount of $4,277,000                        $8,301,000
                        ====================================================================================================
F-50
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. RELATED PARTY        SETTLEMENT WITH PRINCIPAL STOCKHOLDER
   TRANSACTIONS
   (CON'T)              In November 1998, the Company  reached an agreement with
                        its former chairman,  Mr. Ronald Jensen, who at the time
                        was also the Company's largest  stockholder.  Mr. Jensen
                        is also a member of EXTL, the Company's  current 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  Stock"),  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
                        permitted  Mr.  Jensen to convert  the face value of the
                        preferred  stock to  common  stock at 90% of the  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 non-cash charge
                        to   the   Company's    statement   of   operations   of
                        approximately  $1.0  million  in the nine  months  ended
                        December 31, 1998.

                        In February  1999,  contemporaneous  with the  Company's
                        issuance of Series E Cumulative  Convertible  Redeemable
                        Preferred  Stock  ("Series E  Preferred  Stock") to EXTL
                        which is  discussed  below,  the  terms of the  Series C
                        Preferred  Stock were  amended  and the  Company  issued
                        3,000,000  shares of common stock in exchange for the 75
                        shares  of   outstanding   Series  C   Preferred   Stock
                        (convertible  into  1,875,000  shares of common stock on
                        the exchange  date).  The market value of the  1,125,000
                        incremental  shares of common  stock issued was recorded
                        as a  preferred  stock  dividend of  approximately  $2.2
                        million. See Note 10 for further discussion.

                                      F-51
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
7. RELATED PARTY        PREFERRED STOCK ISSUANCES
   TRANSACTIONS
   (CON'T)              In February 1999, the Company issued 50 shares of Series
                        E Preferred Stock to the Company's  largest  stockholder
                        for $5.0 million. See Note 10 for further discussion.

                        As discussed earlier, in August 1999, the Company issued
                        40 shares of Series J Preferred  Stock as  prepayment of
                        $4.0  million  of the  Secured  Notes.  See  Note 10 for
                        further discussion.

                        ACQUISITION OF COMPANIES

                        In December 1999, the Company acquired Coast,  which was
                        majority  owned by Mr.  Jensen.  See Note 4 for  further
                        discussion.   In   addition,   Coast   has   outstanding
                        promissory  notes with an affiliate of EXTL as discussed
                        above.

                        Effective August 1, 1999, the Company acquired iGlobe, a
                        wholly-owned  subsidiary  of HGP. An eGlobe  director is
                        the  president and chief  executive  officer of HGP. See
                        Note 4 for further discussion.

                        REDEEMABLE COMMON STOCK

                        Upon the execution of the Coast merger agreement, one of
                        the Coast  stockholders  signed an employment  agreement
                        with the Company.  Under a side letter to the employment
                        agreement,  the Company was obligated to repurchase  the
                        247,213  shares of common stock issued this  employee in
                        the  Coast   acquisition   for  $700,000  under  certain
                        conditions.   Accordingly,   the  redemption   value  of
                        $700,000 for these shares was reclassified and reflected
                        as  Redeemable   Common  Stock  at  December  31,  1999.
                        Subsequent to December 31, 1999,  this  employee  waived
                        the redemption feature. As a result, this amount will be
                        reclassified  to  stockholders'   equity  in  the  first
                        quarter of 2000.

                        OFFICE LEASES

                        A  company  owned  by  the  Co-Chairman,   director  and
                        significant stockholder of eGlobe leases certain offices
                        to the Company.  The monthly rent of these office leases
                        approximates   $50,000  through  March  31,  2003.  Rent
                        expense paid to companies  owned by the  stockholder was
                        approximately  $573,000,  $197,000  and $209,000 for the
                        year ended  December  31,  1999,  the nine months  ended
                        December  31,  1998 and the year ended  March 31,  1998,
                        respectively.

                                      F-52
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
8. PROXY RELATED        The Company, its former auditors, certain of its present
   LITIGATION AND       and former  directors  and others were  defendants  in a
   SETTLEMENT           consolidated  securities class action which alleged that
   COSTS                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 an Order and Final Judgment entered in this action
                        on September  21, 1998  pursuant to the  Stipulation  of
                        Settlement  dated  April 2,  1998,  the  Company  issued
                        350,000  shares of its common  stock  into a  Settlement
                        Fund that was  distributed  as of October 1999 among the
                        Class on whose behalf the action was brought.

                        As a result of the above action and related matters, the
                        Company  recorded $0.1 million and $3.9 million in costs
                        and expenses  during the nine months ended  December 31,
                        1998 and the year ended March 31, 1998.  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   related   to  the   Company's
                        obligation  under the Stipulation of Settlement to issue
                        additional  stock if the market  price of the  Company's
                        stock was less than $10.00 per share  during the defined
                        periods.   The  Company  had  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.  In March 2000,  that condition was satisfied and
                        the  Company  has  no  further   obligations  under  the
                        Stipulation of Settlement.

                        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 $81,000.

                                      F-53
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
9. OTHER                In  October  1999,  a major  telecommunications  carrier
   LITIGATION           filed suit  against  the Company  seeking  approximately
                        $2.5 million pursuant to various service contracts.  The
                        Company  disputes  the amounts  allegedly  owed based on
                        erroneous invoices,  the quality of service provided and
                        unfair and  deceptive  billing  practices.  The  Company
                        believes  it  has  substantial   counterclaims   and  is
                        vigorously  defending this suit. The ultimate outcome of
                        this litigation is unknown at this time.

                        In July 1999, a certain  transmission  vendor filed suit
                        against the  Company,  seeking to collect  approximately
                        $300,000.   The  Company  believes  it  has  substantial
                        counterclaims  and is  vigorously  defending  this  suit
                        based upon breach of contract.

                        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 the  items
                        discussed  above and such other  actions and claims will
                        not have a material  effect on the  financial  position,
                        operating results or cash flows of the Company.

                                      F-54
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       PREFERRED STOCK AND REDEEMABLE PREFERRED STOCK
    EQUITY
                        At the June  16,  1999  annual  stockholder  meeting,  a
                        proposal   to  amend  the   Company's   Certificate   of
                        Incorporation  to  increase  the  Company's   authorized
                        preferred  stock to 10,000,000 was approved and adopted.
                        Par value for all preferred  stock remained at $.001 per
                        share. In addition,  the stockholders  also approved and
                        adopted a prohibition on stockholders  increasing  their
                        percentage  of ownership of the Company above 30% of the
                        outstanding  stock or 40% on a fully diluted basis other
                        than by a  tender  offer  resulting  in the  stockholder
                        owning 85% or more of the outstanding  common stock. The
                        following  is a  summary  of  the  Company's  series  of
                        preferred   stock  and  the   amounts   authorized   and
                        outstanding at December 31, 1999 and 1998:

                                Series B Convertible  Preferred  Stock,  500,000
                                shares  authorized,  and 0 and  500,000  shares,
                                respectively,  issued  and  outstanding  (series
                                eliminated in December 1999).

                                8%  Series C  Cumulative  Convertible  Preferred
                                Stock, 275 shares  authorized,  0 and 75 shares,
                                respectively,  issued  and  outstanding  (series
                                eliminated in December 1999).

                                8%  Series D  Cumulative  Convertible  Preferred
                                Stock, 125 shares  authorized,  35 and 0 shares,
                                respectively,   issued  and  outstanding   ($3.5
                                million   aggregate   liquidation    preference)
                                (converted in January 2000).

                                8%  Series E  Cumulative  Convertible  Preferred
                                Stock, 125 shares  authorized,  50 and 0 shares,
                                respectively,  issued and outstanding (converted
                                on January 31, 2000).

                                Series F Convertible Preferred Stock,  2,020,000
                                authorized,     1,010,000    and    0    shares,
                                respectively,  issued and outstanding (converted
                                on January 3, 2000).

                                6% Series G  Cumulative  Convertible  Redeemable
                                Preferred Stock, 1 share  authorized,  no shares
                                issued and  outstanding  (series  eliminated  in
                                December 1999).

                                      F-55
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'               Series H Convertible  Preferred  Stock,  500,000
    EQUITY (CON'T)              shares   authorized,   500,000   and  0  shares,
                                respectively,  issued and outstanding (converted
                                on January 31, 2000).

                                Series   I   Convertible   Optional   Redemption
                                Preferred  Stock,   400,000  shares  authorized,
                                400,000 and 0 shares,  respectively,  issued and
                                outstanding   (150,000   shares   converted   on
                                February 14, 2000).

                                5%  Series J  Cumulative  Convertible  Preferred
                                Stock,  40 shares  authorized,  40 and 0 shares,
                                respectively,   issued  and  outstanding   ($4.0
                                million   aggregate   liquidation    preference)
                                (converted on January 31, 2000).

                                5%  Series K  Cumulative  Convertible  Preferred
                                Stock,  30 shares  authorized,  30 and 0 shares,
                                respectively,   issued  and  outstanding   ($3.0
                                million   aggregate   liquidation    preference)
                                (converted on January 31, 2000).

                                20%  Series M  Convertible  Preferred  Stock,  1
                                share authorized,  1 and 0 share,  respectively,
                                issued and outstanding  ($9.0 million  aggregate
                                liquidation preference).

                                8%  Series N  Cumulative  Convertible  Preferred
                                Stock,  20,000  shares  authorized,  1,535 and 0
                                shares,  respectively,  issued  and  outstanding
                                ($1.5 million liquidation preference) (converted
                                during January 2000).

                                Series O  Convertible  Preferred  Stock,  16,100
                                shares   authorized,   16,100   and  0   shares,
                                respectively,   issued  and  outstanding  ($16.0
                                million aggregate liquidation preference).

                        Following  is a detailed  discussion  of each  series of
                        preferred  stock  outstanding  at December  31, 1999 and
                        1998:

                                      F-56
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Series B Convertible Preferred Stock
    EQUITY (CON'T)
                        On December 2, 1998,  the Company  issued 500,000 shares
                        of  Series B  Preferred  Stock  valued  at $3.5  million
                        (value  increased  an  additional  $1.5  million in June
                        1999) in connection with the acquisition of IDX. In July
                        1999,  the  Company  renegotiated  the  terms of the IDX
                        purchase  agreement with the IDX stockholders.  Pursuant
                        to the renegotiations,  the Series B Preferred Stock was
                        reacquired by the Company in exchange for 500,000 shares
                        of Series H Preferred Stock. As a result of the exchange
                        agreement,  the Company  recorded the excess of the fair
                        market  value  of  the  new  preferred  stock  over  the
                        carrying value of the reacquired  preferred  stock, as a
                        dividend  to the  Series  B  Preferred  stockholders  of
                        approximately   $6.0   million.   Pursuant   to  further
                        renegotiations  in  December  1999,  this  dividend  was
                        reduced by approximately  $1.4 million.  (See Note 4 for
                        further discussion).

                        8% Series C Cumulative Convertible Preferred Stock

                        In November 1998, in connection  with a settlement  with
                        the  Company's  largest  stockholder  (see  Note 7),  75
                        shares of Series C  Preferred  Stock were  issued to Mr.
                        Ronald Jensen in exchange for 1,425,000 shares of common
                        stock.  The  terms  of  the  Series  C  Preferred  Stock
                        permitted  the holders to convert the Series C Preferred
                        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 a maximum  conversion price of $6.00
                        per share,  subject to adjustment if the Company  issued
                        common stock for less than the conversion price.

                        In February 1999, the Company issued 3,000,000 shares of
                        common   stock  in   exchange   for  the  75  shares  of
                        outstanding  Series C Preferred Stock.  This transaction
                        was  contemporaneous  with  the  Company's  issuance  of
                        Series E Preferred  Stock to EXTL,  an  affiliate of Mr.
                        Jensen,  which  is  discussed  below.  See  Note  7  for
                        discussion of this transaction.

                        Series D Cumulative Convertible Preferred Stock

                        In January 1999,  the Company issued 30 shares of Series
                        Preferred  Stock  ("Series  D  Preferred  Stock")  to  a
                        private  investment  firm  for  gross  proceeds  of $3.0
                        million.  The holder agreed to purchase for $2.0 million
                        20  additional  shares of Series D Preferred  Stock 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.

                                      F-57
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10.STOCKHOLDERS'        Upon  the  Company's  registration  in May  1999  of the
   EQUITY (CON'T)       common stock  issuable upon the conversion of the Series
                        D Preferred Stock, the investor  purchased 20 additional
                        shares of Series D Preferred Stock and warrants for $2.0
                        million 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.

                        The value of  approximately  $634,000  assigned to these
                        warrants  when  granted  was  originally  recorded  as a
                        discount  to  the  Series  D  Preferred   Stock.   These
                        discounts  were  amortized  as  deemed  preferred  stock
                        dividends  over the periods from the dates of the grants
                        to the dates that the  Series D  Preferred  Stock  could
                        first be converted  into common stock defined as 90 days
                        from issuance. On August 20, 1999, the exercise price of
                        $1.60 for  100,000  warrants  was  lowered  to $1.44 per
                        share.  The value assigned to this revision in terms was
                        recorded as a preferred  stock  dividend.  In connection
                        with the revision in terms,  the investor  exercised the
                        warrants to purchase  100,000 shares at a price of $1.44
                        per share and  warrants  to  purchase  75,000  shares at
                        $0.01 per share.  As of December 31,  1999,  warrants to
                        purchase   112,500   shares  at  $0.01  per  share  were
                        outstanding.

                        Due to the  Company's  failure to  consummate a specific
                        merger  transaction  by May 30, 1999, the Company issued
                        to the investor a warrant  exercisable  beginning August
                        1999 to purchase  76,923  shares of common stock with an
                        exercise price of $.01 per share.  The value of $250,000
                        assigned  to the  warrant  was  recorded  as a preferred
                        stock  dividend.  The warrant is  exercisable  for three
                        years.  In August  1999,  the investor  exercised  these
                        warrants.

                        The Series D Preferred  Stock carried an annual dividend
                        of 8%, payable  quarterly  beginning  December 31, 1999.
                        All  dividends  that would accrue  through  December 31,
                        2000 on each  share of  Series  D  Preferred  Stock  are
                        payable  in full upon  conversion  of such  share.  As a
                        result, dividends through December 31, 2000 were accrued
                        over the period from the issuance  date to the date that
                        the Series D Preferred Stock could first be converted by
                        the holder. The Company accrued  approximately  $477,000
                        (net of  $240,000  included in the 1999  conversion)  in
                        cumulative  Series D  Preferred  Stock  dividends  as of
                        December  31,  1999.  The  shares of Series D  Preferred
                        Stock were  convertible,  at the holder's  option,  into
                        shares of the  Company's  common stock any time after 90
                        days from issuance at a conversion price equal to $1.60.
                        The  shares of Series D  Preferred  Stock  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  $20.0
                        million.

                                      F-58
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       In December 1999, 15 shares of Series D Preferred  Stock
    EQUITY (CON'T)      were converted  into  1,087,500  shares of common stock.
                        Subsequent to December 31, 1999, the remaining 35 shares
                        of  Series  D  Preferred   Stock  were   converted  into
                        2,537,500  shares of common stock.  The shares of common
                        stock issued upon  conversion of the 50 shares of Series
                        D Preferred Stock included payment for dividends through
                        December 31, 2000.

                        Series E Cumulative Convertible Preferred Stock

                        In February 1999, the Company issued 50 shares of Series
                        E Preferred Stock to the Company's largest  stockholder,
                        for  gross  proceeds  of  $5.0  million.  The  Series  E
                        Preferred  Stock  carried  an  annual  dividend  of  8%,
                        payable  quarterly  beginning  December  31,  2000.  All
                        dividends that would accrue through December 31, 2000 on
                        each share of Series E  Preferred  Stock are  payable in
                        full  upon  conversion  of  such  share.  As  a  result,
                        dividends  through  December  31, 2000 were accrued over
                        the period from the  issuance  date to the date that the
                        Series E Preferred Stock could first be converted by the
                        holder.  The Company accrued  approximately  $750,000 in
                        Series E Preferred  Stock  dividends  as of December 31,
                        1999. As additional consideration, the Company issued 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 value of
                        $1.1 million assigned to such warrants was recorded as a
                        deemed  dividend  when  granted  because  the  Series  E
                        Preferred  Stock was  convertible at the election of the
                        holder at the issuance  date. In connection  with a debt
                        placement  concluded  in April  1999 (see  Note 7),  the
                        Series E  Preferred  Stockholder  elected  to make  such
                        shares  convertible;  accordingly,  such  shares were no
                        longer redeemable.

                        The  shares of Series E  Preferred  Stock  automatically
                        convert into shares of the Company's  common  stock,  on
                        the  earliest to occur of (a) 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, (b) the date that 80% or
                        more of the Series E Preferred  Stock has been converted
                        into common stock, or (c) 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 $20.0 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.

                                      F-59
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       On  January  31,  2000,  the  Series E  Preferred  Stock
    EQUITY (CON'T)      automatically  converted into 2,352,941 shares of common
                        stock because the last  reported  closing sales price of
                        the  Company's   common  stock  was  over  the  required
                        threshold for the requisite number of trading days.

                        Series F Convertible Preferred Stock

                        As  discussed in Note 4, in February  1999,  the Company
                        completed  the  acquisition  of  Telekey.  The  purchase
                        consideration  included the issuance of 1,010,000 shares
                        of Series F Preferred  Stock valued at  $1,957,000.  The
                        Company  originally agreed to issue at least 505,000 and
                        up  to  an  additional  1,010,000  shares  of  Series  F
                        Preferred  Stock 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 505,000  shares  valued at $979,000  are included in
                        stock  to be  issued  in the  accompanying  supplemental
                        consolidated balance sheet.

                        The shares of Series F Preferred Stock initially  issued
                        automatically convert into shares of common stock on the
                        earlier  to occur of (a) the first  date as of which the
                        market  price is  $4.00  or more for any 15  consecutive
                        trading  days  during  any  period  that  the  Series  F
                        Preferred Stock is outstanding, or (b) July 1, 2001. The
                        Company  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
                        defined revenue and EBITDA objectives.

                        On December 31, 1999,  the market price of the Company's
                        common stock exceeded  $4.00;  therefore,  no additional
                        shares  were  issuable.  On January 3, 2000,  the former
                        stockholders   of  Telekey   converted   their  combined
                        1,010,000  shares of  Series F  Preferred  Stock  into a
                        total of 1,209,584 shares of common stock.

                        In  February  2000,  the Company  reached a  preliminary
                        agreement  with the  former  stockholders  of Telekey to
                        restructure  certain  terms of the original  acquisition
                        agreement.  Such  restructuring,  which  is  subject  to
                        completion   of   final   documentation,   includes   an
                        acceleration  of the original  earn-out  provision.  See
                        Note 4.

                                      F-60
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Series G  Cumulative  Convertible  Redeemable  Preferred
    EQUITY (CON'T)      Stock

                        In connection with the purchase of substantially  all of
                        the assets of  Connectsoft in June 1999, as discussed in
                        Note 4,  the  Company  issued  one  share  of  Series  G
                        Preferred  Stock  valued at $3.0  million.  The Series G
                        Preferred  Stock  carried  an  annual  dividend  of  6%,
                        payable annually beginning September 30, 2000. In August
                        1999, the Company issued 30 shares of Series K Preferred
                        Stock  in  exchange  for  the  one  share  of  Series  G
                        Preferred  Stock.  This  exchange is  discussed  in more
                        detail below.

                        Series H Convertible Preferred Stock

                        In July  1999,  the  Company  issued  500,000  shares of
                        Series  H   Preferred   Stock   originally   valued   at
                        approximately  $11.0  million in  exchange  for  500,000
                        shares of Series B Preferred.  See Note 4 for discussion
                        of the  exchange  agreement.  The  shares  of  Series  H
                        Preferred Stock convert  automatically into a maximum of
                        3,750,000 shares of common stock,  subject to adjustment
                        as  described  below,  on January 31, 2000 or earlier if
                        the closing  sale price of the common  stock is equal to
                        or greater than $6.00 for 15  consecutive  trading days.
                        Providing   the  Series  H   Preferred   Stock  had  not
                        converted,  the Company  guaranteed a price of $6.00 per
                        share on January 31, 2000.

                        In December 1999,  the Company and the IDX  stockholders
                        agreed  to  reduce  the  preferred  stock  and  warrants
                        consideration  paid to the IDX stockholders as discussed
                        in Note 4. As a result of this renegotiation,  the value
                        of the shares of Series H Preferred Stock was reduced by
                        $1.4 million.  As a result,  the shares were convertible
                        into a maximum of 3,262,500 shares at December 31, 1999.

                        On January  31,  2000,  the shares of Series H Preferred
                        Stock  automatically  converted into 3,262,500 shares of
                        common stock (reflecting the above adjustment negotiated
                        in December 1999).

                                      F-61
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Series I Convertible Optional Redemption Preferred Stock
    EQUITY (CON'T)

                        In July  1999,  the  Company  issued  400,000  shares of
                        Series I Preferred  Stock in exchange for notes  payable
                        of $4.0 million due to the IDX stockholders.  See Note 4
                        for  discussion of  renegotiations.  The Company had the
                        option,  which the Company did not  exercise,  to redeem
                        150,000 shares of the Series I Preferred  Stock prior to
                        February 14, 2000 at a price of $10.00 per share plus 8%
                        of the value of Series I Preferred  Stock per annum from
                        December  2, 1998  through the date of  redemption.  The
                        Company still has an option to redeem  250,000 shares of
                        Series I  Preferred  Stock  prior to July 17,  2000 at a
                        price of $10.00 per share plus 8% of the value of Series
                        I  Preferred  Stock  per  annum  from  December  2, 1998
                        through the date of redemption for cash, common stock or
                        a combination  of the two. Any Series I Preferred  Stock
                        not redeemed by the  applicable  dates  discussed  above
                        automatically  converts  into  common  stock  based on a
                        conversion  price of $10.00  per share plus 8% per annum
                        of the  value  of the  Series  I  Preferred  Stock  from
                        December 2, 1998 through the date of conversion  divided
                        by the  greater of the average  closing  price of common
                        stock over the 15 days  immediately  prior to conversion
                        or $2.00 up to a maximum of 3.9 million shares of common
                        stock.  The  Company  made a written  election in August
                        1999 to pay the 8% of the  value  in  shares  of  common
                        stock upon redemption or conversion.

                        On February  14,  2000,  150,000  shares of the Series I
                        Preferred  Stock  plus  the  8%  accrual  of  the  value
                        automatically  converted  into 166,304  shares of common
                        stock.

                        Series J Cumulative Convertible Preferred Stock

                        In August 1999,  the Company  reached an agreement  with
                        EXTL which was  finalized  in November  1999 whereby the
                        Company  issued to EXTL 40 shares of Series J  Preferred
                        Stock  valued  at $4.0  million  as  prepayment  of $4.0
                        million of the  outstanding  $20.0 million Secured Notes
                        issued to EXTL. (See Note 7 for discussion).

                                      F-62
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       The Series J Preferred  Stock carries an annual dividend
    EQUITY (CON'T)      of 5% which is payable quarterly, beginning December 31,
                        2000. The Company has accrued  approximately  $29,000 in
                        cumulative  Series J  Preferred  Stock  dividends  as of
                        December  31,  1999.  The  shares of Series J  Preferred
                        Stock are  convertible,  at the  holder's  option,  into
                        shares of the  Company's  common  stock at any time at a
                        conversion  price,  subject to  adjustment  for  certain
                        defined events,  equal to $1.56.  The shares of Series J
                        Preferred   Stock   automatically   converts   into  the
                        Company's  common stock, on the earliest to occur of (i)
                        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 Series J Preferred Stock is outstanding,  (ii) the
                        date that 80% or more of the  Series J  Preferred  Stock
                        the  Company  has  issued  has been  converted  into the
                        Company's common stock, or (iii) 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 $20.0 million.

                        On  January  31,  2000,  the  Series J  Preferred  Stock
                        automatically  converted into 2,564,102 shares of common
                        stock because the last  reported  closing sales price of
                        the  Company's   common  stock  was  over  the  required
                        threshold for the requisite number of trading days.

                        Series K Cumulative Convertible Preferred Stock

                        In August 1999, the Company  reached an agreement  under
                        which it issued 30  shares of Series K  Preferred  Stock
                        valued at $3.0  million in exchange for the one share of
                        its Series G Preferred  Stock. The carrying value of the
                        Series G Preferred  Stock exceeded the fair value of the
                        Series K Preferred  Stock  because of accrued  dividends
                        that were not paid pursuant to the exchange.  The excess
                        of  $36,000  reduced  the loss  attributable  to  common
                        stockholders.

                                      F-63
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       The Series K Preferred  Stock carries an annual dividend
    EQUITY (CON'T)      of 5% which is payable quarterly, beginning December 31,
                        2000. All dividends  that would accrue through  December
                        31, 2000 on each share of Series K  Preferred  Stock are
                        payable  in full upon  conversion  of such  share.  As a
                        result, dividends through December 31, 2000 were accrued
                        over the period from the issuance  date to the date that
                        the Series K Preferred Stock could first be converted by
                        the holder. The Company accrued  approximately  $200,000
                        in Series K Preferred Stock  cumulative  dividends as of
                        December  31,  1999.  The  shares of Series K  Preferred
                        Stock are  convertible,  at the  holder's  option,  into
                        shares of the  Company's  common  stock at any time at a
                        conversion  price equal to $1.56,  subject to adjustment
                        for  certain  defined  events.  The  shares  of Series K
                        Preferred Stock automatically convert into the Company's
                        common stock,  on the earliest to occur of (i) 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 Series K Preferred Stock is outstanding,  (ii) the
                        date that 80% or more of the  Series K  Preferred  Stock
                        the  Company  has  issued  has been  converted  into the
                        Company's common stock, or (iii) 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 $20.0 million.

                        On  January  31,  2000,  the  Series K  Preferred  Stock
                        automatically  converted into 1,923,077 shares of common
                        stock because the closing price of the Company's  common
                        stock was over the required  threshold for the requisite
                        number of trading days.

                                      F-64
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Series M Convertible Preferred Stock
    EQUITY (CON'T)
                        In October 1999,  the Company issued one share of Series
                        M Preferred  Stock valued at $9.6 million in  connection
                        with the acquisition of iGlobe.  The one share of Series
                        M  Preferred  Stock  has a  liquidation  value  of  $9.0
                        million and carries an annual cumulative dividend of 20%
                        which  will  accrue  and  be  payable   annually  or  at
                        conversion  in cash or shares of  common  stock,  at the
                        option of the Company.  The Company accrued  $380,000 in
                        Series M Preferred  Stock  dividends  as of December 31,
                        1999. The above market dividend resulted in a premium of
                        $643,000  which will be amortized as a deemed  preferred
                        dividend  stock  over  the  one  year  period  from  the
                        issuance  date  through   October  2000.  The  Series  M
                        Preferred  Stock is  convertible,  at the  option of the
                        holder,  one year after the issue  date at a  conversion
                        price of $2.385.  The Company recorded a dividend on the
                        Series M Preferred Stock of  approximately  $1.4 million
                        for  the  beneficial  conversion  feature  based  on the
                        excess  of  the  common  stock   closing  price  on  the
                        effective  date of the  acquisition  over the conversion
                        price.  This  dividend  will be  amortized  as a  deemed
                        preferred  dividend  over the one year  period  from the
                        date of issuance.

                        The  Company  has the  right,  at any time  prior to the
                        holder's   exercise  of  its   conversion   rights,   to
                        repurchase the Series M Preferred  Stock for cash upon a
                        determination  by eGlobe's  Board that it has sufficient
                        cash to fund operations and make the purchase. The share
                        of  Series M  Preferred  Stock  shall  automatically  be
                        converted  into  shares  of common  stock,  based on the
                        then-effective conversion rate, on the earliest to occur
                        of (but no earlier than one year from  issuance) (i) the
                        first date as of which the last reported  sales price of
                        the common stock is $5.00 or more for any 10 consecutive
                        trading  days  during  any  period  in  which  Series  M
                        Preferred  Stock is  outstanding,  (ii) the date that is
                        seven years after the issue date, or (iii) the date upon
                        which the  Company  closes a public  offering  of equity
                        securities  of the  Company at a price of at least $4.00
                        per  share and with  gross  proceeds  of at least  $20.0
                        million.

                                      F-65
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Series N Cumulative Convertible Preferred Stock
    EQUITY (CON'T)
                        During October and November 1999, the Company sold 2,670
                        shares  of 8%  Series  N  Preferred  Stock  and  304,636
                        warrants for gross proceeds of $2.7 million.  The Series
                        N Preferred Stock carries an 8% annual dividend  payable
                        in cash or common  stock at the holder's  option,  or in
                        the  absence  of an  election  of  the  holder,  at  the
                        election of the Company.  The Company accrued $45,000 in
                        Series N Preferred  Stock  dividends  as of December 31,
                        1999.

                        The shares of Series N Preferred  Stock are  immediately
                        convertible,  at the holder's option, into shares of the
                        Company's  common stock at a  conversion  price equal to
                        the  greater of $2.125 and 101% of the  average  closing
                        market  price  per  share  of  common  stock  for the 15
                        trading  days  prior to the  binding  commitment  of the
                        holder to  invest  (provided  however  that no shares of
                        Series N Preferred  Stock sold after the first  issuance
                        shall have an initial conversion price below the initial
                        conversion of the shares sold at first  issuance) or 85%
                        of the market price per share of common stock, computing
                        the  market  price  per share  for the  purpose  of such
                        conversion as equal to the average  closing market price
                        per share for the five trading days immediately prior to
                        the   conversion   date,   provided   however  that  the
                        conversion  price shall not be greater  than the greater
                        of $3.25 or 150% of the initial  conversion  price.  The
                        Company recorded  dividends at issuance of approximately
                        $230,000 for the beneficial  conversion feature based on
                        the excess of the common  stock market price on the date
                        of the issuance over the conversion price.

                        The Series N Preferred Stock automatically converts into
                        shares of common  stock on the earliest to occur of: (i)
                        the date that is the fifth  anniversary  of the issuance
                        of Series N Preferred  Stock;  (ii) the first date as of
                        which the last reported  sales price of the common stock
                        on  Nasdaq  is  $6.00  or more  for  any 15  consecutive
                        trading  days  during  any  period  in  which  Series  N
                        Preferred Stock is outstanding;  (iii) the date that 80%
                        or more of the Series N Preferred  issued by the Company
                        has  been  converted  into  common  stock,  the  holders
                        thereof  have  agreed  with the  Company  in  writing to
                        convert such Series N Preferred  Stock into common stock
                        or a combination of the  foregoing;  or (iv) the Company
                        closes a public  offering  of equity  securities  of the
                        Company with gross proceeds of at least $25.0 million.

                                      F-66
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       The warrants are  exercisable one year from issuance and
    EQUITY (CON'T)      expire three years from  issuance.  The exercise  prices
                        vary from $3 to $5 per share.  In addition,  the holders
                        may elect to make a cash-less exercise. The value of the
                        warrants of $423,000  was  recorded as a dividend at the
                        issuance  date  because the Series N Preferred  Stock is
                        immediately convertible.

                        During December 1999, 1,135 shares of Series N Preferred
                        Stock  were  converted  into  457,162  shares  of common
                        stock.  Subsequent  to December 31, 1999,  the remaining
                        shares  of  Series  N  Preferred  Stock  outstanding  at
                        December 31, 1999 were  converted into 375,263 shares of
                        common stock.

                        See Note 16 for a  discussion  of  additional  shares of
                        Series N Preferred  Stock sold and converted  subsequent
                        to year end.

                        Due to a delay in  registering  shares of the  Company's
                        common  stock,  in February  2000,  the  Company  issued
                        warrants to certain Series N Preferred  Stockholders  to
                        purchase 200,000 shares of the Company's common stock at
                        a price  per  share  equal to $7.50.  The  warrants  are
                        exercisable in whole or in part at any time beginning on
                        the date  that is one year  after  the date of  issuance
                        until the third anniversary of the date of issuance.

                        Series O Convertible Preferred Stock

                        In December  1999,  the Company  issued 16,100 shares of
                        Series  O  Preferred   Stock  in  connection   with  the
                        acquisition of Coast. See Note 4 for further discussion.
                        The estimated  value of the Series O Preferred  Stock of
                        $13.4 million is based upon a preliminary appraisal. The
                        Series O Preferred  Stock carries an annual  dividend of
                        10%. All dividends  that would accrue  through  November
                        30, 2001 on each share of Series O  Preferred  Stock are
                        payable  in full  upon  conversion  of such  share.  The
                        preliminary  appraisal  includes a present value of $2.5
                        million for  dividends  through  November 30, 2001.  The
                        difference   between  the  undiscounted   value  of  the
                        dividends  and  $2.5  million  is  being  accrued  as  a
                        dividend  over the period  that the  Series O  Preferred
                        Stock could first be converted by the holder.

                                      F-67
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       The   shares  of  Series  O   Preferred   Stock  have  a
    EQUITY (CON'T)      liquidation  value of $16.1 million and are convertible,
                        at the holder's option,  into a maximum 3,220,000 shares
                        of common  stock at any time  after the later of (a) one
                        year  after  the date of  issuance  and (b) the date the
                        Company  has  received  stockholder  approval  for  such
                        conversion and the applicable  Hart-Scott-Rodino waiting
                        period has expired or terminated (the "Clearance Date"),
                        at a  conversion  price  equal to $5.00.  The  shares of
                        Series O Preferred Stock will automatically be converted
                        into shares of common stock, on the earliest to occur of
                        (i) the  fifth  anniversary  of the  first  issuance  of
                        Series O  Preferred  Stock,  (ii) the  first  date as of
                        which the last  reported  sales price of common stock on
                        Nasdaq is $6.00 or more for any 15  consecutive  trading
                        days during any period in which Series O Preferred Stock
                        is  outstanding,  (iii) the date that 80% or more of the
                        Series O  Preferred  Stock the  Company  issued has been
                        converted  into  common  stock,   or  (iv)  the  Company
                        completes a public  offering of equity  securities  with
                        gross  proceeds to the Company of at least $25.0 million
                        at a price  per  share  of  $5.00.  Notwithstanding  the
                        foregoing,  the  Series O  Preferred  Stock  will not be
                        converted  into the Company's  common stock prior to the
                        Company's  receipt  of  stockholder  approval  for  such
                        conversion,  which was  obtained  at the March 23,  2000
                        stockholders' meeting, and the expiration or termination
                        of the applicable  Hart-Scott-Rodino  waiting period. If
                        the events  discussed above occur prior to the Clearance
                        Date,  the  automatic   conversion  will  occur  on  the
                        Clearance Date.

                        On January  26,  2000,  the  closing  sales price of the
                        Company's   common  stock  was  $6.00  or  more  for  15
                        consecutive   trading  days  and  accordingly,   on  the
                        Clearance Date, the outstanding Series O Preferred Stock
                        will be converted into 3,220,000 shares of common stock.

                        COMMON STOCK

                        At the March 23, 2000 stockholders'  meeting, a proposal
                        to  amend  the   Company's   Restated   Certificate   of
                        Incorporation  to  increase  the  Company's   authorized
                        number  of  shares  of   common   stock   available   to
                        200,000,000 was approved and adopted.

                        In November  1998, the Company agreed to issue 75 shares
                        of  Series  C  Preferred   Stock  in  exchange  for  the
                        1,425,000  shares of common stock  originally  valued at
                        $7.5 million as described  above. As discussed  earlier,
                        in February 1999, the Company issued 3,000,000 shares of
                        common stock in exchange for these outstanding shares of
                        Series C Preferred Stock.

                                      F-68
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       During the nine months  ended  December 31, 1998 and the
    EQUITY (CON'T)      year ended March 31, 1998,  the Company  agreed to issue
                        28,700  shares  valued at $81,000 and 350,000  shares of
                        common stock valued at $3.5 million in  connection  with
                        the  settlement  of  litigation.  See Note 8 for further
                        discussion.  Additionally,  in June  1999,  the  Company
                        issued  to  a  former  employee  54,473  shares  of  the
                        Company's  common stock valued at $99,000 in  settlement
                        of certain potential claims.

                        In December  1998,  the Company  issued 62,500 shares of
                        common stock valued at $102,000 in the UCI  acquisition.
                        During 1999, the Company issued 526,063 shares of common
                        stock amounting to $1,645,000 as payment of the first of
                        two   installments   under  the  Swiftcall   acquisition
                        agreement,  1.5  million  shares  of  common  stock  and
                        warrants to purchase  additional  shares of common stock
                        in connection with its acquisition of control of ORS and
                        882,904  shares  (prior to the  reclassification  of the
                        value  of  247,213  shares  reclassified  to  Redeemable
                        Common Stock valued at $0.7 million as discussed in Note
                        7) of common stock valued at  $2,980,000  in  connection
                        with the  acquisition  of  Coast.  See Notes 4 and 7 for
                        discussion of acquisitions.

                        In March 1999,  the Company  elected to pay the IDX $1.0
                        million promissory note and accrued interest with shares
                        of common stock.  The Company  issued  431,729 shares of
                        common stock and warrants to purchase  43,173  shares of
                        common stock  valued at  $1,023,000  to  discharge  this
                        indebtedness.  In July 1999,  the Company issued 140,599
                        shares of common  stock  valued at $433,000 in repayment
                        of  the  $418,000  note  and  related  accrued  interest
                        related to the IDX  acquisition.  In  addition,  in July
                        1999,  the Company  repaid a $200,000  note payable with
                        125,000  shares of common stock  valued at $200,000.  In
                        connection  with  this  transaction,  the  Company  also
                        issued  warrants to purchase  40,000 common shares at an
                        exercise price of $1.60 and a warrant to purchase 40,000
                        common  shares at an exercise  price of $1.00 per share.
                        See Notes 4 and 7 for discussion.

                                      F-69
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       In  August  1999,  the  Company  entered  into  a  stock
    EQUITY (CON'T)      purchase  agreement with a long time  stockholder  and a
                        lender. Under this agreement, for $250,000, the investor
                        purchased 160,257 shares of common stock and warrants to
                        purchase  60,000  shares of common  stock at an exercise
                        price of $1.00 per share and the option to exchange  the
                        principal of an existing note (up to a maximum amount of
                        $500,000)  for  shares  of  common  stock at a price per
                        share of $1.56  and a  warrant  to  purchase  shares  of
                        common stock at a price of $1.00 (60,000 per $250,000 of
                        debt  exchanged).  On December  16,  1999,  the lender's
                        option to convert the loan  principal  outstanding  into
                        common stock was increased from a maximum of $500,000 to
                        $750,000 and therefore a maximum of 180,000 warrants can
                        now be issued. (See Note 7 for further discussion).

                        On  December  23,  1999,  the  Company  entered  into  a
                        promissory  note with a bank,  as amended on February 1,
                        2000,  for a  principal  amount  of  $14.0  million.  In
                        connection  with  the note  agreement,  a  security  and
                        pledge agreement was signed whereby the Company assigned
                        all of its rights to 4,961,000  shares of eGlobe  common
                        stock  to  the  lender.   The  Company  and  the  lender
                        concurrently  entered  into a stock  purchase  agreement
                        whereby the lender  purchased the shares in exchange for
                        a $30.0 million stock purchase note. However, the lender
                        failed  to fund the note on a timely  basis and in March
                        2000,   eGlobe   advised   the  lender  that  they  were
                        terminating the agreement and demanded the lender return
                        eGlobe's stock  certificates.  As of March 24, 2000, the
                        lender has not returned the certificates. Such shares of
                        common stock are included in the  outstanding  shares at
                        December 31, 1999 at par value.

                        In  the  year  ended  December  31,  1999,  the  Company
                        received  proceeds of  approximately  $721,000  from the
                        exercise  of  warrants  to acquire  1,168,518  shares of
                        common  stock.  No warrants  were  exercised in the nine
                        months  ended  December  31,  1998  and the  year  ended
                        March 31, 1998.

                        In the year ended  December 31, 1999, and the year ended
                        March  31,  1998,  the  Company  received   proceeds  of
                        approximately  $61,000 and $138,000 from the exercise of
                        options and stock appreciation  rights to acquire 39,517
                        and  18,348  shares of common  stock,  respectively.  No
                        proceeds  were  received  during the nine  months  ended
                        December 31, 1998.

                                      F-70
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       Notes Receivable from Stock Sales
    EQUITY (CON'T)
                        The Company  loaned  certain of its  executive  officers
                        money in connection with their exercise of non-qualified
                        stock options in December 1999. The notes  receivable of
                        $1,210,000  are full recourse  promissory  notes bearing
                        interest  at 6% and are  collateralized  by the  430,128
                        shares  of  stock  issued  upon  exercise  of the  stock
                        options.  Interest is payable  quarterly  in arrears and
                        principal  is due the earlier of (a) for $177,000 of the
                        notes  December 16, 2003 and for $1,033,000 of the notes
                        December 16, 2004 and (b) the date that is 90 days after
                        the date  that  the  employee's  employment  terminates,
                        unless such  termination  occurs  other than "for cause"
                        (as  defined).  The  employee  also  agrees to  promptly
                        redeem the  outstanding  note  balances upon the sale of
                        the underlying  stock. The notes receivable are shown on
                        the  supplemental   consolidated   balance  sheet  as  a
                        reduction to  stockholders'  equity.  These options were
                        not  granted   under  the  Employee   Stock  Option  and
                        Appreciation Rights Plan (the "Employee Plan") discussed
                        below.

                                      F-71
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       EMPLOYEE STOCK OPTION AND APPRECIATION RIGHTS PLAN
    EQUITY (CON'T)
                        On December 14, 1995, the Board of Directors adopted 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.

                        On June 16, 1999, the Company's  stockholders adopted an
                        amendment  to  increase  the  number  of  shares  of the
                        Company's common stock available for grant to 3,250,000.
                        This  increase  included the  reduction of the number of
                        shares  available for issuance  under the Company's 1995
                        Director  Stock Option and  Appreciation  Rights Plan by
                        400,000  shares.   On  March  23,  2000,  the  Company's
                        stockholders adopted an amendment to increase the number
                        of shares of the  Company's  common stock  available for
                        grant to 7,000,000 shares.

                        As of December 31, 1999, options  outstanding under this
                        Employee Plan exceeded the shares available for grant by
                        1,995,468  shares.  The Board of Directors granted these
                        options  to certain  executive  officers  and  directors
                        subject to  stockholder  approval of the increase in the
                        number of shares  available  under the Employee Plan. As
                        discussed  earlier,  stockholder  approval  was obtained
                        March 23, 2000.

                        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

                                      F-72
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       common  stock  equal in value to the  excess of the fair
    EQUITY (CON'T)      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 year ended December 31,1999,  the nine months
                        ended  December  31,  1998 and the year ended  March 31,
                        1998,  the  Compensation   Committee  of  the  Board  of
                        Directors  granted  options to purchase an  aggregate of
                        3,068,054, 996,941 and 1,677,229,  respectively,  shares
                        of common stock to its employees under the Employee Plan
                        at exercise prices ranging from $0.01 to $7.67 per share
                        for the year ended December 31,1999,  $1.47 to $3.81 per
                        share for the nine months  ended  December  31, 1998 and
                        $2.32 to $3.12 per share  for the year  ended  March 31,
                        1998.  The  employees  were also granted SAR's in tandem
                        with the  options  granted  to them in  connection  with
                        grants prior to December 5, 1997.

                        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 were
                        originally  870,000 shares of the Company's common stock
                        reserved  for  issuance  under the  Director  Plan.  The
                        Director  Plan was 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. On June 16, 1999, the Company's
                        stockholders  approved a transfer  of 437,000  shares of
                        common stock  previously  available  for grant under the
                        Director  Plan to the Employee  Plan.  As a result,  the
                        number of shares of the Company's common stock available
                        for  grant  under  the  Director  Plan  was  reduced  to
                        433,000.

                        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 year ended  December
                        31, 1999,

                                      F-73
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       the nine  months  ended  December  31, 1998 and the year
    EQUITY (CON'T)      ended March 31, 1998, the Compensation  Committee of the
                        Board of Directors  confirmed the grant of total options
                        (including   options  with  vesting   contingencies)  to
                        purchase  300,000,  240,000  and  85,000,  respectively,
                        shares of common stock to its directors  pursuant to the
                        Company's  Director Plan at an exercise price of $2.8125
                        per share for the year ended December 31, 1999, $1.81 to
                        $3.19 per share for the nine month period ended December
                        31, 1998 and $2.63 to $2.69 per share for the year ended
                        March 31, 1998.  These exercise prices were equal to the
                        fair market value of the shares on the date of grants.

                        WARRANTS

                        In connection with the issuance of preferred  stock, the
                        Board of Directors granted warrants valued at $2,403,000
                        to purchase an aggregate  of 1,669,058  shares of common
                        stock  during  the year  ended  December  31,  1999 with
                        exercise  prices  between  $0.001  and $5.00 per  share.
                        During the nine months ended December 31, 1998,  375,000
                        contingent   warrants  were   granted.   See  the  above
                        discussion of preferred stock for further information.

                        In  connection  with the issuance of debt,  the Board of
                        Directors  granted  warrants to purchase an aggregate of
                        5,658,173,  142,000 and 856,667  shares of common stock,
                        respectively,  during the year ended  December 31, 1999,
                        the nine  months  ended  December  31, 1998 and the year
                        ended March 31, 1998,  at exercise  prices  ranging from
                        $0.01 to $2.82 per share for the year ended December 31,
                        1999, $2.00 to $3.03 per share for the nine months ended
                        December  31, 1998 and $0.01 to $6.61 per share for year
                        ended March 31,  1998.  For the year ended  December 31,
                        1999,  the nine months  ended  December 31, 1998 and the
                        year  ended  March 31,  1998,  the fair  value for these
                        warrants  of   $14,277,000,   $325,000   and   $923,000,
                        respectively,  at the grant date was originally recorded
                        as a discount to the related debt.  These  discounts are
                        being amortized as additional  interest expense over the
                        term of the respective debt using the effective interest
                        method.  Additional  interest  expense relating to these
                        warrants for the year ended  December 31, 1999, the nine
                        months ended  December 31, 1998 and the year ended March
                        31,  1998  was   $5,182,000,   $255,000  and   $479,000,
                        respectively.  See  Notes  5  and 7  for  discussion  of
                        certain significant transactions.

                                      F-74
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       During the year ended December 31, 1999, the nine months
    EQUITY (CON'T)      ended  December  31,  1998 and the year ended  March 31,
                        1998,  the  Board  of  Directors   granted  warrants  to
                        purchase  an  aggregate  of  826,594,  2,500 and  91,200
                        shares of common stock, respectively,  to non-affiliates
                        at exercise prices ranging from $1.37 to $2.18 per share
                        for the year ended  December 31,  1999,  $2.00 per share
                        for the nine month  period  ended  December 31, 1998 and
                        $2.75 per share for the year ended March 31,  1998.  For
                        the year ended  December 31, 1999, the nine months ended
                        December 31, 1998 and the year ended March 31, 1998, the
                        fair value for these warrants of $1,794,000,  $3,000 and
                        $213,000,   respectively,  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 year  ended  December  31,  1999 and the nine
                        months ended December 31, 1998, 3,037,000 and 318,000 of
                        the warrants granted above expired.

                        During  1999,  in  connection  with the  stock  purchase
                        agreement with an existing  stockholder and lender,  the
                        Company  granted  warrants to purchase an  aggregate  of
                        60,000  shares of common  stock  during the fiscal  year
                        December  31, 1999 with an  exercise  price of $1.00 per
                        share.

                        During the nine months  ended  December  31,  1998,  the
                        Board of  Directors  granted  warrants  to  purchase  an
                        aggregate  of  2,500,000  (2,000,000  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.
                        During 1999, the Company  renegotiated  the IDX purchase
                        agreement whereby the Company reacquired the warrant for
                        2,500,000  shares  of  common  stock  issued in 1998 and
                        granted  new   warrants  to  purchase  an  aggregate  of
                        1,087,500  shares of common stock to the stockholders of
                        IDX at an exercise  price of $0.001.  These warrants are
                        exercisable  contingent upon IDX meeting certain revenue
                        and EBITDA  objectives at September 30, 2000 or December
                        31, 2000. See Note 4 for further information.

                        During 1999, the Board of Directors also issued warrants
                        in connection with the purchase of ORS. The warrants are
                        exercisable  for  shares  of common  stock as  discussed
                        further in Note 4.

                                      F-75
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       SFAS No. 123, "Accounting for Stock-Based  Compensation"
    EQUITY (CON'T)      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  the  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 year
                        ended  December 31, 1999, the nine months ended December
                        31,   1998  and  the  year   ended   March   31,   1998,
                        respectively:   no  expected  dividend  yields  for  all
                        periods;  expected volatility of 55% for the first three
                        quarters of 1999 and 75% for the fourth quarter of 1999,
                        55% and 55%;  risk-free  interest rates of 6.00%,  4.51%
                        and 5.82%; and expected lives of 3 years, 3.65 years and
                        2 years for the Plans and stock awards.

                        Under the  accounting  provisions  for SFAS No. 123, the
                        Company's  net loss and loss per share  would  have been
                        increased by the pro forma amounts indicated below:
-------------------------------------------------------------------------------------------------------------------
                                                        YEAR ENDED          NINE MONTHS ENDED           YEAR ENDED
                                                        DECEMBER 31,           DECEMBER 31,              MARCH 31,
                                                           1999                   1998                     1998
                                                     --------------------------------------------------------------
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
        AS REPORTED                                     $(67,034,000)           $(5,958,000)          $(11,257,000)
        PRO FORMA                                       $(68,717,000)           $(6,308,000)          $(11,425,000)

   LOSS PER SHARE - BASIC AND DILUTED
        AS REPORTED                                       $    (1.11)            $    (0.10)            $    (0.20)
        PRO FORMA                                         $    (1.13)            $    (0.10)            $    (0.20)
F-76
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       A summary of the status of the  Company's  stock  option
    EQUITY (CON'T)      plans and  options  issued  outside of these plans as of
                        December  31,  1999 and 1998 and  March  31,  1998,  and
                        changes during the periods are presented below:
DECEMBER 31,              DECEMBER 31,              MARCH 31,
                                                                1999                     1998                     1998
                                                       -----------------------  -----------------------  -----------------------
                                                                    WEIGHTED                 WEIGHTED                 WEIGHTED
                                                                     AVERAGE                  AVERAGE                  AVERAGE
                                                       NUMBER OF    EXERCISE    NUMBER OF    EXERCISE    NUMBER OF    EXERCISE
                                                         SHARES       PRICE       SHARES       PRICE       SHARES       PRICE
                                                       -------------------------------------------------------------------------
OUTSTANDING, BEGINNING
                               OF PERIOD               2,538,159         $3.55   2,020,822        $3.93   1,263,032        $6.70
                                    GRANTED            3,798,182         $2.93   1,236,941        $2.39   1,762,229        $1.85
                                    EXPIRED             (621,228)        $2.85    (719,604)       $2.91    (986,091)       $6.87
                                    EXERCISED           (469,645)        $2.71          --           --     (18,348)       $5.75
                                                       -------------------------------------------------------------------------
                            OUTSTANDING,  END OF
                               PERIOD                  5,245,468         $2.93   2,538,159        $3.55   2,020,822        $3.93
                                                       -------------------------------------------------------------------------
                            EXERCISABLE, END OF        1,881,788         $3.02     773,049        $5.14     484,193        $7.95
                               PERIOD
                                                       =========================================================================

                            WEIGHTED AVERAGE FAIR
                               VALUE OF OPTIONS
                               GRANTED DURING THE
                               PERIOD AT MARKET        $    1.41                $     0.83                $    0.99
                                                       ===========              ===========               ==========
                            WEIGHTED AVERAGE FAIR
                               VALUE OF OPTIONS
                               GRANTED DURING THE
                               PERIOD BELOW MARKET     $    3.10                $       --                $      --
                                                       ===========              ===========              ===========
Included  in the above  table are  certain  options  for
                        which  vesting is  contingent  based on  various  future
                        performance  measures.   See  earlier  discussion  under
                        "Employee Stock Option and Appreciation Rights Plan".

                        The following table summarizes  information  about stock
                        options outstanding at December 31, 1999:
OUTSTANDING                              EXERCISABLE
                                          ----------------------------------------------- ---------------------------------
                                                             WEIGHTED        WEIGHTED                          WEIGHTED
                                                             REMAINING        AVERAGE                          AVERAGE
                      RANGE OF EXERCISE     NUMBER OF       CONTRACTUAL      EXERCISE        NUMBER OF         EXERCISE
                           PRICES             SHARES       LIFE (YEARS)        PRICE           SHARES           PRICE
                     ------------------------------------------------------------------------------------------------------
$      0.01              9,885        2.41            $ .01              9,885        $ .01
                         $ 1.46-2.00            589,833        3.96            $1.67            371,858        $1.69
                         $ 2.25-3.16          4,065,135        4.38            $2.82          1,104,760        $2.66
                         $ 3.50-4.50            279,666        2.89            $4.13             94,336        $3.71
                         $ 5.45-7.67            300,949        2.55            $5.89            300,949        $5.89
                       ----------------------------------------------------------------------------------------------------
                         $ 0.01-7.67          5,245,468        4.14            $2.93          1,881,788        $3.02
                       ====================================================================================================
F-77
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       A summary  of the  status of the  Company's  outstanding
    EQUITY (CON'T)      warrants as of December 31, 1999 and 1998, and March 31,
                        1998,  and  changes  during the  periods  are  presented
                        below:
DECEMBER 31,              DECEMBER 31,             MARCH 31,
                                                                  1999                     1998                    1998
                                                         -----------------------   ---------------------   ----------------------
                                                                      WEIGHTED                  WEIGHTED                WEIGHTED
                                                                       AVERAGE                   AVERAGE                 AVERAGE
                                                         NUMBER OF    EXERCISE     NUMBER OF    EXERCISE    NUMBER      EXERCISE
                                                          SHARES        PRICE       SHARES       PRICE     OF SHARES     PRICE
                                                        -------------------------------------------------------------------------
OUTSTANDING, BEGINNING
                                OF  PERIOD               4,093,167         $0.91   1,391,667        $4.00     443,800       $6.31
                                     GRANTED             9,301,325         $1.04   3,019,500        $0.12     947,867       $2.61
                                     EXPIRED            (3,037,000)        $0.32    (318,000)       $6.90          --       $  --
                                     EXERCISED          (1,168,518)        $0.62          --        $  --          --       $  --
                                                        -------------------------------------------------------------------------
                             OUTSTANDING,  END OF
                                 PERIOD                  9,188,974         $1.35   4,093,167        $0.91   1,391,667       $4.00
                                                        =========================================================================
                             EXERCISABLE, END OF         4,463,507         $1.71   1,218,167        $3.05   1,391,667       $4.00
                                 PERIOD                 =========================================================================
Included in the above table are  certain  warrants  that
                        are  contingent  based  on  various  future  performance
                        measures. (See Note 4 ).

                        The  following  table   summarizes   information   about
                        warrants outstanding at December 31, 1999:
OUTSTANDING                              EXERCISABLE
                                          ---------------------------------------------------------------------------------
                                                             WEIGHTED        WEIGHTED                        WEIGHTED
                                                             REMAINING        AVERAGE                         AVERAGE
                      RANGE OF EXERCISE     NUMBER OF       CONTRACTUAL      EXERCISE       NUMBER OF        EXERCISE
                           PRICES             SHARES       LIFE (YEARS)        PRICE         SHARES            PRICE
                     ------------------------------------------------------------------------------------------------------
$      .001          1,087,500        1.00           $ .001                 --        $  --
                         $       .01            404,500        2.29           $  .01            404,500        $ .01
                         $ 1.00-1.50          5,499,999        2.75           $ 1.04          2,166,667        $1.09
                         $ 1.51-2.18          1,472,500        2.05           $ 1.92          1,472,500        $1.92
                         $ 2.37-3.00            124,761        2.84           $ 2.73             78,173        $2.57
                         $      5.00            258,047        2.88           $ 5.00                 --        $  --
                         $ 6.00-6.61            341,667        5.76           $ 6.52            341,667        $6.52
                       ====================================================================================================

                         $0.001-6.61          9,188,974        2.53           $ 1.35          4,463,507        $1.71
                       ====================================================================================================
F-78
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
10. STOCKHOLDERS'       The Company may be required to issue additional warrants
    EQUITY(CON'T)       under the following circumstances:

                        (a)     During  1999,  the Company  entered into a stock
                                agreement  with a lender  pursuant  to which the
                                lender may elect to convert debt in exchange for
                                shares of common  stock and warrants to purchase
                                60,000  shares  of  common  stock at a price per
                                share  of  $1.00  for  each  $250,000  (up  to a
                                maximum  amount of $750,000) of debt  exchanged.
                                See Note 7 for further discussion.

                        (b)     As  discussed  in Note  4,  the  Company  issued
                                contingent  warrants to purchase common stock in
                                the  ORS  acquisition.  These  warrants  are not
                                included in the outstanding warrants because the
                                Company  includes the  operations  of ORS in its
                                supplemental  consolidated financial statements.
                                Upon the  exchange  by Oasis of its  interest in
                                the  LLC  for  the  eGlobe   common   stock  and
                                warrants, these warrants will be included.

11. TAXES (BENEFIT)     Taxes  (benefit)  on income  (loss)  for the year  ended
    ON INCOME           December  31, 1999,  the nine months ended  December 31,
    (LOSS)              1998 and the year ended March 31, 1998, consisted of the
                        following:
DECEMBER 31,         DECEMBER 31,          MARCH 31,
                                                                    1999                 1998                1998
                                                             ------------------------------------------------------------
Current:
                                 Federal                      $   (962,000)           $ 578,000          $  321,000
                                 Foreign                                --                   --             140,000
                                 State                                  --                   --                  --
                                 Other                                  --                   --           1,500,000
                                                             ------------------------------------------------------------

                             Total Current                        (962,000)             578,000           1,961,000
                                                             ------------------------------------------------------------

                             Deferred:
                                 Federal                       (17,132,000)            (286,000)         (1,568,000)
                                 State                          (1,520,000)             (25,000)           (140,000)
                                                             ------------------------------------------------------------

                                                               (18,652,000)            (311,000)         (1,708,000)
                             Change in
                                 valuation allowance            18,652,000              311,000           1,708,000
                                                             ------------------------------------------------------------

                             Total                             $  (962,000)           $ 578,000         $ 1,961,000
                                                             ============================================================
F-79
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
11. TAXES (BENEFIT)     During the year ended  December 31,  1999,  Trans Global
    ON INCOME           elected  to  carryback  approximately  $2.8  million  of
    (LOSS) (CON'T)      taxable  losses,  resulting  in  a  receivable  and  tax
                        benefit of approximately $962,000.

                        During the year ended March 31, 1998, eGlobe undertook a
                        study to simplify its  organizational  and tax structure
                        and  identified  potential   international  tax  issues.
                        eGlobe  determined that it had potential tax liabilities
                        and recorded an additional tax provision of $1.5 million
                        to reserve against  liabilities.  In early 1999,  eGlobe
                        filed with the Internal  Revenue Service ("IRS") amended
                        returns for the years ended March 31, 1991 through 1998.
                        In May 1999,  eGlobe  was  informed  by the IRS that all
                        amended returns had been accepted as filed. The eventual
                        outcome of discussions with State Tax Authorities and of
                        any other issues cannot be predicted with certainty.

                        As of December 31, 1999 and 1998 and March 31, 1998, the
                        net deferred tax asset recorded and its  approximate tax
                        effect consisted of the following:
DECEMBER 31,          DECEMBER 31,           MARCH 31,
                                                                         1999                  1998                  1998
                                                                ---------------------------------------------------------------
Net operating loss carry-
                                      forwards                        $ 21,290,000            $ 6,041,000          $ 3,496,000
                              Expense accruals                             618,000              1,098,000            1,010,000
                              Goodwill and intangible
                                      amortization                       3,626,000                     --                   --
                              Foreign net operating loss
                                      carryforwards                        762,000                260,000                   --
                              Other                                        186,000                431,000              269,000
                                                                ---------------------------------------------------------------

                                                                        26,482,000              7,830,000            4,775,000
                              Valuation allowance                      (26,482,000)            (7,830,000)          (4,775,000)
                                                                ---------------------------------------------------------------

                              Net deferred tax asset                  $         --            $        --          $        --
                                                                ===============================================================
F-80
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
11. TAXES (BENEFIT)     The  acquisition  of IDX in December 1998 included a net
    ON INCOME           deferred  tax asset of $2.7  million.  This net deferred
   (LOSS) (CON'T)       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 year ended  December 31,  1999,  the nine months
                        ended  December  31,  1998 and the year ended  March 31,
                        1988,  a  reconciliation  of the United  States  Federal
                        statutory rate to the effective rate is shown below:
DECEMBER 31,        DECEMBER 31,        MARCH 31,
                                                                               1999                1998              1998
                                                                               ----                ----              ----
Federal tax (benefit), computed
                                 at  statutory rate                           (34.0)%                (34.0)%        (34.0)%
                             State tax (benefit), net of
                                 federal tax benefit                           (0.9)                  (1.3)          (1.2)
                             Effect of  foreign operations                      1.1                   37.7           23.9
                             Amendment to prior year net
                                 operating loss carryforwards                  (4.9)                    --             --
                             Additional taxes                                    --                     --           16.1
                             Change in valuation allowance                     35.2                    5.8           18.4
                             Other                                              1.7                    2.5           (2.1)
                                                                              -----                   ----           ----
                             Total                                             (1.8)%                 10.7 %         21.1 %
                                                                              =====                   ====           ====
As of December 31, 1999,  the Company has net  operating
                        loss  carryforwards  available  of  approximately  $57.7
                        million,  which can offset  future  years' U.S.  taxable
                        income.  Such  carryforwards  expire  in  various  years
                        through 2019 and are  subject,  as a result of change in
                        ownership, to limitation under the Internal Revenue Code
                        of 1986,  as amended.  The Company  also has foreign net
                        operating loss carryforwards in various jurisdictions of
                        approximately  $2.0  million,  which can  offset  future
                        year's foreign taxable income. Such carryforwards expire
                        in various  years  through 2004 and are subject to local
                        limitations on use.

                                      F-81
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
12.  SEGMENT            OPERATING SEGMENT INFORMATION
     INFORMATION
                        The  Company  has  four  operating   reporting  segments
                        consisting  of  Enhanced  Services,   Network  Services,
                        Customer Care and Retail  Services.  The Company's basis
                        for  determining  the  segments  relates  to the type of
                        services  each  segment   provides.   Enhanced  Services
                        includes  the  unified  messaging  services,   telephone
                        portal services, interactive voice and data services and
                        the card services.  Network Services  includes  low-cost
                        transmission  services,  voice  services  (CyberCall and
                        CyberFax)   and  several   other   additional   services
                        including   billing  and  report   generation   designed
                        exclusively to support CyberCall and CyberFax.  Customer
                        Care  Services  includes the  state-of-art  call center,
                        which  was  part of the  Company's  acquisition  of ORS.
                        Retail  Services   primarily   includes  a  small  North
                        American retail center,  which was part of the Company's
                        acquisition  of Coast,  which was effective  December 2,
                        1999.  Segment results  reviewed by the Company decision
                        makers  do  not  include   general  and   administrative
                        expenses,  interest,  depreciation  and amortization and
                        other  miscellaneous   income  and  expense  items.  All
                        material intercompany  transactions have been eliminated
                        in consolidation. The following table presents operating
                        segment information:
ENHANCED           NETWORK             CUSTOMER            RETAIL
                                         SERVICES           SERVICES              CARE             SERVICES             TOTAL
                                      ---------------- ------------------- ------------------- ------------------ ------------------
FOR THE YEAR ENDING
             DECEMBER 31, 1999
             -----------------
             REVENUE                    $ 20,088,000        $120,918,000         $ 1,637,000        $ 1,001,000      $ 143,644,000
             INTER-SEGMENT                   (22,000)         (1,674,000)                 --                 --         (1,696,000)
                                      ----------------------------------------------------------------------------------------------
             TOTAL REVENUE              $ 20,066,000        $119,244,000         $ 1,637,000        $ 1,001,000      $ 141,948,000
             GROSS PROFIT               $  2,946,000        $  1,688,000         $   308,000        $    65,000      $   5,007,000
             TOTAL ASSETS               $ 38,063,000        $ 51,031,000         $ 3,736,000        $20,965,000      $ 113,795,000
                                      ----------------------------------------------------------------------------------------------
             FOR THE NINE MONTHS
             ENDING
             DECEMBER 31, 1998
             -----------------
             REVENUE                    $ 21,360,000        $ 68,507,000         $        --        $   553,000      $  90,420,000
             GROSS PROFIT (LOSS)        $ 10,064,000        $  6,469,000         $        --        $   (42,000)     $  16,491,000
             TOTAL ASSETS               $ 21,697,000        $ 41,775,000         $        --        $   907,000      $  64,379,000
                                      ----------------------------------------------------------------------------------------------
             FOR THE YEAR ENDING
             MARCH 31, 1998
             --------------
             REVENUE                    $ 31,819,000        $ 46,473,000         $        --        $ 1,304,000      $  79,596,000
             GROSS PROFIT               $ 13,667,000        $  6,588,000         $        --        $   590,000      $  20,845,000
             TOTAL ASSETS               $ 21,797,000        $ 12,125,000         $        --        $ 1,103,000      $  35,025,000
                                      ----------------------------------------------------------------------------------------------
F-82
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
12. SEGMENT             GEOGRAPHIC INFORMATION
    INFORMATION
    (CON'T)             For  purposes of  allocating  revenues  by country,  the
                        Company uses the physical  location of its  customers as
                        its basis.  Identifiable  Long-Lived Assets include only
                        the tangible assets of the Company.  The following table
                        presents  information  about the  Company by  geographic
                        area:
NORTH
                                                                  AMERICA
                                                  ASIA           (EXCLUDING           LATIN
                                EUROPE           PACIFIC          MEXICO)            AMERICA            OTHER           TOTALS
                          ---------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDING
      DECEMBER 31, 1999
      -----------------
      REVENUE                  $ 7,364,000      $ 7,873,000      $121,709,000        $ 3,485,000      $1,517,000     $141,948,000
      OPERATING LOSS           $(3,074,000)     $(6,993,000)     $(32,053,000)       $(4,374,000)     $ (419,000)    $(46,913,000)
      IDENTIFIABLE LONG-
        LIVED ASSETS           $ 8,243,000      $ 3,846,000      $ 24,813,000        $ 2,035,000      $3,141,000     $ 42,078,000
                          ---------------------------------------------------------------------------------------------------------
      FOR THE NINE
      MONTHS ENDING
      DECEMBER 31, 1998
      -----------------
      REVENUE                  $ 2,241,000      $ 5,949,000      $ 76,664,000        $ 5,244,000      $  322,000      $90,420,000
      OPERATING LOSS           $(1,373,000)     $(1,460,000)     $   (456,000)       $(1,287,000)     $  (79,000)     $(4,655,000)
      IDENTIFIABLE LONG-
         LIVED ASSETS          $ 6,060,000      $ 4,076,000      $  7,568,000        $ 1,571,000      $  923,000      $20,198,000
                          ---------------------------------------------------------------------------------------------------------
      FOR THE YEAR
      ENDING
      MARCH 31, 1998
      --------------
      REVENUE                  $ 3,468,000      $10,295,000       $56,535,000        $ 8,248,000      $1,050,000      $79,596,000
      OPERATING INCOME
        (LOSS)                 $  (759,000)     $(1,772,000)      $ 1,054,000        $(1,419,000)     $ (181,000)     $(3,077,000)
      IDENTIFIABLE LONG-
         LIVED ASSETS          $ 3,150,000      $ 4,138,000       $ 9,530,000        $   440,000      $       --      $17,258,000
                          ---------------------------------------------------------------------------------------------------------
F-83
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
12. SEGMENT             CUSTOMER INFORMATION
    INFORMATION
    (CON'T)             For the year ended  December 31,  1999,  the nine months
                        ended  December  31,  1998 and the year ended  March 31,
                        1998 revenues from  significant  customers  consisted of
                        the following:
DECEMBER 31, 1999           DECEMBER 31, 1998        MARCH 31, 1998
                                                           -------------------------------------------------------------------
Customer:
                               A                                  4%                          21%                    25%
                               B                                 21%                           7%                     6%
                               C                                  7%                          16%                    --
                               D                                 23%                          15%                    --
13. COMMITMENTS         EMPLOYMENT AGREEMENTS
    AND
    CONTINGENCIES       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, 1999
                        under such agreements is approximately $3.9 million. The
                        Company  is  also  currently   negotiating   employ-ment
                        agreements  with two officers who were former  owners of
                        Trans Global.

                        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.

                        USAGE COMMITMENT

                        The  Company  has  a  contract   with  a   long-distance
                        telecommunications company to provide telecommunications
                        services for the Company's customers. Under the terms of
                        the   agreement,   the  Company  has  a  minimum   usage
                        commitment of $125,000 per month  through  September 30,
                        2000.  The minimum usage  commitment may be decreased in
                        the  second  and  third  year  of the  agreement  if the
                        cumulative  usage is  achieved  in the first year of the
                        agreement.

                                      F-84
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
13. COMMITMENTS         RESERVATION SERVICES
    AND
    CONTINGENCIES       The  Company  has  entered  into  reservation   services
    (CON'T)             contracts  with its customers  which provide for,  among
                        other  things,  assigning  agents to handle  reservation
                        call volume.  These contracts have initial terms ranging
                        from  three  months  to  one  year.   Either  party  can
                        terminate the contracts after the initial term,  subject
                        to certain conditions contained in the contracts.

                        INTERNATIONAL REGULATIONS

                        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-85
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
13.  COMMITMENTS        TELECOMMUNICATION LINES
     AND
     CONTINGENCIES      In its normal  course of  business,  the Company  enters
     (CON'T)            into   agreements   for  the   use  of   long   distance
                        telecommunication lines. As of December 31, 1999, future
                        minimum  annual  payments  under such  agreements are as
                        follows:
YEARS ENDING DECEMBER 31,                                                   TOTAL
                              --------------------------------------------------------------------------------------------
2000                                                                      $8,488,000
                                   2001                                                                       5,373,000
                                   2002                                                                       1,827,000
                                   2003                                                                         157,000
                                   2004                                                                          75,000
                              --------------------------------------------------------------------------------------------
                                                                                                            $15,920,000
                              --------------------------------------------------------------------------------------------
LEASE AGREEMENTS

                        The Company  leases  office  space and  equipment  under
                        various operating leases. The Company has subleased some
                        office  space to third  parties.  Future  minimum  lease
                        payments  under the  non-cancelable  leases  and  future
                        minimum   rentals   receivable   under  the   subleases,
                        including the related  party office leases  discussed in
                        Note 7, are as follows:
MINIMUM
                                                           MINIMUM            LEASE          SUBLEASE
                                  YEARS ENDING              LEASE           PAYMENTS TO       RENTAL
                                  DECEMBER 31,            PAYMENTS         RELATED PARTY      INCOME                TOTAL
                               ---------------------------------------------------------------------------------------------------
2000                $ 1,679,000        $ 569,000       $ (551,000)           $ 1,697,000
                                      2001                  1,105,000          581,000         (227,000)             1,459,000
                                      2002                    835,000          596,000               --              1,431,000
                                      2003                    740,000          150,000               --                890,000
                                      2004                    421,000               --               --                421,000
                                  Thereafter                  343,000               --               --                343,000
                               ---------------------------------------------------------------------------------------------------
                                                          $ 5,123,000      $ 1,896,000       $ (778,000)           $ 6,241,000
                               ---------------------------------------------------------------------------------------------------
Rent expense for the year ended  December 31, 1999,  the
                        nine months  ended  December 31, 1998 and the year ended
                        March 31,  1998 was  approximately  $2.3  million,  $0.8
                        million,  and $0.9 million,  respectively.  Rent expense
                        for  1999  includes   sublease  rental  income  of  $0.2
                        million.

                                      F-86
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
13.  COMMITMENTS        As a result of the ORS  acquisition,  the Company leases
     AND                certain   employees  from  a   professional   employment
     CONTINGENCIES      organization,  which also  performs  human  resource and
     (CON'T)            payroll   functions.   Total  employment  lease  expense
                        incurred  by  the  Company   related  to  this  contract
                        amounted to  approximately  $1.5  million for the period
                        from acquisition through December 31, 1999.

                        LETTERS OF CREDIT

                        Outstanding  letters  of credit  issued as  security  as
                        required by certain telecommunications vendors, amounted
                        to  approximately  $1,464,000 and $1,100,000 at December
                        31,  1999 and  1998,  respectively.  Such  amounts  were
                        secured by restricted short-term investments.

                        FINANCIAL ADVISORY AGREEMENT

                        On  December  1,  1999,  the  Company  entered  into  an
                        agreement  with an outside  investment  banking  firm to
                        provide  financial  advisory  services.  The term of the
                        agreement   is   for   six   months,   however,   it  is
                        automatically  renewed  for  an  additional  six  months
                        unless written notice of termination is given.  Warrants
                        valued at $1.1  million to  purchase  common  stock were
                        issued  as a  retainer  in  January  2000 (See Note 10).
                        Under  the  agreement,  cash  fees  are  payable  by the
                        Company for acquisition or disposition transactions, and
                        are based on certain calculated percentages. The Company
                        shall also  reimburse  the  investment  banking firm for
                        reasonable out-of-pocket expenses incurred in connection
                        with its services, up to a maximum amount per month.

                                      F-87
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
13. COMMITMENTS         SECURED ACCOUNTS PAYABLE
    AND
    CONTINGENCIES       Approximately  $9.9  million  of Tran  Global's  capital
    (CON'T)             assets are subject to security interests in favor of its
                        major supplier, AT&T Corp. ("AT&T").  Effective December
                        10, 1999,  Trans Global  entered into an agreement  with
                        AT&T  regarding  the  payment  of  approximately   $13.8
                        million  in past  due 1999  switch  and  circuit  costs.
                        Pursuant to the  agreement,  Trans  Global has agreed to
                        repay AT&T in roughly equal monthly installments,  which
                        include  interest  at  9%,  through January 1, 2001. See
                        Note 18 for further discussions.

14. GOVERNMENT          The   Company   is   subject   to    regulation   as   a
    REGULATIONS         telecommunications     service    provider    in    some
                        jurisdictions   in  the  United   States   and   abroad.
                        Applicable laws and regulations,  and the interpretation
                        of such laws and  regulations,  differ  significantly in
                        those jurisdictions. In addition, the Company or a local
                        partner is required to have  licenses  or  approvals  in
                        those countries where it operates and where equipment is
                        installed.  The Company may also be affected  indirectly
                        by the laws of other  jurisdictions  that affect foreign
                        carriers with which it does business.

                        UNITED STATES FEDERAL REGULATION

                        Pursuant to the  Communications  Act of 1934, as amended
                        by the  Telecommunications  Act  of  1996,  the  Federal
                        Communications   Commission  ("FCC")  regulates  certain
                        aspects of the telecommunications industry in the United
                        States.  The  FCC  currently  requires  common  carriers
                        providing international  telecommunications  services to
                        obtain authority under section 214 of the Communications
                        Act.  eGlobe  and  its  subsidiaries  have  section  214
                        authority and are regulated as non-dominant providers of
                        both   international  and  domestic   telecommunications
                        services.

                                      F-88
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
14. GOVERNMENT          Any  common  carrier  providing  wireline  domestic  and
    REGULATIONS         international  service  also must file a tariff with the
    (CON'T)             FCC setting forth the terms and  conditions  under which
                        it provides those services. With few exceptions,  common
                        carriers     are      prohibited      from     providing
                        telecommunications  services to  customers  under rates,
                        terms, or conditions different from those that appear in
                        a tariff.  The FCC has determined that it no longer will
                        require  or allow  non-dominant  providers  of  domestic
                        services  to file  tariffs,  but  instead  will  require
                        carriers to make their  rates  publicly  available,  for
                        example  by posting  the  information  on the  Internet.
                        Because this FCC order has only  recently  been affirmed
                        by the  U.S.  Court  of  Appeals  for  the  District  of
                        Columbia  Circuit,  it is presently being phased in, and
                        carriers are permitted to have tariffs on file for their
                        domestic services.  The Company has tariffs on file with
                        the FCC setting  forth the rates,  terms and  conditions
                        under  which  it  provides  domestic  and  international
                        services.

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

                        The FCC's international settlements policy places limits
                        on the arrangements that U.S. international carriers may
                        enter into with foreign  carriers that have market power
                        in  foreign  telecommunications  markets.  The policy is
                        primarily  intended to prevent dominant foreign carriers
                        from  playing  U.S.  carriers  against each other to the
                        disadvantage of U.S.  carriers and U.S.  consumers.  The
                        international  settlements  policy  provides that a U.S.
                        carrier that enters into an operating  agreement for the
                        exchange  of public  switched  traffic  with a  dominant
                        foreign  carrier must file a copy of that agreement with
                        the FCC. Any such agreement that is materially different
                        from an agreement  filed by another  carrier on the same
                        international  route must be approved by the FCC. Absent
                        FCC approval, no such agreement may provide for the U.S.
                        carrier to receive more than its proportionate  share of
                        inbound traffic.  Certain  competitive routes are exempt
                        from the  international  settlements  policy.  The FCC's
                        policies  also  require U.S.  international  carriers to
                        negotiate  and  adopt   settlement  rates  with  foreign
                        correspondents  that are at or below  certain  benchmark
                        rates.

                        The  FCC's  rules  also  prohibit  a U.S.  carrier  from
                        accepting  a  "special  concession"  from  any  dominant
                        foreign carrier.  The FCC defines a "special concession"
                        as an exclusive  arrangement  (i.e.,  one not offered to
                        similarly  situated U.S. carriers)  involving  services,
                        facilities,  or  functions  on the foreign end of a U.S.
                        international  route that are  necessary  for  providing
                        basic telecommunications.

                                      F-89
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
14. GOVERNMENT          The  regulation  of IP telephony in the United States is
    REGULATIONS         still evolving. The FCC has stated that some forms of IP
    (CON'T)             telephony appear to be similar to  "traditional"  common
                        carrier  service and may be regulated  as such,  but the
                        FCC has not decided  whether  some other IP services are
                        unregulated  "information  services"  or are  subject to
                        regulation. 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  jurisdiction over intrastate IP services and
                        could initiate proceedings to regulate such services. As
                        these  decisions  are made,  the  Company  could  become
                        subject to regulation  that might  eliminate some of the
                        advantages  that it now enjoys as a provider of IP-based
                        services.

                        Management believes that the regulatory  requirements in
                        force  today in the United  States  impose a  relatively
                        minimal burden on the Company.  Management also believes
                        that some of its  network  services  are not  subject to
                        regulation  by the FCC or any  other  state  or  federal
                        agency;  however,  there is some  risk that the FCC or a
                        state  regulator  could  decide  that  certain  services
                        should require  specific  authorization or be subject to
                        other   regulations.   If  that  were  to  occur,  these
                        regulatory     requirements    could    include    prior
                        authorization requirements,  tariffing requirements,  or
                        the  payment  of  contributions  to  federal  and  state
                        subsidy   mechanisms    applicable   to   providers   of
                        telecommunications services. Some of these contributions
                        could be required  whether or not the Company is subject
                        to authorization or tariff requirements.

                        United     Kingdom.     In    the    United     Kingdom,
                        telecommunications  services  that have been  offered by
                        Trans Global  through its  affiliate,  TGC UK Ltd.,  are
                        subject  to  regulation   by  various  U.K.   regulatory
                        agencies.   The   United   Kingdom   generally   permits
                        competition  in all  sectors  of the  telecommunications
                        market,  subject to licensing  requirements  and license
                        conditions. TGC UK has been granted  licenses to provide
                        international traffic on a resale basis and over its own
                        facilities,  which  licenses  are subject to a number of
                        restrictions.  Use of these licenses has permitted Trans
                        Global to engage in  cost-effective  routing  of traffic
                        between  the United  States and the United  Kingdom  and
                        beyond.
OTHER COUNTRIES

                        Telecommunications  activities are subject to government
                        regulation   to  varying   degrees   in  every   country
                        throughout  the  world.  In  many  countries  where  the
                        Company  operates,  equipment cannot be connected to the
                        telephone  network  without  regulatory  approval,   and
                        therefore  installation  and  operation of the Company's
                        operating  platform  or other  equipment  requires  such
                        approval.  The Company has  licenses or other  equipment
                        approvals in the  jurisdictions  where it  operates.  In
                        most jurisdictions  where the Company conducts business,
                        the  Company  relies on its local  partner to obtain the
                        requisite  authority.  In many  countries  the Company's
                        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 some of
                        our operational  and  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 affect on our
                        business and prospects.  In some cases,  principally the
                        United  States  and  countries  that are  members of the
                        European  Community,  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.

                                      F-90
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
14. GOVERNMENT          Many aspects of the Company's  international  operations
    REGULATIONS         and  business  expansion  plans are  subject  to foreign
    (CON'T)             government regulations,  including currency regulations.
                        Foreign  governments may adopt regulations or take other
                        actions  that  would have a direct or  indirect  adverse
                        impact  on the  Company's  business  opportunities.  For
                        example,  the regulatory  status of IP telephony in some
                        countries  is  uncertain.  Some  countries  prohibit  or
                        regulate IP  telephony,  and any of those  policies  may
                        change at any time.

                        The Company is  planning to expand or initiate  services
                        in certain  Middle East  countries  including  Egypt and
                        Kuwait.   These  services  will  include  largely  voice
                        services as regulatory liberalization in those countries
                        permits.  Although the Company plans to obtain authority
                        to provide  service  under  current  and future  laws of
                        those countries (or, where permitted, to provide service
                        without  government  authorization),  there  can  be  no
                        assurance   that   foreign  laws  will  be  adopted  and
                        implemented   providing   the  Company  with   effective
                        practical  opportunities  to compete in these countries.
                        The Company's  ability or inability to take advantage of
                        such liberalization could have a material adverse effect
                        on its ability to expand services as planned.

15. FOURTH              In the fourth  quarter of the year  ended  December  31,
    QUARTER             1999, certain  adjustments related to an increase in the
    ADJUSTMENTS         accounts receivable reserve allowance, accrued dividends
                        for certain series of Preferred  Stock that are entitled
                        to receive dividends for specified periods regardless of
                        the conversation date,  capitalized software development
                        costs  related to Vogo and accrued  excise and sales and
                        use taxes  which in total  amounts  to an  aggregate  of
                        approximately   $1.5  million  were   recorded  and  are
                        discussed in "Summary of  Accounting  Policies" and Note
                        10   to   the   supplemental    consolidated   financial
                        statements.

16. SUBSEQUENT          SERIES N CUMULATIVE CONVERTIBLE PREFERRED STOCK
    EVENTS
                        In January  2000,  the Company  sold an  additional  525
                        shares of Series N Preferred  Stock and 42,457  warrants
                        for proceeds of $0.5  million.  These shares of Series N
                        Preferred  Stock  were  immediately  converted,  at  the
                        holders'  option,  into 155,394  shares of the Company's
                        common stock at conversion prices from $3.51 to $3.72.

                                      F-91
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
16. SUBSEQUENT          The warrants are  exercisable one year from issuance and
    EVENTS              expire three years from  issuance.  The exercise  prices
    (CON'T)             vary from $3.00 to $7.50 per  share.  In  addition,  the
                        holders  may  elect to make a  cash-less  exercise.  The
                        value of the warrants  will be recorded as a dividend at
                        the issuance dates because the Series N Preferred  Stock
                        is  immediately  convertible.  See  Note 10 for  further
                        discussion of Series N Preferred Stock.

                        SERIES P CONVERTIBLE PREFERRED STOCK

                        On January 27, 2000, the Company issued 15,000 shares of
                        Series  P  Convertible   Preferred   Stock   ("Series  P
                        Preferred  Stock")  and  warrants  to  purchase  375,000
                        shares of common stock with an exercise  price of $12.04
                        per share for  proceeds  of $15.0  million  to Rose Glen
                        ("RGC"). The shares of Series P Preferred Stock carry an
                        effective   annual   interest   rate   of  5%  and   are
                        convertible,  at the  holder's  option,  into  shares of
                        common  stock.  The shares of Series P  Preferred  Stock
                        will  automatically  be converted  into shares of common
                        stock  on  January  26,  2003,   subject  to  delay  for
                        specified events.  The conversion price for the Series P
                        Preferred  Stock is $12.04  until  April 27,  2000,  and
                        thereafter  is equal to the  lesser  of 120% of the five
                        day average closing price of the Company's  common stock
                        on Nasdaq during the 22-day period prior to  conversion,
                        and $12.04.  The Company can force a  conversion  of the
                        Series P Preferred  Stock on any trading day following a
                        period in which the closing  bid price of the  Company's
                        common  stock has been  greater than $24.08 for a period
                        of at least 35 trading days after the earlier of (1) the
                        first  anniversary of the date the common stock issuable
                        upon  conversion  of the  Series P  Preferred  Stock and
                        warrants  are  registered   for  resale,   and  (2)  the
                        completion  of a  firm  commitment  underwritten  public
                        offering with gross  proceeds to the Company of at least
                        $45.0 million.

                                      F-92
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
16. SUBSEQUENT          The shares of Series P Preferred  Stock are  convertible
    EVENTS              into a maximum of 5,151,871 shares of common stock. This
    (CON'T)             maximum  share  amount is  subject  to  increase  if the
                        average closing bid prices of the Company's common stock
                        for the 20 trading  days ending on the later of June 30,
                        2000 and the 60th  calendar  day after the common  stock
                        issuable upon conversion of the Series P Preferred Stock
                        and warrants is registered is less than $9.375, provided
                        that under no circumstances  will the Series P Preferred
                        Stock be convertible  into more than 7,157,063 shares of
                        the Company's  common stock. In addition,  no holder may
                        convert  the Series P Preferred  Stock or  exercise  the
                        warrants  it owns for any  shares of common  stock  that
                        would  cause  it to own  following  such  conversion  or
                        exercise  in  excess  of  4.9%  of  the  shares  of  the
                        Company's common stock then outstanding.

                        Except  in the event of a firm  commitment  underwritten
                        public  offering of eGlobe's  securities or a sale of up
                        $15.0  million of common stock to a specified  investor,
                        the  Company  may  not  obtain  any  additional   equity
                        financing  without  the  Series  P  Preferred   holder's
                        consent for a period of 120 days  following the date the
                        common stock  issuable  upon  conversion of the Series P
                        Preferred  Stock and warrants is registered  for resale.
                        The  holder  also has a right of first  offer to provide
                        any additional  equity  financing that the Company needs
                        until the first anniversary of such registration.

                        The  Company  may be  required  to redeem  the  Series P
                        Preferred Stock in the following circumstances:

                        (a)     if  the  Company  fails  to  perform   specified
                                obligations   under  the   securities   purchase
                                agreement or related agreements;

                        (b)     if the Company or any of its  subsidiaries  make
                                an  assignment  for the benefit of  creditors or
                                becomes  involved  in  bankruptcy,   insolvency,
                                reorganization or liquidation proceedings;

                        (c)     if the Company  merges out of existence  without
                                the surviving  company  assuming the obligations
                                relating to the Series P Preferred Stock;

                        (d)     if  the  Company's  common  stock  is no  longer
                                listed on the Nasdaq National Market, the Nasdaq
                                Small Cap Market, the NYSE or the AMEX;

                                      F-93
eGLOBE, INC.
                         NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
16. SUBSEQUENT          (e)     if the  Series P  Preferred  Stock is no  longer
    EVENTS                      convertible  into common stock  because it would
    (CON'T)                     result  in an  aggregate  issuance  of more than
                                5,151,871 shares of common stock, as such number
                                may be adjusted,  and the Company has not waived
                                such limit or obtained stockholder approval of a
                                higher limit; or

                        (f)     if the  Series P  Preferred  Stock is no  longer
                                convertible  into common stock  because it would
                                result  in an  aggregate  issuance  of more than
                                7,157,063  shares of the Company's  common stock
                                and the  Company  has not  obtained  stockholder
                                approval of a higher limit.

                        SERIES Q CONVERTIBLE PREFERRED STOCK

                        On March 17,  2000,  the Company  issued 4,000 shares of
                        Series  Q  Convertible   Preferred   Stock   ("Series  Q
                        Preferred  Stock")  and  warrants  to  purchase  100,000
                        shares of eGlobe common stock with an exercise price per
                        share  equal  to  $12.04,   subject  to  adjustment  for
                        issuances  of shares of common  stock below market price
                        for proceeds of $4.0 million to RGC.

                        The Series Q Preferred  Stock  agreement  also  provides
                        that the Company may issue up to 6,000 additional shares
                        of Series Q Preferred  Stock and warrants to purchase an
                        additional  150,000 shares of common stock to RGC for an
                        additional  $6.0  million  at a  second  closing  to  be
                        completed  no later  than  July 15,  2000.  The  primary
                        condition to the second closing is the  effectiveness of
                        a  registration  statement  registering  the  resale  of
                        common stock underlying the Series Q Preferred Stock and
                        the  warrants  and the  Series  P  Preferred  Stock  and
                        warrants  issued  in  January  2000  to RGC  (see  above
                        discussion "Series P Convertible Preferred Stock").

                        The  shares  of  Series  Q  Preferred   Stock  carry  an
                        effective  annual  yield of 5%  (payable  in kind at the
                        time of conversion) and are convertible, at the holder's
                        option,  into  shares of  common  stock.  The  shares of
                        Series Q Preferred Stock will automatically be converted
                        into shares of common stock on March 15,  2003,  subject
                        to delay for specified events.  The conversion price for
                        the Series Q Preferred  Stock is $12.04  until April 26,
                        2000,  and thereafter is equal to the lesser of: (i) the
                        five day average  closing price of the Company's  common
                        stock  on  Nasdaq  during  the  22-day  period  prior to
                        conversion, and (ii) $12.04.

                                      F-94
eGLOBE, INC.
                         NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
16. SUBSEQUENT          The  Company  can  force a  conversion  of the  Series Q
     EVENTS             Preferred Stock on any trading day following a period in
     (CON'T)            which  the  closing  bid price of the  Company's  common
                        stock has been  greater  than  $24.08 for a period of at
                        least 20 trading days after the earlier of (1) the first
                        anniversary  of the date the common stock  issuable upon
                        conversion of the Series Q Preferred  Stock and warrants
                        is registered  for resale,  and (2) the  completion of a
                        firm commitment  underwritten public offering with gross
                        proceeds to us of at least $45.0 million.

                        The  Series  Q  Preferred  Stock is  convertible  into a
                        maximum  of  3,434,581  shares  of  common  stock.  This
                        maximum  share  amount is  subject  to  increase  if the
                        average closing bid prices of the Company's common stock
                        for the 20 trading  days ending on the later of June 30,
                        2000 and the 60th  calendar  day after the common  stock
                        issuable upon conversion of the Series Q Preferred Stock
                        and warrants is registered is less than $9.375, provided
                        that under no circumstances  will the Series Q Preferred
                        Stock be converted  into more than  7,157,063  shares of
                        common stock (the maximum  share amount will increase to
                        9,365,463  shares of the  Company's  common stock if the
                        Company  receives  written guidance from Nasdaq that the
                        issuance  of  the  Series  Q  Preferred  Stock  and  the
                        warrants  will not be  integrated  with the issuances of
                        the Series P Preferred  Stock and related  warrants.  In
                        addition,  no holder may  convert the Series Q Preferred
                        Stock or exercise the warrants it owns for any shares of
                        common stock that would cause it to own  following  such
                        conversion  or  exercise in excess of 4.9% of the shares
                        of the Company's common stock then outstanding.

                        The  Company  may be  required  to redeem  the  Series Q
                        Preferred Stock in the following circumstances:

                        (a)     if  the  Company  fails  to  perform   specified
                                obligations   under  the   securities   purchase
                                agreement or related agreements;

                                      F-95
eGLOBE, INC.
                         NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
16. SUBSEQUENT          (b)     if the Company or any of its subsidiaries  makes
    EVENTS                      an  assignment  for the benefit of  creditors or
    (CON'T)                     become   involved  in   bankruptcy   insolvency,
                                reorganization or liquidation proceedings;

                        (c)     if the Company  merges out of existence  without
                                the surviving  company  assuming the obligations
                                relating to the Series Q Preferred Stock;

                        (d)     if  the  Company's  common  stock  is no  longer
                                listed on the Nasdaq National Market, the Nasdaq
                                SmallCap Market, the NYSE or the AMEX;

                        (e)     if the  Series Q  Preferred  Stock is no  longer
                                convertible  into common stock  because it would
                                result  in an  aggregate  issuance  of more than
                                3,434,581 shares of common stock, as such number
                                may be adjusted,  and the Company has not waived
                                such limit or obtained stockholder approval of a
                                higher limit; or

                        (f)     if the  Series Q  Preferred  Stock is no  longer
                                convertible  into common stock  because it would
                                result  in an  aggregate  issuance  of more than
                                7,157,063  shares of the Company's  common stock
                                (the  maximum  share  amount  will  increase  to
                                9,365,463  shares of common stock if the Company
                                receives  written  guidance from Nasdaq that the
                                issuance of the Series Q Preferred Stock and the
                                warrants  will  not  be   integrated   with  the
                                issuances  of the Series P  Preferred  Stock and
                                related  warrants)   and  the  Company  has  not
                                obtained stockholder approval of a higher limit.

                        i1.COM

                        On December  31, 1999,  the Company  along with a former
                        IDX  executive  formed  i1.com.  i1.com is  developing a
                        distributed network of e-commerce applications that will
                        allow  small and  medium-sized  businesses  to  transact
                        business  over  the  Internet.   The  Company  initially
                        received  a 75%  interest  in  i1.com  in  exchange  for
                        providing  i1.com  access  to  the  Company's   IP-based
                        network infrastructure.

                        i1.com recently completed a $14.0 million equity private
                        placement. The Company now retains a 35% equity interest
                        and 45% voting interest in i1.com.

                                      F-96
eGLOBE, INC.
                         NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
16. SUBSEQUENT          CONVERSION OF PREFERRED STOCK INTO COMMON STOCK
    EVENTS
    (CON'T)             Subsequent to December 31, 1999, the remaining  Series D
                        Preferred Stock plus accrued  dividends through December
                        31,  2000,  all of Series E  Preferred  Stock,  Series F
                        Preferred  Stock,  Series  H  Preferred  Stock,  150,000
                        shares of the Series I  Preferred  Stock plus 8% accrued
                        value,  Series J  Preferred  Stock,  Series K  Preferred
                        Stock  and  the  remaining   Series  N  Preferred  Stock
                        converted into 14,391,271 shares of the Company's common
                        stock. See Note 10 for further discussion.

                                      F-97
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
17. SUPPLEMENTAL
    INFORMATION TO
    STATEMENTS OF
    CASH FLOWS
    AND NON-CASH
    INVESTING AND
    FINANCING
    ACTIVITIES
---------------------------------------------------------------------------------------------------
                                                                               Year          Nine Months          Year
                                                                              Ended             Ended             Ended
                                                                           December 31,      December 31,        March 31,
                                                                               1999             1998               1998
                             ---------------------------------------------------------------------------------------------------
Cash paid during the period for:
                                Interest                                 $ 1,368,000        $  208,000       $ 1,465,000
                                Income taxes                                 696,000           665,000         1,006,000
                             Non-cash investing and financing
                                activities:
                                Equipment acquired under
                                   capital lease obligations               1,036,000           329,000           312,000
                                Common stock issued for
                                   acquisition of equipment                        --               --           100,000
                                Exercise of stock options for
                                    notes receivable                        1,210,000               --                --
                                Value of warrants issued and
                                    reflected as debt discount             14,026,000               --                --
                                Value of warrants issued and
                                    reflected as stock offering
                                    cost                                      706,000               --                --
                                Unamortized debt discount
                                   related to warrants                      7,265,000          321,000           438,000
                                Stock issued as
                                   prepayment of debt                       5,616,000               --                --
                                Exchange of Notes for Series I
                                   Preferred Stock                          3,982,000               --                --
                                Preferred stock dividends                   7,330,000               --                --
                                Preferred stock dividend related
                                   to exchange of Series B
                                   Preferred Stock for Series H
                                   Preferred Stock                          4,600,000               --                --
                             ---------------------------------------------------------------------------------------------------
F-98
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
17. SUPPLEMENTAL
    INFORMATION TO
    STATEMENTS OF
    CASH FLOWS
    AND NON-CASH
    INVESTING AND
    FINANCING
    ACTIVITIES (CON'T)
---------------------------------------------------------------------------------------------------
                                                                                YEAR               NINE MONTHS
                                                                                ENDED                 ENDED          YEAR ENDED
                                                                             DECEMBER 31,           DECEMBER 31,      MARCH 31,
                                                                                 1999                  1998             1998
                             ---------------------------------------------------------------------------------------------------
ACQUISITIONS, NET OF CASH ACQUIRED (NOTE 4):

                                 IDX:
                                  Working capital deficit, other
                                    than cash acquired                             $ (197,000)       $ (931,000)        $   --
                                  Property and equipment                                   --           975,000             --
                                  Intangible assets                                 6,510,000                --             --
                                  Purchase price in excess of the net
                                    assets acquired                                (4,536,000)       10,918,000             --
                                  Other assets                                             --           163,000             --
                                  Notes payable issued in acquisition                      --        (5,418,000)            --
                                  Series B Convertible Preferred Stock                     --            (1,000)            --
                                  Additional paid-in capital                       (1,485,000)       (3,499,000)            --

                                 UCI:
                                  Intangible assets                                   655,000                --             --
                                  Purchase price in excess of the net
                                   assets acquired                                   (698,000)        1,177,000
                                  Accrued cash payment paid in 1999                        --           (75,000)            --
                                  Note payable issued in acquisition                       --        (1,000,000)            --
                                  Common stock issued for
                                    acquisition                                            --          (102,000)            --

                                 TELEKEY:
                                  Working capital deficit, other than
                                    cash acquired                                  (1,281,000)               --             --
                                  Property and equipment                              481,000                --             --
                                  Intangible assets                                 2,975,000                --             --
                                  Purchase price in excess of the net
                                    assets acquired                                 2,131,000                --             --
                                  Acquired debt                                    (1,015,000)               --             --
                                  Notes payable issued in acquisition                (150,000)               --             --
                                  Issuance of Series F Convertible
                                    Preferred Stock                                    (1,000)               --             --
                                  Additional paid-in capital                       (1,956,000)               --             --
                                  Stock to be issued                                 (979,000)               --             --
F-99
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
17. SUPPLEMENTAL
    INFORMATION TO
    STATEMENTS OF
    CASH FLOWS
    AND NON-CASH
    INVESTING AND
    FINANCING
    ACTIVITIES (CON'T)
---------------------------------------------------------------------------------------------------
                                                                                YEAR               NINE MONTHS
                                                                                ENDED                 ENDED          YEAR ENDED
                                                                             DECEMBER 31,           DECEMBER 31,      MARCH 31,
                                                                                 1999                  1998             1998
                             ---------------------------------------------------------------------------------------------------
ACQUISITIONS, NET OF CASH ACQUIRED (NOTE 4) (CON'T)

                                 CONNECTSOFT:
                                  Working capital deficit, other than
                                    cash acquired                                  (2,142,000)                 --            --
                                  Property and equipment                              514,000                  --            --
                                  Intangible assets                                 9,120,000                  --            --
                                  Purchase price in excess of the net
                                    asset acquired                                  1,017,000                  --            --
                                  Acquired debt                                    (2,992,000)                 --            --
                                  Advances to Connectsoft prior to
                                    acquisition by eGlobe                            (971,000)                 --            --
                                  Issuance of Series G Preferred
                                    Stock exchanged for Series K
                                    Preferred Stock                                        --                  --            --
                                  Additional paid-in capital                       (3,000,000)                 --            --

                                 SWIFTCALL:
                                  Working capital deficit, other than
                                    cash acquired                                  (1,699,000)                 --            --
                                  Property and equipment                            5,144,000                  --            --
                                  Common stock                                         (1,000)                 --            --
                                  Additional paid-in capital                       (1,644,000)                 --            --
                                  Stock to be issued                               (1,645,000)                 --            --

                                 iGLOBE:
                                  Property and equipment                            6,686,000                  --            --
                                  Intangible assets                                 2,383,000                  --            --
                                  Purchase price in excess of net assets
                                    acquired                                        1,760,000                  --            --
                                  Deposits                                            900,000                  --            --
                                  Acquired debt                                    (1,786,000)                 --            --
                                  Issuance of Series M Preferred Stock                     --                  --            --
                                  Additional paid-in capital                       (9,643,000)                 --            --

                                 ORS:                                                                          --            --
                                  Working capital surplus, other than
                                    cash acquired                                      36,000                  --
                                  Property and equipment                              671,000                  --            --
                                  Intangible assets in LLC                          1,580,000                  --            --
                                  Other assets                                         40,000                  --            --
                                  Purchase price in excess of the net
                                    assets acquired                                   363,000                  --            --
                                  Minority interest                                (2,330,000)                 --            --
F-100
eGLOBE, INC.
             NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
17. SUPPLEMENTAL
    INFORMATION TO
    STATEMENTS OF
    CASH FLOWS
    AND NON-CASH
    INVESTING AND
    FINANCING
    ACTIVITIES  (CON'T)
---------------------------------------------------------------------------------------------------
                                                                                YEAR               NINE MONTHS
                                                                                ENDED                 ENDED          YEAR ENDED
                                                                             DECEMBER 31,           DECEMBER 31,      MARCH 31,
                                                                                 1999                  1998             1998
                             ---------------------------------------------------------------------------------------------------
ACQUISITIONS, NET OF CASH ACQUIRED (NOTE 4) (CON'T)

                                 COAST:
                                  Working capital surplus, other than
                                    cash acquired                                     938,000                --               --
                                  Property and equipment                            1,415,000                --               --
                                  Deposits                                             16,000                --               --
                                  Intangible assets                                 3,190,000                --               --
                                  Purchase price in excess of net assets
                                    acquired                                       14,344,000                --               --
                                  Acquired debt                                    (3,539,000)               --               --
                                  Common stock                                         (1,000)               --               --
                                  Issuance of Series O Convertible
                                    Preferred Stock                                        --                --               --
                                  Additional paid-in capital                      (16,379,000)               --               --
                             ---------------------------------------------------------------------------------------------------
                                 Net cash used to acquire companies               $ 2,799,000       $ 2,207,000         $     --
                             ---------------------------------------------------------------------------------------------------
18. EVENTS              DEBT RENEGOTIATIONS
    SUBSEQUENT TO
    MARCH 24, 2000      On April 5, 2000,  the EXTL Note  Agreement  was amended
                        and EXTL  consented to the Company's  (1)  assumption of
                        the Coast notes  payable,  (2)  guarantee of these Coast
                        notes and (3)  granting  of a security  interest  in the
                        assets currently securing the Notes as well as the Coast
                        assets to the Coast noteholder.  The Coast notes payable
                        were  also  amended  on this  date  and  the  noteholder
                        consented  to (1) waive any  event of  default  that may
                        have  occurred  as a result  of the  Coast  merger,  (2)
                        permit  Coast to  guarantee  the EXTL Notes and Revolver
                        and to secure  such  guarantee,  and (3) revise the debt
                        covenants to be consistent with those in the EXTL Notes.
                        See Note 7 for further discussion.

                        SECURED ACCOUNTS PAYABLE

                        As of April 6, 2000,  the  Company's  subsidiary,  Trans
                        Global, is in arrears on its scheduled  payments to AT&T
                        and  is   currently   in   negotiations   with  AT&T  to
                        restructure  this  payable.  See  Note  13  for  further
                        discussion.

                                     F-101
eGLOBE, INC.
                                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
--------------------------------------------------------------------------------
ALLOWANCE FOR DOUBTFUL ACCOUNTS
BALANCE AT       CHARGED TO                      TRANS GLOBAL      BALANCE
                                                    BEGINNING        COST AND                        ADJUSTMENT      AT END OF
DESCRIPTION                                         OF PERIOD        EXPENSES        DEDUCTIONS         (1)           PERIOD
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1999                      $ 1,216,000      $ 2,528,000     $  538,000          $      --    $3,206,000
------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED DECEMBER 31, 1998               $ 1,702,000      $ 1,018,000     $1,504,000          $      --    $1,216,000
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MARCH 31, 1998                         $   373,000      $ 1,564,000     $  335,000          $ 100,000    $1,702,000
------------------------------------------------------------------------------------------------------------------------------
(1)  The accompanying  supplemental consolidated statements of operations do not
     include the results of Trans Global's operations for the three months ended
     March 31, 1998 as  discussed in the Summary of Accounting  Policies to the
     Supplemental  Consolidated Financial Statements. An adjustment is reflected
     above to account for the activity in the allowance account during this time
     period.

                                     F-102
SIGNATURES

Pursuant to the  requirements of Section 13 of 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed in its
behalf by the undersigned, thereunto duly authorized.

                                               eGlobe, Inc.
                                               (Registrant)

Date:  May  22 , 2000                           By       /S/    Anne Haas
                                                  ------------------------------
                                                            Anne Haas
                                                      Controller, Treasurer
                                                  (Principal Accounting Officer)