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 earliest event reported): April 24, 2001 TELSCAPE INTERNATIONAL, INC. (Exact Name of Registrant as Specified in its Charter) TEXAS (State or Other Jurisdiction of Incorporation) 75-2433637 (Commission File Number) (IRS Employer Identification Number) 1325 Northmeadow Parkway, Suite 110, Roswell, Georgia 30076 (Address of Principal Executive Offices and Zip Code) (770) 432-6800 (Registrant's Telephone Number, Including Area Code) Item 3. Bankruptcy or Receivership. On April 27, 2001, the Company voluntarily filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the District of Delaware. The Company does not have a fiscal agent or receiver. An order confirming a plan of reorganization has not been issued by the court. As of the date of the filing, the Company had $360 million of assets and $188 million in notes, long term debt and payables. The $360 million of assets includes $189 million of goodwill and other intangibles, principally acquired in the June 2000 merger between Pointe Communications Corp. and Telscape International, Inc. The $188 million of liabilities includes $20 million of current payables, $36 million of past due payables. As of the date of the filing, $4 million was currently due and $4 million was past due on notes and leases according to the respective payment schedules. However, $85 million of the notes and leases were considered current due to defaults on the instruments. In the period immediately proceeding the bankruptcy filing the Company was negotiating to receive bridge financing in the amount of $20 to $30 million to fund negative cash flows from operations and capital expenditures. The intent was for the bridge period to last until the Company was able to dispose of its non-core assets, principally the Mexico fiber optic network. Telereunion, a subsidiary of the Company, built and owns the fiber optic network. Telereunion has not filed for Chapter 11 bankruptcy protection. In light of the recent financial challenges, the Company made a strategic decision to re-focus the core business on the U.S. CLEC operations, which management believes to be a favorable economic model to operate in the current market conditions, and to market for sale the Company's most commercially attractive asset, the Mexico fiber optic network. The Company anticipates that it can sign operational agreements with the eventual buyer of the network which will allow the Company to realize the benefits without sacrificing the capital needed to maintain the network as an asset of the Company. The core business will continue to utilize the benefits of the Mexico network as the Company terminates long distance traffic on it. The Company was unable to complete negotiations for this bridge financing before the vendor and creditor commitments referred to above came due, which precipitated the bankruptcy filing. This filing allows the Company protection from its pre-petition creditors until it is able to complete the plan of reorganization and begin to implement the plan after approval by the bankruptcy court. The Company is currently negotiating to receive similar bridge financing for $10 million as a debtor in possession until such time as it can sell the non-core assets. The Company anticipates these sales will allow it to satisfy its obligations and proceed to focus on the core business which is U.S. CLEC operations. If the Company is unable to complete these sale in a timely manner, it will have to constrict operations, which will adversely affect its ability to implement the plan of reorganization. The Company's day-to-day operations will continue unchanged, overseen by a newly created office of the Chairman, comprised of President and Chief Operating Officer Peter Alexander. Item 5. Other Events. Delisting Notice ---------------- The Company received a Nasdaq Staff Determination on April 24, 2001. The Determination indicates that the Company has failed to maintain a minimum bid price of $1.00 over the last 30 consecutive trading days as required by The Nasdaq National Market under market place rule 4450(a)(5). The company will be provided 90 calendar days, or until July 23, 2001, to regain compliance with this rule. If at any time before July 23, 2001, the bid price of the Company's common stock is at least $1.00 for a minimum of 10 consecutive trading days, staff will determine if the Company complies with the Rule. However, if the Company is unable to demonstrate compliance with the Rule on or before July 23, 2001, staff will provide the company with written notification that its securities will be delisted. At that time, the Company may appeal staff's decision to a Nasdaq Listing Qualifications Panel. Suspension of Trading --------------------- The Company also received on April 30, 2001, a Nasdaq Staff Determination in light of its filing for protection under Chapter 11 of the U.S. Bankruptcy Code on April 27, 2001. Based on the filing, Nasdaq has determined to halt trading in the Company's securities in accordance with Marketplace Rule 4450(f), pending receipt and review of additional information. As a result of the Company's filing, the fifth character "Q" has been appended to the Company's trading symbol. The Company intends to comply with Nasdaq's request for additional information on or before the required date of May 14, 2001. This information includes description of events leading up to and subsequent to the filing, reasons for the filing, a copy of the Company's plan of reorganization, and financial information as of and subsequent to the filing. If the Company does not provide the requested information or if Nasdaq determines that the submission does not adequately address the issues, the Company will receive notification that its securities will be delisted in accordance with Marketplace Rule 4330(a)(3). At that time, the Company may appeal Nasdaq's decision to a Nasdaq Listing Qualifications Panel. Resignations ------------ In connection with the Company's bankruptcy filing on April 27, 2001, the Company's Chief Executive Officer and Chairman, Stephen Raville, resigned these positions. In addition, Board member William O'Reilly resigned his position effective April 27, 2001. Board member David Lee resigned effective April 23, 2001. Board member Scott Crist resigned effective April 24, 2001. Board member Darryl Thompson resigned his position effective May 3, 2001. None of these members expressed disagreement with the Company's operations, policies or practices. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TELSCAPE INTERNATIONAL, INC. (Registrant) Date: May 3, 2001 By: /s/ Peter Alexander ------------------------------ Peter Alexander President and Chief Operating Officer

1997 1998 1999 --------------- -------------- --------------- Revenues: Communications services and products...................... $ 10,203,787 $ 24,784,756 $ 49,808,827 Internet connection services.... 2,747,635 2,835,446 2,116,093 --------------- -------------- --------------- Total revenues.................. 12,951,422 27,620,202 51,924,920 --------------- -------------- --------------- Costs and Expenses: Cost of services and products... 9,765,856 23,246,432 50,129,620 Selling, general, and administrative expenses....... 8,766,282 9,933,265 19,274,799 Nonrecurring charge............. 2,677,099 -- -- Depreciation and amortization... 2,995,334 3,451,982 4,477,292 --------------- -------------- --------------- Total costs and expenses........ 24,204,571 36,631,679 73,881,711 --------------- -------------- --------------- Operating Loss....................... (11,253,149) (9,011,477) (21,956,791) --------------- -------------- --------------- Interest Expense, net................ (480,924) (1,760,315) (15,998,840) Other (Expense) Income............... (241,785) 1,624,310 (335,225) --------------- -------------- --------------- Net Loss Before Income Taxes......... (11,975,858) (9,147,482) (38,290,855) Income Tax Benefit................... -- -- -- Net Loss............................. $ (11,975,858) $ (9,147,482) $ (38,290,855) =============== ============== =============== NET LOSS PER SHARE -- Basic and Diluted (Note 2)......... $ (0.39) $ (0.22) $ (1.36) =============== ============== =============== Shares Used In Computing Net Loss Per Share.............................. 31,084,693 42,143,733 46,204,130 =============== ============== ===============

PREFERRED STOCK COMMON STOCK ADDITIONAL ------------------ --------------------- PAID-IN SHARES AMOUNT SHARES AMOUNT CAPITAL -------- ------ ------------ ------ ----------- Balance at December 31, 1996......... -- $-- 24,202,779 $ 242 $28,302,025 Issuance of common stock ($1.00 per share) (Note 7).................... -- -- 9,283,997 93 9,203,844 Retirement of shares in conjunction with a contribution agreement executed by certain members of management......................... -- -- (2,500,000) (25) (3,538,698) Issuance of common stock in conjunction with conversion of debenture, net ($.50 per share) (Note 7)........................... -- -- 2,200,000 22 999,978 Issuance of common stock in conjunction with the acquisition of communications operating licenses........................... -- -- 400,000 4 399,996 Issuance of common stock in conjunction with financing lease transaction (Note 4)............... -- -- 450,000 5 449,995 Issuance of common stock in conjunction with debt issuance..... -- -- 98,000 -- 98,000 Issuance of common stock warrants in conjunction with operating lease ($0.34 per warrant)................ -- -- -- -- 66,300 Net loss............................. -- -- -- -- -- -------- ------ ------------ ------ ----------- Balance at December 31, 1997......... -- -- 34,134,776 341 35,981,440 Issuance of common stock ($.50 per share) (Note 7).................... -- -- 9,500,000 95 4,499,905 Issuance of common stock ($1.00 per share) (Note 7).................... -- -- 850,000 9 849,991 Issuance of common stock warrants in conjunction with promissory note ($0.21 per warrant) (Note 4)....... -- -- -- -- 114,069 Issuance of common stock in conjunction with a merger ($0.90 per share) (Note 3)................ -- -- 206,250 2 186,761 Issuance of common stock ($1.30 per share) (Note 7).................... -- -- 500,000 5 649,995 Issuance of common stock warrants in conjunction with a merger ($0.49 per warrant) (Note 3).............. -- -- -- -- 289,100 Exercise of warrants ($0.70 per share)............................. -- -- 10,354 -- 7,248 Exercise of warrants ($0.70 per share)............................. -- -- 20,709 1 14,496 Exercise of stock options ($1.00 per share)............................. -- -- 117,750 1 117,749 Issuance of common stock rights in conjunction with a merger ($0.44 per warrant) (Note 3).............. -- -- -- -- 272,500 Issuance of common stock warrants in conjunction with promissory note ($0.18 per warrant) (Note 4)....... -- -- -- -- 68,400 Issuance of common stock warrants in conjunction with promissory note ($0.16 per warrant) (Note 4)....... -- -- -- -- 60,800 Issuance of common stock warrants in conjunction with promissory note ($0.21 per warrant) (Note 4)....... -- -- -- -- 25,200 Net Loss............................. -- -- -- -- -- -------- ------ ------------ ------ ----------- Balance at December 31, 1998......... -- -- 45,339,839 454 43,137,654 Issuance of common stock warrants in conjunction with promissory note ($0.18 per warrant) (Note 4)....... -- -- -- -- 129,200 Issuance of common stock warrants in conjunction with promissory note ($0.25 per warrant) (Note 4)....... -- -- -- -- 190,000 Issuance of common stock warrants in conjunction with promissory note ($0.08 per warrant) (Note 4)....... -- -- -- -- 391,950 Issuance of common stock warrants in conjunction with promissory note ($0.49 per warrant) (Note 4)....... -- -- -- -- 98,751 F-5 Issuance of common stock warrants in conjunction with promissory note ($0.40 per warrant) (Note 4)....... -- -- -- -- 216,170 Issuance of common stock in conjunction with a merger ($1.50 per share) (Note 3)................ -- -- 37,589 -- 56,383 Issuance of common stock in conjunction with purchase of minority interest in a subsidiary ($1.17 per share).................. -- -- 300,000 3 352,800 Issuance of common stock in conjunction with settlement of payables (average of $0.26 per share)............................. -- -- 75,776 1 20,209 Issuance of common stock in conjunction with conversion of debentures ($1.20 per share)....... -- -- 166,666 2 200,000 Issuance of common stock in conjunction with exercise of conversion rights ($0.36 per share)............................. -- -- 625,000 6 108,552 Issuance of common stock in conjunction with exercise of options ($1.25 per share).......... -- -- 149,319 1 203,955 Issuance of common stock warrants in conjunction with an acquisition of a customer base ($0.66 per warrant)........................... -- -- -- -- 118,363 Issuance of common stock in conjunction with exercise of warrants ($1.00 per share)......... -- -- 5,000,000 50 4,999,950 Issuance of Class A Senior Convertible Preferred Stock and warrants, net of issuance cost ($3,000.00 per share).............. 10,080 101 -- -- 50,152,024 Issuance of Class A Senior Convertible Preferred Stock as payment for dividends on Class A Senior Convertible Preferred Stock.............................. 777 8 -- -- 2,331,826 Issuance of Class B Senior Convertible Preferred Stock and warrants in conjunction with conversion of convertible debentures and accrued interest on convertible debentures............. 7,264 72 -- -- 33,505,712 Compensation on variable options..... -- -- -- -- 157,155 Net loss............................. -- -- -- -- -- -------- ------ ------------ ------ ----------- Balance at December 31, 1999......... 18,121 $ 181 51,694,189 $ 517 136,370,654 ======== ====== ============ ====== ===========

YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1999 ----------------- ----------------- ----------------- Cash Flows from Operating Activities: Net loss.............................. $(11,975,858) $(9,147,482) $(38,290,855) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization..... 2,995,334 3,451,982 4,477,292 Bad debt expense.................. 586,687 883,462 1,586,491 Amortization of discounts on debt and lease obligations........... 56,891 250,244 13,825,619 Interest on convertible debenture paid in-kind.................... -- -- 791,662 Loss on extinguishment of debt.... 241,785 -- -- Nonrecurring charge............... 2,677,099 -- -- Deferred settlement gain.......... -- (2,757,132) -- Changes in operating assets and liabilities: Accounts receivable, net........ (1,645,919) (1,820,958) (506,518) Notes receivable................ 63,802 (215,337) (3,088,611) Inventory....................... (194,180) (155,880) (1,090,356) Prepaid expenses................ 23,832 (38,654) (366,538) Other assets.................... (225,135) (640,641) (1,839,700) Accounts payable, accrued, and other liabilities............. 998,031 1,460,510 3,692,179 Unearned revenue................ (185,009) 1,283,268 (1,414,661) ----------------- ----------------- ----------------- Total adjustments........... 5,393,218 1,700,864 16,066,859 ----------------- ----------------- ----------------- Net cash used in operating activities................ (6,582,640) (7,446,618) (22,223,996) ----------------- ----------------- ----------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment.... (2,577,080) (3,505,889) (6,644,342) Restricted cash....................... (135,000) (50,000) (357,913) Acquisition of businesses, net of cash acquired............................ -- (350,633) (137,140) ----------------- ----------------- ----------------- Net cash used in investing activities................ (2,712,080) (3,906,522) (7,139,395) ----------------- ----------------- ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of preferred stock, net.......................... -- -- 27,978,051 Proceeds from convertible debentures.......................... 2,180,000 -- 20,849,118 Proceeds from issuance of common stock............................... 5,831,604 6,000,000 -- Proceeds from issuance of preferred stock in subsidiary................. -- 1,981,959 -- Proceeds from exercise of warrants and options............................. -- 25,495 170,622 Proceeds from lease obligations....... 2,086,096 754,891 -- Proceeds from notes payable, net...... 476,046 4,336,403 10,633,000 Repayment of notes payable and lines of credit........................... (1,443,775) (243,181) (9,319,466) Repayment of financing lease obligations......................... -- (402,731) (903,449) Repayment of convertible debentures... -- -- (80,000) ----------------- ----------------- ----------------- Net cash provided by financing activities...... 9,129,971 12,452,836 49,327,876 ----------------- ----------------- ----------------- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........................... (164,749) 1,099,696 19,964,485 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR............................... 320,252 155,503 1,255,199 ----------------- ----------------- ----------------- CASH AND CASH EQUIVALENTS AT END OF YEAR.................................. $ 155,503 $ 1,255,199 $21,219,684 ================= ================= ================= F-9 Supplemental Disclosures: Cash paid for interest................ $ 339,874 $ 1,238,442 $ 2,093,800 Cash paid for income taxes............ -- -- -- Supplemental Noncash Disclosures: Exchange of promissory note for exercise of warrants................ -- -- 5,000,000 Assets acquired under financing and capital leases...................... -- 6,219,977 6,002,111 Assets acquired in excess of liabilities assumed................. -- 1,381,531 1,146,728 Purchase price adjustments............ 864,612 -- -- Value of warrants issued.............. -- 830,069 1,026,071 Value of stock issued for acquisition......................... -- 186,761 56,383 Incurrance of notes payable to pay operating obligations............... -- 1,397,000 -- Conversion of liabilities to equity Subordinated debentures............. 2,115,000 -- 200,000 Stockholder loans................... 937,865 -- -- Notes Payable....................... -- -- 225,145 Accrued liabilities................. 319,468 -- -- Giveback of shares by members of management............................ 3,538,723 -- -- Deferred settlement gain................ 2,757,132 -- -- Conversion of subordinated debenture.... 1,000,000 -- -- Shares issued for operating licenses.... 400,000 -- -- Shares issued for operating payables.... -- -- 20,210

YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1997 ------------- ------------- ------------- Net loss............................. $ (38,290,855) $ (9,147,482) $ (11,975,858) Beneficial conversion feature........ (22,174,074) -- -- Preferred stock dividends............ (2,331,834) -- -- ------------- ------------- ------------- Net loss available to common stockholders....................... $ (62,796,760) (9,147,482) (11,975,858) ============= ============= ============= Net loss per share................... $ (1.36) $ (0.22) $ (0.39) ============= ============= ============= Shares used in computing net loss per share.............................. 46,204,130 42,143,733 31,084,693 ============= ============= =============

NOTES AND LEASE DEBT OBLIGATIONS TOTAL ---------- ------------ -------------- 2000................................. $2,807,548 $ 4,677,130 $ 7,484,678 2001................................. 877,808 5,110,332 5,988,140 2002................................. 903,317 6,235,213 7,138,530 2003................................. 3,646 660,367 664,013 2004................................. 4,008 11,854 15,862 Thereafter........................... 131,316 -- 131,316 Total...................... 4,727,643 16,694,896 21,422,539 ---------- ------------ -------------- Interest............................. -- (2,887,811) (2,887,811) Discounts............................ (165,413) (197,049) (362,462) ---------- ------------ -------------- Principal............................ $4,562,230 $ 13,610,036 $ 18,172,266

LTSOP ISOP NEDSOP PFP MVAP ---------- ----------- ---------- ----------- ----------- Balance at December 31, 1996......... 260,002 392,000 400,000 0 0 Granted.............................. 464,000 1,380,964 200,000 0 0 Forfeited............................ (120,002) (376,500) 0 0 0 Exercised............................ 0 0 0 0 0 Balance at December 31, 1997......... 604,000 1,396,464 600,000 0 0 Granted.............................. 0 755,000 0 0 0 Forfeited............................ 0 (603,250) 0 0 0 Exercised............................ (114,000) (3,750) 0 0 0 Balance at December 31, 1998......... 490,000 1,544,464 600,000 0 0 Granted.............................. 0 181,000 0 2,201,501 4,050,000 Forfeited............................ 0 (204,390) (100,000) 0 0 Exercised............................ (7,000) (169,832) 0 0 0 Balance at December 31, 1999......... 483,000 1,351,242 500,000 2,201,501 4,050,000 Exercisable.......................... 463,000 793,742 375,000 110,606 90,000

1997 1998 1999 --------------- -------------- --------------- Net loss: As reported..................... $ (11,975,858) $ (9,147,482) $ (62,796,760) Pro forma....................... $ (12,421,433) $ (9,691,957) $ (64,425,012) Net loss per share: As reported..................... $(0.39) $(0.22) $(1.36) Pro forma....................... $(0.40) $(0.23) $(1.40)

WEIGHTED WEIGHTED AVERAGE GRANT NUMBER OF EXERCISE AVERAGE REMAINING YEAR SHARES PRICE RANGE PRICE CONTRACTUAL LIFE ------------------------------------- ----------- ------------- --------- ----------------- 1999................................. 5,445,151 $1.00-$2.25 $1.74 9.4 years 1998................................. 577,501 $1.00-$2.00 $1.20 5.1 years 1997................................. 855,000 $1.00-$1.25 $1.06 4.2 years 1996................................. 637,741 $1.00-$7.00 $1.87 3.2 years 1995................................. 600,000 $0.70-$3.50 $1.74 2.4 years

WHOLESALE/ PREPAID CARD RETAIL INTERNATIONAL CORPORATE & SERVICES SERVICES SERVICES OTHER NETWORK TOTAL ------------ ------------ ------------ ----------- ------------ ------------ Revenues................................ $40,880,125 $4,463,032 $4,894,286 $ 1,687,477 0 $51,924,920 Cost of revenues........................ 38,251,567 3,896,820 6,588,630 1,392,603 0 50,129,620 ------------ ------------ ------------ ----------- ------------ ------------ Gross Margin........................ 2,628,558 566,212 (1,694,344) 294,874 0 1,795,300 SG&A.................................... 3,917,923 2,875,029 4,080,209 3,239,587 5,162,051 19,274,799

1997 QUARTERS FIRST SECOND THIRD FOURTH ---------------------------------------- -------------- -------------- -------------- -------------- Revenues................................ $ 2,749,355 $ 3,321,055 $ 3,197,172 $ 3,683,840 Operating Loss.......................... (2,156,847) (1,778,036) (1,516,171) (5,802,095) Net Loss................................ (2,540,621) (1,857,555) (1,405,009) (6,172,673) Net Loss Per Share...................... ($0.09) ($0.06) ($0.04) ($0.18) 1998 QUARTERS FIRST SECOND THIRD FOURTH ---------------------------------------- -------------- -------------- -------------- -------------- Revenues................................ $ 4,098,866 $ 5,275,304 $ 9,008,987 $ 9,237,045 Operating Loss.......................... (2,061,633) (1,360,892) (1,521,831) (4,067,121) Net Loss................................ (2,322,700) 7,975 (1,835,418) (4,997,339) Net Loss Per Share...................... ($0.06) $0.00 ($0.04) ($0.11) 1999 QUARTERS FIRST SECOND THIRD FOURTH ---------------------------------------- -------------- -------------- -------------- -------------- Revenues................................ $ 11,553,526 $ 13,154,066 $ 12,965,451 $ 14,251,878 Operating Loss.......................... (2,572,601) (3,919,793) (5,518,186) (9,946,210) Net Loss................................ (3,659,039) (5,457,412) (6,536,122)(1) (22,638,282) Net Loss Per Share...................... ($0.08) ($0.65)(1) ($0.16)(1) ($0.44)

PREPAID WHOLESALE/ CARD RETAIL INTERNATIONAL CORPORATE & SERVICES SERVICES SERVICES OTHER NETWORK TOTAL ----------- ---------- -------------- ---------- ------------ -------------- Revenues............................. $10,872,743 $1,162,236 $2,068,826 $ 129,268 $ -- $ 14,233,073 Cost of revenues..................... 9,784,822 1,084,861 2,552,318 131,852 -- 13,553,853 ----------- ---------- -------------- ---------- ------------ -------------- Gross Margin......................... 1,087,921 77,375 (483,492) (2,584) -- 679,220 SG&A................................. 1,212,359 1,703,153 663,985 395,484 1,782,858 5,757,839

PREPAID WHOLESALE/ CARD RETAIL INTERNATIONAL CORPORATE & SERVICES SERVICES SERVICES OTHER NETWORK TOTAL ----------- ---------- -------------- ---------- ------------ -------------- Revenues............................. $ 8,989,363 $1,009,435 $1,162,094 $ 392,634 $ -- $ 11,553,526 Cost of revenues..................... 8,248,607 724,923 1,000,409 273,089 -- 10,247,028 ----------- ---------- -------------- ---------- ------------ -------------- Gross Margin......................... 740,756 284,512 161,685 119,545 -- 1,306,498 SG&A................................. 663,289 360,985 636,571 520,688 651,619 2,833,152

Assets TELSCAPE POINTE ADJUSTMENTS PRO FORMA ------------------------------------- -------- --------- ----------- --------- Current assets: Cash............................. $ 2,848 $ 5,772 $ 29,575(a) $ 36,695 (1,500)(c) Restricted cash.................. -- 184 -- 184 Accounts receivable.............. 13,340 14,555 (7,719)(c) 20,176 Inventory........................ 2,948 1,948 -- 4,896 Other current assets............. 6,756 819 -- 7,575 -------- --------- ----------- --------- Total current assets........ 25,892 23,278 20,356 69,526 -------- --------- ----------- --------- Property, net........................ 63,330 31,335 -- 94,665 Other assets: Intangibles...................... 31,737 19,512 179,519(c) 230,768 Other............................ 8,606 2,481 -- 11,087 -------- --------- ----------- --------- Total assets............ $129,565 $ 76,606 $ 199,875 $ 406,046 ======== ========= =========== ========= Liabilities and Stockholders' Equity Current liabilities: Current portion of debt and capital lease obligations...... $ 17,718 $ 3,696 $ (7,719)(c) $ 13,695 Accounts payable................. 47,954 14,799 (16,057)(d) 46,696 Accrued liabilities.............. 16,283 5,495 -- 21,778 Deferred revenue................. -- 1,526 -- 1,526 -------- --------- ----------- --------- Total current liabilities... 81,955 25,516 (23,776) 83,695 -------- --------- ----------- --------- Long term portion of debt and capital lease obligations.................. 26,573 9,785 (2,000)(a) 50,415 16,057(d) Minority interest.................... 5 -- -- 5 Stockholders' equity: Preferred stock.................. -- -- -- -- Common stock..................... 8 1 11(c) 20 Additional paid in capital....... 52,907 142,644 60,846(a) 403,250 146,853(c) Accumulated deficit.............. (31,155) (101,340) (29,271)(a) (130,611) 31,155(c) Treasury stock................... (480) -- -- (480) Subscriptions receivable......... (248) -- -- (248) -------- --------- ----------- --------- Total stockholders' equity.................... 21,032 41,305 209,594 271,931 -------- --------- ----------- --------- Total liabilities and stockholders' equity................ $129,565 $ 76,606 $ 199,875 $ 406,046 ======== ========= =========== =========

TELSCAPE POINTE ADJUSTMENTS PRO FORMA -------- ------- ----------- --------- Revenues............................. $ 23,224 $14,233 $-- $ 37,457 Operating Expenses: Cost of revenue...................... 19,868 13,554 -- 33,422 Selling, general and administrative..................... 6,832 5,758 -- 12,590 Depreciation and amortization........ 1,562 1,153 2,992(c) 5,707 -------- ------- ----------- --------- Total operating costs........... 28,262 20,465 2,992 51,719 -------- ------- ----------- --------- Operating loss....................... (5,038) (6,232) (2,992) (14,262) -------- ------- ----------- --------- Other (income) expense: Interest (income) expense, net....... 1,084 (64) -- 1,020 Other, net........................... (136) -- -- (136) -------- ------- ----------- --------- Total other expense............. 948 (64) -- 884 -------- ------- ----------- --------- Net loss before minority interest and income taxes....................... (5,986) (6,168) (2,992) (15,146) Income tax expense................... (192) -- -- (192) -------- ------- ----------- --------- Net loss before minority interest.... (6,178) (6,168) (2,992) (15,338) Minority interest.................... (5) -- -- (5) -------- ------- ----------- --------- Net loss from continuing operations......................... (6,183) (6,168) (2,992) (15,343) Preferred Stock dividends and beneficial conversion issuances.... -- (1,622) (1,200)(a) (2,822) -------- ------- ----------- --------- Net loss from continuing operations attributable to common stockholders....................... $ (6,183) $(7,790) $(4,192) $ (18,165) ======== ======= =========== ========= Net loss from continuing operations per share -- basic and diluted..... $ (0.77) $ (0.15) $ (0.92) ======== ======= =========== ========= Weighted average common shares....... 8,010 51,841 (40,165)(c) 19,686 ======== ======= =========== =========

TELSCAPE POINTE TELECOMMUTE(B) ADJUSTMENTS PRO FORMA ---------- -------- --------------- ------------ ---------- Revenues............................. $ 106,833 $ 51,925 $ (1,670) $ -- $ 157,088 Operating expenses: Cost of revenue................. 93,394 50,130 (1,441) -- 142,083 Selling, general and administrative expenses....... 24,357 19,275 (3,282) -- 40,350 Impairment loss................. 715 -- -- -- 715 Depreciation and amortization... 6,335 4,477 (233) 11,360(d) 21,939 ---------- -------- --------------- ------------ ---------- Total operating costs...... 124,801 73,882 (4,956) 11,360 205,087 ---------- -------- --------------- ------------ ---------- Operating loss....................... (17,968) (21,957) 3,286 (11,360) (47,999) ---------- -------- --------------- ------------ ---------- Other (income) expense: Interest expense, net........... 4,252 15,999 (228) -- 20,023 Other, net...................... 683 335 -- (186)(b) 832 ---------- -------- --------------- ------------ ---------- Total other expense........ 4,935 16,334 (228) (186) 20,855 ---------- -------- --------------- ------------ ---------- Net loss before income taxes......... (22,903) (38,291) 3,514 (11,174) (68,854) Income tax benefit................... 3,428 -- -- -- 3,428 ---------- -------- --------------- ------------ ---------- Net loss............................. (19,475) (38,291) 3,514 (11,174) (65,426) Preferred stock dividends and beneficial conversion issuances.... -- (24,506) -- (33,234)(a) (57,740) ---------- -------- --------------- ------------ ---------- Net loss available to common stockholders....................... $ (19,475) $(62,797) $ 3,514 $(44,408) $ (123,166) ========== ======== =============== ============ ========== Net loss per share-basic and diluted............................ $ (2.92) $ (1.36) $ (6.74) ========== ======== ========== Weighted average common shares....... 6,670 46,204 (34,613)(d) 18,261 ========== ======== ============ ==========

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