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Preliminary proxy statement providing notification matters to be brought to a vote

PRE 14A






                                 14A INFORMATION

                PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

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Filed by a Party other than the Registrant [_]

Check the appropriate box:

[X]  Preliminary Proxy Statement

[_]  Confidential, for Use of the Commission Only (as permitted by Rule
     14a-6(e)(2))

[_]  Definitive Proxy Statement

[_]  Definitive Additional Materials

[_]  Soliciting Material Pursuant to Section 240.14a-11(c) or Section
     240.14a-12

                      Frontline Communications Corporation
                ------------------------------------------------
                (Name of Registrant as Specified In Its Charter)

                ------------------------------------------------
     (Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
                Payment of Filing Fee (Check the appropriate box)

[X]  No fee required.

[_]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

     (1)  Title of each class of securities to which transaction applies:

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     (2)  Aggregate number of securities to which transaction applies:

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     (3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

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     (4)  Proposed maximum aggregate value of transaction:

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[_]  Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

     (6)  Amount Previously Paid:

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                      FRONTLINE COMMUNICATIONS CORPORATION

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                          To Be Held on August 13, 2003

To the stockholders of Frontline Communications Corporation:

          Notice is hereby given that the annual meeting of stockholders of
Frontline Communications Corporation will be held on August 13, 2003 at 11:00
a.m. local time at the Board Room of the American Stock Exchange, 86 Trinity
Place, New York, New York, for the following purposes:

     1. To approve the proposal (a) to issue shares of our common stock to the
holders of our Series C Convertible Preferred Stock issued to the former
stockholders of Proyecciones y Ventas Organizadas, S.A. de C.V., a company
organized under the laws of Mexico ("Provo"), in connection with our acquisition
of Provo, and (b) to issue shares of our common stock to the holders of our
Series D Convertible Preferred Stock issued to certain of our executive officers
and directors, certain Provo employees and other third parties in connection
with the closing of the Provo acquisition ("Proposal 1");

     2. To approve the proposal (a) to amend the certificate of designations
pertaining to our Series B Cumulative Convertible Preferred Stock (the "Series B
Stock") to provide for the mandatory conversion of all Series B Stock upon the
election of the holders of a majority of the Series B Stock, and (b) to
effectuate the mandatory conversion of all the Series B Stock at a conversion
ratio of six shares of common stock for each share of Series B Stock (four
shares after giving effect to the proposed two-for-three reverse split of our
common stock) ("Proposal 2");

     3. To approve the proposal to amend our certificate of incorporation (a) to
effect a two-for-three reverse split of our outstanding common stock and (b) to
increase the number of authorized shares of our common stock from 25,000,000
shares to 100,000,000 shares ("Proposal 3");

     4. To approve the proposal to amend our certificate of incorporation to
change our name from Frontline Communications Corporation to Provo
International, Inc. ("Proposal 4");

     5. To approve the proposal to elect nine directors for a term of one year
and until their successors are duly elected and qualified ("Proposal 5");

     6. To approve the proposal to enter into a common stock purchase agreement
with Fusion Capital Fund II, LLC ("Proposal 6");

     7. To approve the proposal to ratify the appointment of BDO Hernandez
Marron y Cia. S.C. as our independent auditors ("Proposal 7"); and

     8. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.

     Approval of Proposal 3 is necessary in order for Frontline to undertake
Proposal 1 and Proposal 2. In addition, approval of Proposal 1 is necessary in
order for Frontline to undertake Proposal 4. The board of directors has fixed
the close of business on June 30, 2003 as the record date for the determination
of stockholders entitled to notice of and to vote at the annual meeting and at
any adjournment or postponement thereof.

                                             By Order of the Board of Directors,


                                             Amy Wagner-Mele
                                             Secretary
Pearl River, New York
July 17, 2003

     All stockholders are cordially invited to attend the annual meeting in
person. Whether or not you expect to attend the meeting, please complete, date,
sign and return the enclosed proxy as promptly as possible in order to ensure
your representation at the meeting. A return envelope (which is postage prepaid
if mailed in the United States) is enclosed for that purpose. Even if you have
given your proxy, you may still vote in person if you attend the meeting. Please
note, however, that if your shares are held of record by a broker, bank or other
nominee and you wish to vote at the meeting, you must obtain from the record
holder a proxy issued in your name.










                                TABLE OF CONTENTS



 
                                                                                                  Page
                                                                                                  ----
                                                                                                
INTRODUCTION........................................................................................1
QUESTIONS AND ANSWERS ABOUT PROPOSALS 1, 2 AND 3....................................................1
FORWARD LOOKING STATEMENTS..........................................................................6
RISK FACTORS........................................................................................7
INFORMATION CONCERNING SOLICITATION AND VOTING.....................................................15
   Record Date; Outstanding Shares.................................................................15
   Purpose of the Annual Meeting; Board Recommendation.............................................15
   Quorum; Vote Required...........................................................................16
   Voting of Proxies...............................................................................17
   Authorization to Vote on Adjournment and Other Matters..........................................17
   Revocability of Proxies.........................................................................17
   Solicitation....................................................................................18
   Presence of Auditors............................................................................18
PROPOSAL 1.........................................................................................19
   Introduction....................................................................................19
   American Stock Exchange Requirements............................................................19
   Interests of Certain Persons in Approval of Series C Stock and Series D Stock Conversion........20
   Series C Stock Rights and Preferences...........................................................21
   Secured Note Rights and Preferences.............................................................22
   Series D Stock Rights and Preferences...........................................................22
   Required Vote...................................................................................23
   Board Recommendation............................................................................23
THE ACQUISITION TRANSACTION........................................................................24
   General.........................................................................................24
   Background of the Provo Acquisition.............................................................24
   Factors Considered by Our Board of Directors....................................................24
   Description of Frontline's Business.............................................................26
   Description of Provo's Business.................................................................26
   Reasons for the Transaction.....................................................................29
   No Vote Required; No Appraisal Rights...........................................................29
   Material Terms of the Stock Purchase Agreement..................................................29
   Accounting Treatment............................................................................31
   Regulatory Approvals............................................................................31
   Certain Federal Tax Consequences................................................................31
   Opinion of GunAllen Financial, Inc..............................................................32
SELECTED HISTORICAL FINANCIAL DATA OF FRONTLINE....................................................36
SELECTED HISTORICAL FINANCIAL DATA OF PROVO........................................................37
SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION...............................38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF THE PROVO BUSINESSES............................................................................40
   Overview........................................................................................40
   Results of Operations...........................................................................41
   Comparison of Years ended December 31, 2002 and 2001............................................42
   Liquidity and Capital Resources.................................................................43
PROPOSAL 2.........................................................................................46
   Introduction....................................................................................46
   Existing Terms of the Series B Stock............................................................46
   Specifics of the Mandatory Conversion Proposal..................................................46
   Purpose and Background of the Mandatory Conversion Proposal.....................................47
   Interests of Certain Persons in Approval of Series C Stock and Series D Stock Conversion........48
   Consequences of the Mandatory Conversion Proposal...............................................48
   Resale of Common Stock Exchanged for Series B Stock.............................................49
   Certain Federal Tax Consequences................................................................49
   Accounting Treatment of the Preferred Conversion................................................51















                                                                                               
   Dissenters' Rights of Appraisal.................................................................51
   Required Vote...................................................................................51
   Board Recommendation............................................................................51
PROPOSAL 3.........................................................................................52
   General.........................................................................................52
   The Reverse Split...............................................................................52
   Increase in Authorized Shares of Common Stock...................................................55
   Dissenters' Rights of Appraisal.................................................................57
   Required Vote...................................................................................57
   Board Recommendation............................................................................57
PROPOSAL 4.........................................................................................58
   General.........................................................................................58
   Required Vote...................................................................................58
   Board Recommendation............................................................................58
PROPOSAL 5.........................................................................................59
   General.........................................................................................59
   Required Vote...................................................................................59
   Board Recommendation............................................................................59
   Nominees........................................................................................59
   Board Committees and Meetings...................................................................61
   Executive Compensation..........................................................................61
   Employment Agreements...........................................................................62
   Director Compensation...........................................................................63
   1997 Stock Option Plan..........................................................................63
   2001 Stock Incentive Plan.......................................................................63
   Voting Security Ownership of Certain Beneficial Owners and Management...........................64
   Section 16(a) Beneficial Ownership Reporting Compliance.........................................65
   Certain Relationships and Related Transactions..................................................65
PROPOSAL 6.........................................................................................70
   Introduction....................................................................................70
   American Stock Exchange Requirements............................................................70
   The Fusion Transaction..........................................................................70
   Required Vote...................................................................................73
   Board Recommendation............................................................................73
PROPOSAL 7.........................................................................................74
   General.........................................................................................74
   Former Accountants..............................................................................74
   Audit Committee Report..........................................................................74
   Required Vote...................................................................................75
   Board Recommendation............................................................................75
INCORPORATION OF OTHER DOCUMENTS BY REFERENCE......................................................76
OTHER MATTERS......................................................................................77

INDEX OF FINANCIAL STATEMENTS.....................................................................F-1

ANNEX A  Series C Certificate of Designation..................................................... A-1
ANNEX B  Series D Certificate of Designation......................................................B-1
ANNEX C  Secured Noted............................................................................C-1
ANNEX D  Series B Certificate of Designation......................................................D-1
ANNEX E  Opinion of Gun Allen Financial, Inc......................................................E-1
ANNEX F  Certificate of Amendment to Series B Certificate of Designation..........................F-1
ANNEX G  Certificate of Amendment to Certificate of Incorporation.................................G-1
ANNEX H  Fusion Transaction Documents.............................................................H-1












                      FRONTLINE COMMUNICATIONS CORPORATION
                               One Blue Hill Plaza
                                  P.O. Box 1548
                              Pearl River, NY 10965

               PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
                          To Be Held on August 13, 2003

                                  INTRODUCTION

     The enclosed proxy is solicited on behalf of the board of directors of
Frontline Communications Corporation, a Delaware corporation, for use at our
Annual Meeting of Stockholders to be held on August 13, 2003, at 11:00 a.m.
local time, or at any adjournment or postponement thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting. The annual
meeting will be held at the Board Room of the American Stock Exchange, 86
Trinity Place, New York, New York. We intend to mail this proxy statement and
accompanying proxy card on or about July 17, 2003 to all stockholders entitled
to vote at the annual meeting.

     On April 3, 2003, we acquired all of the outstanding stock of of
Proyecciones y Ventas Organizadas, S.A. de C.V., a company organized under the
laws of Mexico ("Provo"). The annual meeting will cover seven proposals relating
to the acquisition and the capital restructure of the company. The Board of
Directors recommends that the stockholders vote FOR the seven proposals.

                QUESTIONS AND ANSWERS ABOUT PROPOSALS 1, 2 AND 3

     This summary describes the material terms of Proposal 1, Proposal 2 and
Proposal 3 that you will be voting on at the annual meeting.

What is Proposal 1?

     Proposal 1 relates to:

     o    the issuance of shares of our common stock to the holders of our
          Series C Convertible Preferred Stock (the "Series C Stock"), which we
          issued to the former stockholders of Provo, in connection with our
          acquisition of Provo (we generally refer our acquisition of Provo as
          the "Provo acquisition"); and

     o    the issuance of shares of our common stock to the holders of our
          Series D Convertible Preferred Stock (the "Series D Stock"), which we
          issued to certain of our executive officers and directors, certain
          Provo employees and other third parties in connection with the closing
          of the Provo acquisition.

What is Proposal 2?

     Proposal 2 relates to:

     o    the amendment of the certificate of designations pertaining to our
          Series B Cumulative Convertible Preferred Stock (the "Series B Stock")
          to provide for the mandatory conversion of all of the outstanding
          Series B Stock upon the election of the holders of a majority of the
          outstanding Series B Stock;

     o    the election by the holders of the Series B Stock to effectuate the
          mandatory conversion of all of the outstanding Series B Stock at a
          conversion ratio of six shares of common stock for each share of
          Series B Stock (four shares after giving effect to the proposed
          two-for-three reverse split of our common stock).

What is Proposal 3?

     Proposal 3 relates to the adoption of amendments to our certificate of
incorporation authorizing the following:


                                       1










     o    a reverse stock split in which all outstanding shares of our common
          stock would be exchanged at a ratio of two-for-three; and

     o    an increase in the number of authorized shares of common stock from
          25,000,000 shares to 100,000,000 shares.

How are Proposals 1, 2 and 3 related?

     If Proposal 1 or Proposal 2 but not Proposal 3 were to be approved by the
stockholders, we would lack sufficient authorized and unissued common stock to
permit the conversion of all of the outstanding Series C Stock, Series D Stock
or Series B Stock. Accordingly, unless our stockholders approve Proposal 3, we
will be unable to effect Proposal 1 or Proposal 2.

Into how many shares of common stock will the Series C Stock and Series D Stock
be converted?

     Upon approval by our stockholders of Proposal 1 and Proposal 3, all
outstanding shares of Series C Stock will be converted into 22,000,000 shares of
common stock, which reflects a conversion rate of 100 shares of common stock per
share of Series C Stock (after giving effect to the proposed two-for-three
reverse stock split). Upon approval by our stockholders of Proposal 1 and 3, all
outstanding shares of Series D Stock will be converted into 3,550,000 shares of
common stock, which reflects a conversion rate of 100 shares of common stock per
share of Series D Stock (after giving effect to the proposed two-for-three
reserve stock split).

Why are we soliciting stockholder approval of the conversion of the Series C
Stock and Series B Stock into common stock?

     The rules of the American Stock Exchange (the "AMEX") require us to obtain
stockholder approval prior to approving the listing of additional stock to be
issued in connection with an acquisition of the stock or assets of another
company of the issuance of common stock could result in an increase in our
outstanding common stock of 20% or more. Our proposed issuance of shares of
common stock upon conversion of the Series C Stock and Series D Stock falls
under this rule because the issuance of such shares will result in an increase
in outstanding common stock of more than 20%.

Why is the Provo acquisition discussed in this proxy statement?

     You will not be voting on the Provo acquisition itself, which has been
completed. Because the shares that are the subject of Proposal 1 are issuable in
connection with the Provo acquisition, we are including a discussion of the
material terms of the Provo acquisition and the business and operations of
Provo. Please see the section entitled "The Acquisition Transaction" beginning
on page 24 for information on the Provo acquisition.

When did we acquire Provo?

     On April 3, 2003, we acquired all of the outstanding capital stock of
Provo, and Provo became a subsidiary of Frontline.

What was the purchase price for Provo?

     We acquired Provo for consideration consisting of 220,000 shares of our
Series C Stock, and a $20,000,000 secured note (the "Secured Note"), which will
be payable only if our common stockholders fail to approve the proposed issuance
of common stock upon conversion of the Series C Stock. The Series C Stock had a
value of $6.6 million based on the closing price of the common stock on January
24, 2002, the date we executed the stock purchase agreement. See "The
Acquisition Transaction -- General" on page 24.

Do our stockholders have appraisal rights with respect to the Provo acquisition?

     No. Our stockholders do not have any "dissenters' rights" or rights to an
appraisal of the value of their shares in connection with the Provo acquisition.
See "The Acquisition Transaction-- No Vote Required; No Appraisal Rights"
beginning on page 29.

What was the accounting treatment of the Provo acquisition?


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     The Provo acquisition was accounted for under the purchase method of
accounting. See "The Acquisition Transaction -- Accounting Treatment" on
page 31.

What were the material federal tax consequences of the Provo acquisition?

     No gain or loss will be recognized by Provo or Frontline in connection with
the Provo acquisition or upon the conversion of Frontline Series C Stock into
Frontline common stock. The Provo acquisition (or, possibly, the authorization
by stockholders of Frontline to issue common stock to the former stockholders of
Provo upon the conversion of Frontline Series C Stock) resulted (or will result)
in an ownership change of Frontline. As a result, the utilization of net
operating loss carryforwards of Frontline will be subject to an annual
limitation pursuant to Section 382 of the Internal Revenue Code of 1986, as
amended (the "Code") equal to approximately 4.5% of the value of Frontline
immediately prior to the ownership change.

     The federal income tax consequences of the Provo acquisition are discussed
more fully beginning on page 31 under "The Acquisition Transaction -- Certain
Federal Tax Consequences."

What regulatory approvals were required in connection with the Provo
acquisition?

     No significant regulatory approvals were required for the Provo
acquisition. See "The Acquisition Transaction -- Regulatory Approvals" on
page 31.

Was a fairness opinion delivered in connection with the Provo acquisition?

     Yes. GunAllen Financial, Inc. delivered to us its opinion as to the
fairness from a financial point of view of the consideration to be paid by us in
the Provo acquisition. See "The Acquisition Transaction -- Opinion of GunAllen
Financial, Inc." beginning on page 32.

What were the conditions to the Provo acquisition?

     The stock purchase agreement with respect to the Provo acquisition
contained customary conditions to closing, including the following: receipt of
regulatory approvals, securing a bridge loan in the aggregate principal amount
of not less than $550,000 to finance certain expenses related to the Provo
acquisition, absence of material litigation, absence of any material adverse
change in the Provo and Frontline businesses, accuracy of representations and
warranties and no objection by the AMEX. On April 3, 2003, all of the closing
conditions set forth in the stock purchase agreement were satisfied or waived.
See "The Acquisition Transaction -- Material Terms of the Stock Purchase
Agreement" beginning on page 29.

Why are we seeking to convert all of the Series B Stock into common stock?

     The Series B Stock currently is traded on the AMEX under the symbol
"FNT.PR." In order to maintain the listing of the Series B Stock on the AMEX, we
must meet the standards for continued listing established by the AMEX. We are
not in compliance with the AMEX listing standard that requires that the
aggregate market value of the publicly held shares of the Series B Stock not
fall below $1,000,000 for more than 90 consecutive days. We are proposing to
convert the Series B Stock into common stock to avoid the Series B Stock being
delisted from the AMEX.

Why is it important to avoid having the Series B Stock delisted from the AMEX?

     If the Series B Stock is delisted from the AMEX, it could have adverse
consequences for us, including a loss of investor interest in our securities. In
addition, holders of the Series B Stock may have greater difficulty in trading
shares of the Series B Stock. This lack of liquidity may also make it more
difficult for us to raise capital. In addition, pursuant to our agreement with
our underwriters in connection with the initial offering of the Series B Stock,
we must use our best efforts to maintain the listing of the Series B Stock on
the AMEX. See "Proposal 2 - Purpose and Background of the Mandatory Conversion
Proposal" on page 47.

What are the specifics of the Series B Stock conversion?


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     At present, each share of Series B Stock is convertible into 3.4 shares of
common stock at the election of each individual holder of Series B Stock. The
amendment in this Proposal 2 would amend the certificate of designation
pertaining to the Series B Stock to provide that if the holders of a majority of
the outstanding Series B Stock elect to convert their shares of Series B Stock
to common stock, then all of the outstanding Series B Stock will automatically
and without any further action convert into shares of our common stock at a
conversion ratio of six shares of common stock for each share of Series B Stock
(four shares after giving effect to the proposed two-for-three reverse split of
our common stock). Such conversion ratio provides for the accrued and unpaid
dividends on the Series B Stock in shares of common stock.

     Adoption of Proposal 2 (after giving effect to the proposed two-for-three
reverse stock split) will result in a conversion ratio of four shares of common
stock for each share of the Series B Stock, and the conversion of all 496,445
shares of Series B Stock outstanding as of June 30, 2003 into an aggregate of
1,985,780 shares of common stock.

     By Proposal 2, in addition to amending the certificate of designation
pertaining to the Series B Stock to provide for its mandatory conversion upon
the approval of the holders of a majority of the outstanding Series B Stock,
Frontline is requesting that the holders of the Series B Stock elect to
effectuate the mandatory conversion of all of the outstanding Series B Stock to
our common stock. Thus, if Proposal 2 is adopted, all of the Series B Stock will
automatically be converted to common stock. See "Proposal 2 - Specifics of the
Mandatory Conversion Proposal" on page 46.

What are the material federal income tax consequences of the Series B Stock
conversion?

     Frontline believes that the conversion of the Series B Stock pursuant to
Proposal 2 will constitute a recapitalization for federal income tax purposes,
and that a holder of shares of Series B Stock who receives shares of common
stock in exchange for shares of the Series B Stock in connection with the
conversion of the Series B Stock pursuant to Proposal 2 will not recognize gain
or loss upon such exchange.

     The federal income tax consequences of the Series B Stock conversion are
discussed more fully beginning on page 49 under "Proposal 2 -- Certain Federal
Tax Consequences."

What are the material federal income tax consequences of the reverse stock
split?

     Frontline believes that the reverse stock split pursuant to Proposal 3 will
constitute a recapitalization for federal income tax purposes, and that holders
of Frontline common stock will not recognize gain or loss in connection with the
reverse stock split, except to the extent of cash received in lieu of fractional
shares of Frontline common stock.

     The federal income tax consequences of reverse stock split are discussed
more fully beginning on page 54 under "Proposal 3 -- The Reverse Split --
Certain Federal Tax Consequences."

What effects will the proposed issuances of common stock have on stockholders?

     The proposed issuance of common stock upon conversion of the Series B
Stock, Series C Stock and Series D Stock will dilute the percentage ownership
interest of our existing stockholders. Assuming the effectiveness of the
proposed two-for-three reverse stock split, as of June 30, 2003, we had
6,779,981 shares of common stock outstanding, and if our stockholders approve
Proposal 1, Proposal 2 and Proposal 3, the Series C Stock will be converted into
22,000,000 shares of our common stock, the Series D Stock will be converted into
3,550,000 shares of our common stock and the Series B Stock will be converted
into 1,985,780 shares of our common stock. Again assuming the effectiveness of
the proposed two-for-three reverse stock split, we will then have 34,315,761
shares of common stock outstanding; the common stock issued upon conversion of
the Series C Stock will represent approximately 64.1% of the outstanding common
stock; the common stock issued upon conversion of the Series D Stock will
represent approximately 10.3%of the outstanding common stock; and the common
stock issued upon conversion of the Series B Stock will represent approximately
5.8% of the outstanding common stock. On a pro forma combined basis, the diluted
net loss per common share for the three months ended March 31, 2003 would have
been $0, and the diluted net income per common share for the year ended December
31, 2002 would have been $0.03 (after giving effect to Proposals 1, 2 and 3).
See "Unaudited Pro Forma Combined Statement of Operations for the Three Months
Ended March 31, 2003" on page F-57 and "Unaudited Pro Forma Combined Statement
of Operations for the Year Ended December 31, 2002" on page F-56. Please see
the section


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entitled "Proposal 5 -- Voting Security Ownership of Certain Beneficial Owners
and Management" beginning on page 64 for further information on the effects
of the conversion of the Series B Stock, Series C Stock and the Series D Stock.

What will happen if Proposal 1, Proposal 2 and Proposal 3 are not approved?

     If our stockholders do not approve Proposal 1 and Proposal 3 by August 20,
2003 (or such later date as agreed to by us and the holders of a majority of the
Series C Stock, which will be extended for a period of up to 30 days due to the
actions or inaction of the Securities and Exchange Commission or the AMEX in
connection with our seeking the requisite approvals (the "Conversion Date")),
the Series C Stock will remain outstanding on a non-convertible, non-voting
basis, and the $20,000,000 Secured Note issued to the former Provo stockholders
will become due and payable in accordance with its terms. As described in more
detail below under "Proposal 1 -- Secured Note Rights and Preferences," 
beginning on page 22, the Secured Note will have economic terms which we
believe are considerably less favorable to us than the terms of our common
stock.

     If our stockholders do not approve Proposal 1 and Proposal 3 by the
Conversion Date, the Series D Stock will remain outstanding on a
non-convertible, non-voting basis, but no other consideration will accrue to the
holders of the Series D Stock.

     If our stockholders do not approve Proposal 2 and Proposal 3, the Series B
Stock will remain outstanding in accordance with its existing terms and
conditions. If the Series B Stock remains outstanding, we do not expect that we
will be able to maintain the listing of the Series B Stock on the AMEX.

Who is entitled to vote on Proposal 1, Proposal 2 and Proposal 3?

     Only the holders of shares of our common stock as of June 30, 2003, the
record date for the annual meeting, are entitled to vote on Proposal 1 and
Proposal 3. No one else is entitled to vote on Proposal 1 or Proposal 3. Both
the holders of shares of our common stock and our Series B Stock as of June 30,
2003, the record date for the annual meeting, are entitled to vote on Proposal
2. No one else is entitled to vote on Proposal 2.

What vote is required to approve Proposal 1, Proposal 2 and Proposal 3?

     Under the certificates of designation of the Series C Stock and the Series
D Stock, and under the AMEX rules, approval of Proposal 1 requires the
affirmative vote of the majority of the votes cast on the proposal, provided
that the total votes cast on the proposal represent a majority of all
outstanding securities entitled to vote on the proposal.

     Under Delaware law, approval of Proposal 2 requires the affirmative vote of
the holders of not less than a majority of the outstanding Series B Stock,
voting separately as a class, and the affirmative vote of the holders of not
less than a majority of the outstanding common stock, voting separately as a
class.

     Under Delaware law, approval of Proposal 3 requires the affirmative vote of
the holders of not less than a majority of the outstanding common stock.

What is the board of directors' recommendation on how to vote?

     The board of directors unanimously recommends a vote FOR Proposal 1, FOR
Proposal 2 and FOR Proposal 3.

What do I need to do now?

     First, read this proxy statement carefully. Then, as soon as possible, you
should submit your proxy by executing and returning the enclosed proxy card.
Your shares represented by proxy will be voted in accordance with your
directions. If you submit a proxy, but have not specified any directions, your
shares will be voted FOR approval of Proposal 1, FOR approval of Proposal 2 and
FOR approval of Proposal 3.


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Who can help answer questions I may have?

     If you have any questions concerning Proposal 1, Proposal 2, Proposal 3 or
the annual meeting, if you would like additional copies of the proxy statement
or if you will need special assistance at the meeting, please call Amy
Wagner-Mele, our Secretary, at (845) 623-8553.

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

     The information provided above is merely a brief description of material
information contained in this proxy statement. You should read this proxy
statement in its entirety.

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

                           FORWARD LOOKING STATEMENTS

     This proxy statement contains forward-looking statements, including
statements about the continued strength of our business and opportunities for
future growth. We believe that our expectations are reasonable and are based on
reasonable assumptions. However, such forward-looking statements by their nature
involve risks and uncertainties. We caution that a variety of factors, including
but not limited to the following, could cause our business and financial results
to differ materially from those expressed or implied in forward-looking
statements: our ability to successfully integrate Provo and its business; our
highly leveraged position; our ability to service our debt; deterioration in
current economic conditions; our ability to pursue business strategies; pricing
pressures; changes in the regulatory environment; foreign currency devaluation;
foreign market risk; outcomes of pending and future litigation; our ability to
attract and retain qualified professionals; industry competition; changes in
international trade, monetary and fiscal policies; our ability to integrate
future acquisitions successfully; our ability successfully integrate our
accounting and management information systems successfully; and other factors
that may be discussed in other reports subsequently filed from time to time with
the Securities and Exchange Commission. We assume no obligation to update any
forward-looking statements.


                                       6










                                  RISK FACTORS

     In addition to the other information provided or incorporated by reference
in this document, you should consider the following information carefully The
risks and uncertainties described below are not the only ones we face. There may
be additional risks and uncertainties that are not known to us or that we do not
consider to be material at this time. If the events described in these risks
occur, our business, financial condition and results of operations would likely
suffer. This document contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ significantly from the results
discussed in the forward-looking statements. This section discusses the business
risk factors that might cause those differences.

Risks Related to the Provo Acquisition

If our stockholders fail to approve Proposal 1 and Proposal 3, we will incur
significant additional liabilities.

     If our stockholders do not approve Proposal 1 and Proposal 3 by the
Conversion Date, the Series C preferred stock will remain outstanding on a
non-convertible, non-voting basis, and the $20,000,000 Secured Note issued to
the former stockholders of Provo will become due and payable in accordance with
its terms. The Secured Note will become due and payable in full on the fifteenth
day following the earlier of (i) the Conversion Date, if the stockholders have
not approved Proposal 1 and Proposal 3 by that date; or (ii) the failure of our
stockholders to approve Proposal 1 and Proposal 3. The Secured Note is secured
by substantially all of our assets, including the capital stock of Provo. We
believe that the issuance and eventual right to collect under the Secured Note
is considerably less favorable to us and our stockholders than the issuance of
the underlying common stock. In the event that we are unable to pay the Secured
Note as it becomes due, the former stockholders of Provo may initiate actions
against us, which may include foreclosure on their collateral consisting of
substantially all of our assets.

Insiders will control a substantial majority of our common stock.

     If our stockholders approve Proposal 1 and Proposal 3, approximately 50% of
our common stock will be held by Messrs. Ventura Martinez del Rio, Sr. and
approximately 16% of our common stock will be held by his son, Ventura Martinez
del Rio, Jr. On a combined basis, these stockholders would gain effective
control over most facets of our business through joint majority ownership
control, operational control and board of directors control.

We may not successfully integrate and manage the operations of Provo, which
could adversely affect future earnings.

     As a result of the Provo acquisition, Frontline has acquired Provo and
Provo has become a wholly-owned subsidiary of Frontline. Provo has an operating
history, but not under Frontline management. Failure to manage the combined
company successfully may negatively affect our operating results. The risks of
this acquisition include the following:

     o    management will have to divert time, attention and resources to
          integrate the businesses;

     o    Provo may have unexpected problems or risks in operations, personnel,
          technology or credit;

     o    we may lose Provo's current customers or employees;

     o    new management may not work smoothly with existing employees or
          customers;

     o    the assimilation of new operations, sites and personnel could divert
          resources from existing operations;

     o    management may be unable to continue to operate successfully in an
          international environment; and

     o    we may have trouble instituting and maintaining uniform standards,
          controls, procedures and policies.

     We can make no assurances that we will be able to successfully integrate
acquired businesses or operations that we have acquired, including Provo, or
that we may acquire in the future. In addition, we may not achieve the
anticipated benefits from our acquisitions. If we fail to achieve the
anticipated benefits from such acquisitions, we


                                       7










may incur increased expenses and experience a shortfall in our anticipated
revenues and we may not obtain a satisfactory return on our investment.

We have a history of losses prior to the acquisition of Provo and anticipate
that we may incur losses in the future.

     Since our inception and prior to the Provo acquisition, we have incurred
significant losses. For the years ended December 31, 2001 and 2002, our net
losses were $7,029,287 and $787,525, respectively. While Provo has been a
profitable company for a number of years, we have little experience as a
combined company and we may not be able to achieve profitability as a combined
business. Moreover, we intend to engage in additional strategic acquisitions in
the future. Future acquisitions may reduce our profitability. We can make no
assurances that we will achieve or sustain profitability as a combined company
or generate sufficient operating income to meet our working capital, capital
expenditure and debt service requirements, and if we are unable to do so, this
would have a material adverse effect on our business, financial condition and
results of operations.

We may not realize anticipated operating efficiencies, which could hurt our
profitability.

     As a result of the Provo acquisition, we expect to improve our operations
by reducing costs, expanding services and integrating administrative functions.
We may not realize these operating efficiencies or may not realize them as soon
as anticipated. If we do not realize operating efficiencies as anticipated, our
profitability may be adversely affected.

Unanticipated costs relating to the Provo acquisition could reduce our future
results of operations.

     We believe that we have reasonably estimated the likely costs of
integrating the operations of Frontline and Provo. However, the possibility
exists that unexpected transaction costs such as taxes, fees or professional
expenses, or unexpected future operating expenses such as increased personnel
costs or increased taxes, as well as other types of unanticipated adverse
developments, could have a material adverse effect on the results of operations
and financial condition of the combined company. If unexpected costs are
incurred, the acquisition could adversely affect our results of operations and
earnings per share.

Frontline and Provo have incurred and will continue to incur significant
transaction expenses and integration-related costs in connection with the
acquisition transaction.

     Frontline and Provo expect to incur charges to operations to reflect costs
associated with combining the operations of the two companies and transaction
fees and other costs related to the Provo acquisition. Some of these costs will
be expenses subsequent to the consummation of the Provo acquisition and will
adversely affect the results of the combined company and could adversely impact
the market price of our common stock. In connection with the transaction, the
Company and Provo anticipate expenses of approximately $500,000.
Integration-related costs will be recognized as those actions take place
subsequent to the Provo acquisition. There can be no assurance that realization
of efficiencies anticipated from the integration of the businesses, will offset
additional expenses in the near term, or at all.

Risks Related to our Business

Competition is significant in all of our lines of business and is expected to
intensify.

     The market for each of our current and expected products and services is
intensely competitive, and we expect that competition will intensify in the
future. There are no substantial barriers to entry, and these industries are
characterized by rapidly increasing numbers of new market entrants and new
products and services.

     Provo's two closest competitors in Mexico sell nearly as much prepaid
calling time as it does, and are both affiliated with other large companies.
More than 100 resellers of prepaid calling time currently canvass the market in
Mexico. Our competitors for Internet access services in the United States
include international, national and regional telecommunications providers that
have significantly greater market presence and financial, technical, marketing
and other resources than we do. Many of our current and future competitors
possess a wide range of products and collective new product development
capabilities that exceed ours. In addition, many of these same competitors
possess financial resources greater than ours and have already established a
strong presence within our new target markets. Such competitors may attempt to
adapt or scale their products in order to more effectively


                                       8










compete with ours and may offer their existing products at a more competitive
price. As our market presence expands over time, we expect to face an increasing
number of competitors who attempt to emulate our solution approach.

     Increased competition could result in significant price competition, which
in turn could result in significant price reductions in some of our product
offerings, most notably Internet access and web hosting. In addition, increased
competition for new customers could result in increased sales and marketing
expenses and related customer acquisition costs, which could materially
adversely affect our operating results. We may not have the financial resources,
technical expertise or marketing and support capabilities to compete
successfully, and the software, services or technologies developed by others may
render our products, services or technologies obsolete or less marketable.

We are dependent on many vendors and suppliers and their financial difficulties
may adversely affect our business.

     We depend on many vendors and suppliers to conduct our business. For
example, Provo purchases our prepaid calling cards from Telmex and Telcel and we
purchase telecommunications services from various telecommunications companies
and competitive local exchange carriers in the United States. Many of these
third parties have experienced substantial financial difficulties in recent
months, in some cases leading to bankruptcies and liquidations. In particular,
competitive telecommunications providers in the United States have experienced
financial difficulties, including difficulty in raising the necessary capital to
maintain their operations and in some cases filing for bankruptcy. The financial
difficulties of these companies could have a material adverse effect on our
business and prospects.

We may not be able to maintain our profitability if our suppliers reduce their
commissions or if they cease doing business with us.

     Our business substantially depends on the availability of pre-paid calling
cards and the discounts and commissions given to us by Telmex and Telcel. Access
to calling-cards is obtained through short-term agreements that our providers
can terminate, significantly modify or elect not to renew.

     Our operating margins are sensitive to variations in whole-sale commissions
given by Telmex and Telcel. Any or all of our current suppliers could decide to
reduce whole-sale commissions, which would prevent us from distributing large
numbers of cards and would materially reduce our business operations and
profitability.

Our sales could be adversely affected if we lose any of our largest customers,
if they materially reduce their reliance on distributors or if they are unable
to pay amounts due.

     If any of our largest customers in Mexico were to stop or materially reduce
their purchasing from us, or were unable to pay our invoices, our financial
results could be adversely affected. During fiscal 2002, Provo's top five
customers in the aggregate accounted for approximately 17% of Provo's sales. We
generally do not have long term contracts with our retailer customers or minimum
purchase requirements. In addition, there is the possibility that our larger
customers could bypass distributors and begin purchasing calling cards directly
from Telmex or Telcel. The concentration of sales to our largest customers also
exposes us to credit risks associated with the financial viability of our
customers. We believe that our sales to our largest customers will continue to
represent a significant portion of our sales.

We depend on strategic relationships with third parties.

     We depend on agreements and arrangements with a variety of third party
partners, including, Telmex, Telcel and our network of distributors in Mexico as
well as certain providers of high-speed access capability and other CLECs in the
United States. The loss of any of our existing strategic relationships or any
inability to create new strategic partnerships in the future would cause
disruptions to our business, reduce any competitive advantages that these
relationships may provide over our competitors and adversely affect our ability
to expand our operations. In addition, some of the third parties with which we
seek to enter into relationships may view us as a competitor and refuse to do
business with us.

We have numerous sub-distributors in Mexico and they may divert or delay net
sales receipts from the point of sale.


                                       9










     Provo relies on its large network of sub-distributors to collect a
substantial portion of its revenues. Should any of these sub-distributors decide
to or attempt to divert or delay their remittance to Provo, Provo's need for
consistent interim cash flow would be adversely affected. Moreover, we may not
be able to recover the diverted funds. Significant diversions or delays in
receipts of funds by Provo, could have a material adverse effect on our
business, financial condition and results of operations.

A disruption in the operations of our key shippers could cause a decline in our
sales or a reduction in our earnings.

     We are dependent on a number of commercial freight carriers to deliver our
products to our sub-distributors and customers. If the operations of these
carriers are disrupted for any reason, we may be unable to deliver our products
to our customers on a timely basis. If we cannot deliver our products in an
efficient and timely manner, our sales and profitability will suffer. While the
choice of carriers is a fact based determination depending on a customer's
characteristics, we currently rely on Autobuses Estrella Blanca, S.A. de C.V. to
deliver approximately 42% of our products.

We are dependent on effective billing, customer service and information systems
and we may have difficulties in developing, maintaining and enhancing these
systems.

     Sophisticated back office information and processing systems are vital to
our growth and our ability to control and monitor costs, bill and service
customers, initiate, implement and track customer orders and achieve operating
efficiencies. Since our inception, we have also been engaged in developing and
integrating our essential information systems consisting of our billing system,
our sales order entry system and our customer implementation system. In
addition, we continue to integrate the systems of each of our acquired
businesses, including Provo. These are challenging projects because all of these
systems were developed by different vendors and must be coordinated through
custom software and integration processes. Our sales and other core operating
and financial data are generated by these systems and the accuracy of this data
depends on the quality and progress of the system integration project. Although
we have made progress in our system integration efforts, we have not completed
it and we may experience additional negative adjustments to our financial and
operating data as we complete this effort. These adjustments have not had a
material adverse effect on our financial or operating data to date but until we
complete the entire project we cannot assure you that any such adjustments
arising out of our systems integration efforts will not have a material adverse
effect in the future. If we are unable to develop, acquire and integrate our
operations and financial systems, our customers could experience delays in
delivery of products or services, billing issues and/or lower levels of customer
service. We also cannot assure you that any of our systems will be successfully
implemented on a timely basis or at all or will perform as expected. Our failure
to successfully implement these systems would have a material adverse effect on
our business and prospects.

In order to remain profitable, we will need to implement our business plan
successfully, including increasing our customer bases in Mexico and the United
States and incorporating new lines of business in an effective manner.

     The success of our business plan depends upon our ability to retain and
increase our customer base for prepaid calling cards; attract and retain
significant numbers of customers for our Internet business; and consolidate new
lines of business on a timely and cost effective basis. At the same time, we
will need to hire and retain skilled management, technical, marketing and other
personnel and continue to expand our product and service offerings. We may not
be able to implement our business plan successfully, and we may also encounter
unanticipated expenses, problems or technical difficulties which could
materially delay the implementation of our business plan.

     We have recently expanded our marketing focus and have begun to offer
additional products and services, both of which may place a significant strain
on us. The expansion of our product offerings will continue to place significant
demands on the time and attention of our senior management and involve
significant financial and other costs, including marketing and promoting our new
products and services and hiring personnel to provide these new services. We may
not be able to enter new markets and offer new services successfully, and we may
not be able to undertake these activities while maintaining sufficient levels of
customer service to retain our existing customers, either of which would have a
material adverse effect on us, our reputation and our operations.

Our inability to manage our growth effectively could adversely affect our
business.


                                       10










     Our future performance depends on our ability to continue to sell our
products, effectively roll-out our proposed products and services, implement our
business strategy and effectively manage our growth. Our planned growth and
expansion will place significant demands on our management and operations. Our
ability to manage this growth successfully will depend on:

     o    expanding our management resources, infrastructure, information and
          reporting systems and controls;

     o    expansion, training and management of our employee base, including
          attracting and retaining skilled personnel;

     o    evaluating new markets;

     o    evaluating new acquisition opportunities;

     o    monitoring operations; and

     o    controlling costs.

     If we are not successful in managing our growth effectively or maintaining
the quality of our service, our business, financial condition and results of
operations could be materially adversely affected.

Our Mexican subsidiaries conduct a majority of our operations and own a majority
of our operating assets.

     Our Mexican subsidiaries conduct a majority of our operations, account for
a majority of our revenues and own a majority of our operating assets. As a
result, our ability to make any dividend payments on our common stock depends on
the performance of the businesses owned by our subsidiaries and such
subsidiaries' ability to distribute funds to us. Under Mexican law, Mexican
companies must retain part of their profits to establish certain legal reserves
prior to distributing any dividends to their stockholders. In addition, any
dividends received from our subsidiaries in Mexico may be subject to withholding
taxes in Mexico.

     The rights of holders of our common stock may be subordinated to the rights
of our subsidiaries' lenders. A default by a subsidiary under its debt
obligations would likely result in a block on distributions from the affected
subsidiary to us. In the event of bankruptcy, liquidation or dissolution of a
subsidiary and following payment of its liabilities, our subsidiary may not have
sufficient assets remaining to make payments to us as a stockholder or
otherwise. As of March 31, 2003, Provo and its subsidiaries had outstanding
indebtedness, excluding payables to related parties, of approximately $9.3
million.

We are heavily dependent on our senior management.

     We believe that the success of our business strategy and our ability to
operate profitably depend on the continued employment of our senior management
team. Our business is managed by a small number of key management and operating
personnel who have been involved in our operation in the United States and the
operation of our subsidiaries in Mexico. As we pursue our strategy to grow
through acquisitions our need for qualified personnel may increase further.
Competition for qualified personnel is intense, and we cannot assure you that we
will be able to retain our key employees or that we can attract or retain other
qualified personnel in the future. We only maintain key person life insurance
for $1,000,000 each on the lives of Stephen Cole-Hatchard and Nicko Feinberg.

Risks Related to our Stock

Our substantial leverage could adversely affect our ability to run our business.

     Our total outstanding indebtedness as of June 30, 2003 was approximately
$10.4 million, substantially all of which is secured indebtedness. Of this
amount, we are obligated to pay approximately $550,000 to IIG Equity
Opportunities Fund, Ltd. on August 1, 2003, and to pay 40,000,000 pesos
($3,780,700 at the current exchange rate) to Telmex on September 9, 2003. We
currently lack the funds to pay these obligations when they become due. If we
cannot generate sufficient cash flow or otherwise obtain the funds necessary to
make required payments on our indebtedness, or if we otherwise fail to comply
with the various covenants governing our indebtedness, we will be in default
under the terms of our indebtedness. If we are in default, the holders of
certain of our indebtedness may


                                       11










accelerate the maturity of the specific indebtedness which could cause us to
default on other debt obligations. In addition, if we are in default Telmex may
suspend delivery of prepaid calling cards to us.

     We have entered into a common stock purchase agreement with Fusion Capital
Fund II, LLc, whereby, subject to the approval of Proposal 6 described herein by
our stockholders and the satisfaction of other applicable conditions, Fusion
Capital has agreed to purchase up to $13 million of our common stock over a
40-month period. The proceeds of the expected sale of our common stock pursuant
to that agreement will not be sufficient to enable us to timely pay the amounts
we owe to IIG Equity and Telmex that are due in August and September 2003 as
described in the preceding paragraph. Therefore, in order to satisfy our debt
obligations, we are currently pursuing additional sources of financing. There
can be no assurance, however, that such financing will be available on terms
that are acceptable to us, or on any terms. Our ability to arrange financing and
the cost of the financing will depend on many factors including:

     o    general economic and capital markets conditions;

     o    conditions in the retail, telecommunications and Internet industries;

     o    regulatory developments;

     o    investor confidence and credit availability from banks and other
          lenders;

     o    the success of our business plan; and

     o    tax and securities laws that affect raising capital.

     If we cannot obtain the additional funding we require, we will make
substantial reductions in the scope and size of our operations, in order to
conserve cash until such funding is obtained. We also may be required to seek
protection under the bankruptcy laws.

We have a significant number of outstanding options and warrants which could
depress the market price of our common stock and could interfere with our
ability to raise capital in the future.

     As of June 30, 2003, we had outstanding options and warrants to purchase
2,648,200 shares of our common stock at exercise prices ranging from $0.08 to
$8.50 per share. To the extent that the outstanding options or warrants are
exercised, dilution to the percentage of ownership of our stockholders will
occur. Any sales in the public market of the shares underlying such options and
warrants may adversely affect prevailing market prices for our common stock.
Moreover, the terms upon which we will be able to obtain additional equity
capital may be adversely affected, since the holders of outstanding options and
warrants can be expected to exercise them at a time when we would in all
likelihood be able to obtain any needed capital on terms more favorable to us
than those provided in the outstanding options and warrants.

Conversion of the Series B Stock, Series C Stock and Series D Stock will result
in substantial dilution.

     Under this proxy solicitation we are requesting our stockholders to
consider and vote upon, among other things, the issuance of shares of our common
stock upon conversion of the Series B Stock, Series C Stock and Series D Stock.
Subject to such stockholder approval, such Series B Stock, Series C Stock and
Series D Stock will be converted into a total of 27,535,780 shares of common
stock (after giving effect to the proposed two-for-three reverse stock split).
Holders of common stock will therefore experience dilution of their investment
upon conversion of our Series B Stock, Series C Stock and Series D Stock.

Our stock price has been volatile and future sales of substantial numbers of our
shares could have an adverse affect on the market price of our shares.

     The market price of shares of our common stock has been volatile. The price
of our common stock may continue to fluctuate in response to a number of events
and factors, such as:

     o    our ability to maintain and increase our profitability;

     o    changes in revenues and expense levels;


                                       12










     o    the amount of our cash resources and our ability to obtain additional
          funding;

     o    our ability to service our debt;

     o    announcements of new lines of business, business developments,
          technological innovations or new products by us or our competitors;

     o    changes in government regulation; and

     o    the success of the integration of past and future acquisitions.

     Any of these events may cause the price of our shares to fall, which may
adversely affect our business and financing opportunities. In addition, the
stock market in general and the market prices for Internet companies in
particular have experienced significant volatility that often has been unrelated
to the operating performance or financial conditions of such companies. These
broad market and industry fluctuations may adversely affect the trading price of
our stock, regardless of our operating performance or prospects.

Future sales of our stock by insiders may adversely affect our stock price.

     Many of our outstanding shares are "restricted securities" under the
federal securities laws, and such shares are or will be eligible for sale
subject to restrictions as to timing, manner, volume, notice and the
availability of current public information regarding Frontline. Upon approval of
Proposal 1, Proposal 2 and Proposal 3, a significant majority of our common
stock will be held by the former stockholders of Provo and by our founding
management team. Sales of substantial amounts of stock in the public market or
sales of stock by our insiders or the perception that these sales could occur,
could depress the prevailing market price for all of our securities. Sales of
substantial amounts of stock by these stockholders in the public market may also
make it more difficult for us to sell equity securities or equity-related
securities in the future at a time and price that we deem appropriate and, to
the extent these sales depress our common stock price.

Our stock may be delisted from the AMEX, and that could affect its market price
and liquidity.

     We are required to meet certain financial tests to maintain the listing of
our common stock on the AMEX. If we do not remain listed on the AMEX, the market
price and liquidity of our common stock could be impaired. The delisting of our
common stock could also deter broker-dealers from making a market in or
otherwise generating interest in our common stock and could adversely affect our
ability to attract investors in our common stock and raise additional capital.
As a result of these factors, the value of our common stock could decline
significantly, and our stockholders could lose some or all of their investment.

Risks Related to Operating in Foreign Markets

Our business in Mexico presents unique economic and regulatory risks.

     A significant portion of our assets and revenues are and will be located in
Mexico. Our business, therefore, is affected by prevailing conditions in the
Mexican economy and is, to a significant extent, vulnerable to economic
downturns and changes in government policies. The Mexican government exercises
significant influence over many aspects of the Mexican economy. Accordingly, the
Mexican government's actions and the policies established by legislative,
executive or judicial authorities in Mexico may affect the Mexican economy. We
cannot assure you that future economic, political or diplomatic developments in
or affecting Mexico will not:

     o    impair our business, results of operations, financial condition and
          liquidity (including our ability to obtain financing);

     o    materially and adversely affect the market price of our securities
          (including the shares of our common stock); or

     o    negatively affect our ability to meet our obligations.

We operate in foreign markets and are exposed to risks in those markets that may
adversely affect our performance.


                                       13










     Our growth strategy involves operations in several new international
markets. The following are certain risks inherent in doing business on an
international level, any of which could have a material adverse effect on our
business, financial condition and results of operations:

     o    regulatory limitations restricting or prohibiting us from providing
          our services or selling our products;

     o    unexpected changes in regulatory requirements, tariffs, customs,
          duties and other trade barriers;

     o    difficulties in staffing and managing foreign operations;

     o    political risks;

     o    fluctuations in currency exchange rates and restrictions on
          repatriation of earnings;

     o    delays from customers or government agencies;

     o    dependence upon local suppliers in international markets;

     o    potentially adverse tax consequences resulting from operating in
          multiple jurisdictions with different tax laws; and

     o    an economic downturn in the countries in which we expect to do
          business.

A majority of our revenues are received in foreign currencies. Changes in
current exchange rates could adversely affect our business.

     We generate a majority of our revenues in currencies other than the U.S.
dollar, and thus are subject to fluctuations in exchange rates. We may become
subject to exchange control regulations that might restrict or prohibit the
conversion of our revenue into U.S. dollars. The occurrence of any such factors
could have a material adverse effect on our business, financial condition and
results of operations as well as our ability to service our dollar denominated
liabilities.


                                       14










                 INFORMATION CONCERNING SOLICITATION AND VOTING

Record Date; Outstanding Shares

     The board of directors has fixed the close of business on June 30, 2003 as
the record date for the determination of the holders of our common stock and
Series B Stock entitled to receive notice of and to vote at the annual meeting
or any adjournments or postponement of the annual meeting. Only stockholders of
record on the record date are entitled to receive notice of and to vote at the
annual meeting or any adjournments or postponement of the annual meeting.

     As of the record date, 10,169,972 shares of common stock were issued and
outstanding, which were held by approximately 234 holders of record, and 496,445
shares of Series B Stock were issued and outstanding, which were held by
approximately 14 holders of record (in each case without giving effect to the
proposed two-for-three reverse stock split).

     Each holder of common stock as of the record date is entitled to one vote
for each share of common stock then held by such stockholder on matters to be
acted upon at the annual meeting. Each holder of Series B Stock as of the record
date is entitled to one vote for each share of Series B Stock then held by such
holder on matters to be acted upon at the annual meeting with respect to which
holders of Series B Stock are entitled to vote.

Purpose of the Annual Meeting; Board Recommendation

     The purposes of the annual meeting are as follows:

     o    To consider and vote upon the proposal (a) to issue shares of our
          common stock to the holders of our Series C Stock issued to the former
          stockholders of Provo in connection with our acquisition of Provo, and
          (b) to issue shares of our common stock to the holders of our Series D
          Stock issued to certain of our executive officers and directors,
          certain Provo employees and other third parties in connection with the
          closing of the Provo acquisition ("Proposal 1");

     o    To consider and vote upon the proposal (a) to amend the certificate of
          designations pertaining to our Series B Stock to provide for the
          mandatory conversion of all outstanding Series B Stock upon the
          election of the holders of a majority of the outstanding Series B
          Stock, and (b) to effectuate the mandatory conversion of all the
          outstanding Series B Stock at a conversion ratio of six shares of
          common stock for each share of Series B Stock (four shares after
          giving effect to the proposed two-for-three reverse split of our
          common stock) ("Proposal 2");

     o    To consider and vote upon the proposal to amend our certificate of
          incorporation (a) to effect a two-for-three reverse stock split of our
          outstanding common stock, and (b) to increase the number of authorized
          shares of our common stock from 25,000,000 shares to 100,000,000
          shares ("Proposal 3");

     o    In the event Proposal 1 is approved, to consider and vote upon the
          proposal to amend our certificate of incorporation to change our name
          from Frontline Communication Corporation to Provo International, Inc.
          ("Proposal 4");

     o    To consider and vote upon the proposal to elect nine directors for a
          term of one year and until their successors are duly elected and
          qualified ("Proposal 5");

     o    To consider and vote upon the proposal to enter into a common stock 
          purchase agreement with Fusion Capital Fund II, LLC ("Proposal
          6");

     o    To consider and vote upon the proposal to ratify the appointment of
          BDO Hernandez Marron y Cia, S.C. as our independent auditors
          ("Proposal 7"); and

     o    To transact such other business as may properly come before the
          meeting or any adjournment or postponement thereof.


                                       15










     THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND UNANIMOUSLY RECOMMENDS
THAT THE STOCKHOLDERS VOTE FOR, PROPOSAL 1, PROPOSAL 2, PROPOSAL 3, PROPOSAL 4,
PROPOSAL 5, PROPOSAL 6 AND PROPOSAL 7.

Quorum; Vote Required

     A quorum of stockholders is necessary to hold a valid meeting. A quorum
will be present with respect to Proposal 1, Proposal 3, Proposal 4, Proposal 5,
Proposal 6 and Proposal 7 if at least a majority of the outstanding common stock
are represented by votes at the meeting or by proxy. A quorum will be present
with respect to Proposal 2 if at least a majority of the outstanding common
stock and a majority of the outstanding Series B Stock are represented by votes
at the meeting or by proxy. Votes will be counted by the inspector of election
appointed for the meeting, who will separately count "For" and "Against" votes,
abstentions and broker non-votes. Proxies marked as abstaining as well as broker
non-votes will be treated as "present" for purposes of determining a quorum for
the meeting. (A "broker non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that proposal and has not
received instructions with respect to that proposal from the beneficial owner
(despite voting on at least one other proposal for which it does have
discretionary authority or for which it has received instructions).

     Under the certificates of designations for the Series C Stock and the
Series D Stock, and under the AMEX rules, approval of the issuance of the common
stock upon conversion of the Series C Stock and the Series D Stock (Proposal 1)
requires the affirmative vote of a majority of the votes cast on the proposal by
the holders of the common stock, provided that the total votes cast on the
proposal represent over 50% of the outstanding common stock, which is the only
outstanding class of securities entitled to vote on the proposal.

     Under Delaware law, (i) the amendment of the certificate of incorporation
of designations pertaining to the Series B Stock to provide for the mandatory
conversion of all Series B Stock upon the election of the holders of a majority
of the Series B Stock requires the affirmative vote of the holders of a majority
of the outstanding shares of the Series B Stock and of the common stock, each
voting separately as a class and (ii) to effectuate the mandatory conversion of
all Series B Stock requires the affirmative vote of the holders of a majority of
the outstanding shares of the Series B Stock (Proposal 2).

     Under Delaware law, the affirmative vote of the holders of not less than a
majority of the outstanding shares of common stock is required to approve the
proposed amendments to the certificate of incorporation to effect a
two-for-three reverse split of the common stock and an increase in the number of
authorized shares of common stock from 25,000,000 shares to 100,000,000 shares
(Proposal 3).

     Under Delaware law, the affirmative vote of the holders of not less than a
majority of the outstanding shares of common stock is required to approve the
proposed amendments to the certificate of incorporation to change our name from
Frontline Communications, Inc. to Provo International, Inc. (Proposal 4).

     Under Delaware law, the nine nominees receiving the highest number of
affirmative votes of the shares of common stock present in person or represented
by proxy at the annual meeting and entitled to vote, shall be elected as
directors (Proposal 5).

     Under the AMEX rules, approval of the issuance of a number of shares of
common stock in excess of 20% of the number of outstanding shares of our common
stock to Fusion Capital Fund II, LLC (Proposal 6) requires the affirmative
vote of a majority of the votes cast on the proposal by the holders of the
common stock, provided that the total votes cast on the proposal represent
over 50% of the outstanding common stock, which is the only outstanding class
of securities entitled to vote on the proposal.

     Ratification of the selection of BDO Hernandez Marron y Cia, S.C. as our
independent auditors (Proposal 7) is not legally required. However, the board of
directors has determined that the affirmative vote of the majority of the votes
cast on the proposal by the holders of the common stock will constitute such
approval.

     Abstentions are counted as "present" for purposes of determining who is
entitled to vote on Proposal 1, Proposal 2, Proposal 3, Proposal 4, Proposal 5,
Proposal 6 and Proposal 7. Abstentions will have the effect of a vote AGAINST
Proposal 1, Proposal 2, Proposal 3, Proposal 4 and Proposal 6 (but will not have
any effect on the outcome of Proposal 5 or Proposal 7). Broker non-votes are
counted as "present" for purposes of determining who is entitled to vote. Broker
non-votes will have the same effect as a vote AGAINST Proposal 1, Proposal 2,
Proposal 3, Proposal 4 and Proposal 6, but will have no effect on the outcome of
the Proposal 5 or Proposal 7.


                                       16










Voting of Proxies

     If the accompanying proxy card is properly signed and returned to us and
not revoked before a vote is taken at the annual meeting, it will be voted in
accordance with the instructions indicated on the proxy card. If the proxy card
is signed and returned to us without indicating any voting directions, (i)
shares of common stock represented by the proxy will be voted FOR the issuance
of common stock upon conversion of the Series C Stock and the Series D Stock
(Proposal 1), FOR the amendment of the certificate of designations pertaining to
the Series B Stock to provide for the mandatory conversion of all Series B Stock
upon the election of the holders of a majority of the Series B Stock (Proposal
2), FOR the amendment of our certificate of incorporation to effect a
two-for-three reverse stock split of our outstanding common stock and to
increase the number of our authorized shares of common stock from 25,000,000
shares to 100,000,000 shares (Proposal 3), FOR the amendment of our certificate
of incorporation to change our name from Frontline Communications, Inc. to Provo
International, Inc. (Proposal 4), FOR the election of the nine director nominees
identified herein (Proposal 5), FOR the proposal to enter into a common stock
purchase agreement with Fusion Capital Fund II, LLC, and FOR the ratification of
the appointment of BDO Hernandez Marron y Cia, S.C. as our independent auditors
(Proposal 7); and (ii) shares of Series B Stock represented by the proxy will be
voted FOR the amendment of the certificate of designations pertaining to the
Series B Stock to provide for the mandatory conversion of all Series B Stock
upon the election of the holders of a majority of the Series B Stock and to
effectuate the mandatory conversion of all Series B Stock (Proposal 2).

     Under AMEX rules, brokers who hold shares in street name for customers have
the authority to vote such shares on Proposal 5 and Proposal 7 (but not Proposal
1, Proposal 2, Proposal 3, Proposal 4 or Proposal 6) if they do not receive
specific instructions from the beneficial owners. If you hold shares in street
name, please see the voting form provided by your broker for additional
information. We urge you to mark each applicable box on the proxy card or voting
instruction to indicate how to vote your shares.

     If you return to us a properly executed proxy card or voting instructions
and have abstained from voting on a particular matter, the common stock or
Series B Stock represented by the proxy or voting instructions will be
considered present at the annual meeting for purposes of determining a quorum,
but will not be considered to have been voted in favor of that matter.

     We are not aware of any business to be acted on at the annual meeting,
except as described in this document. If any other matters are properly
presented at the annual meeting, or any adjournment or postponement of the
annual meeting, the persons appointed as proxies or their substitutes will have
discretion to vote or act on the matter according to their best judgment and
applicable law unless the proxy indicates otherwise.

Authorization to Vote on Adjournment and Other Matters

     By signing the proxy, a stockholder authorizes the proxy holder to vote in
his discretion regarding any procedural motions that may come before the annual
meeting. For example, this authority could be used to adjourn the annual meeting
if we believe it is desirable to do so. Adjournment or other procedural matters
could be used to obtain more time before a stockholder vote in order to solicit
additional proxies or to provide additional information to our stockholders. To
the extent a stockholder intends to vote against the proposals to be submitted
at the annual meeting, such stockholder would have no incentive to vote in favor
of discretionary adjournment by the board of directors, which would allow us to
adjourn the annual meeting in order to solicit additional votes in favor of such
proposal. We have no plans to adjourn the annual meeting at this time, but we
intend to attempt to do so if we believe that doing so would promote stockholder
interests.

Revocability of Proxies

     Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. Proxies may be revoked by any of the
following actions:

     o    filing a written notice of revocation with our Secretary at our
          principal executive office (One Blue Hill Plaza, P.O. Box 1548, Pearl
          River, NY 10965);

     o    filing a properly executed proxy showing a later date with our
          Secretary at our principal executive office (One Blue Hill Plaza, P.O.
          Box 1548, Pearl River, NY 10965); or


                                       17










     o    attending the meeting and voting in person (attendance at the meeting
          will not, by itself, revoke the proxy).

Solicitation

     We will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of common stock beneficially owned
by others to forward to such beneficial owners. We may reimburse persons
representing beneficial owners of common stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, facsimile or personal
solicitation by our directors, officers or other regular employees.

Presence of Auditors

     Representatives of our auditors for the 2002 fiscal year, Goldstein Golub
Kessler LLP, and of Provo's auditors and our proposed auditors for the 2003
fiscal year, BDO Hernandez Marron y Cia, S.C., are expected to be present at the
annual meeting. They will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.


                                       18










                                   PROPOSAL 1

                   ISSUANCE OF COMMON STOCK UPON CONVERSION OF
                        SERIES C STOCK AND SERIES D STOCK

Introduction

     The background information necessary to understand fully this Proposal 1
and the reasons why Frontline is seeking stockholder approval of this proposal
are set forth above in the section captioned "Questions and Answers About
Proposals 1, 2 and 3". We urge you to read that background section carefully.

     Proposal 1 relates to:

     o    the issuance of shares of our common stock to the holders of our
          Series C Stock, which we issued to the former stockholders of Provo in
          connection with the Provo acquisition; and

     o    the issuance of shares of our common stock to the holders of our
          Series D Stock, which we issued to certain of our executive officers
          and directors, certain Provo employees and other third parties in
          connection with the closing of the Provo acquisition.

     On April 3, 2003, we acquired Provo for consideration consisting of 220,000
shares of our Series C Stock, and a $20,000,000 secured note (the "Secured
Note") which will be payable only if the stockholders fail to timely approve the
proposed issuance of common stock upon conversion of the Series C Stock. The
Series C Stock had a value of $6.6 million based on the closing price of the
common stock on January 24, 2003, the date we executed the stock purchase
agreement. In connection with our acquisition of Provo, we also issued 35,500
shares of our Series D Stock to certain of our executive officers and directors,
certain Provo employees and other third parties.

     Under the terms of the certificate of designations for the Series C Stock,
a copy of which is attached as Annex A, upon approval by our stockholders of
Proposal 1 and Proposal 3, all outstanding shares of Series C Stock will be
converted into 22,000,000 shares of common stock, which reflects a conversion
rate of 100 shares of common stock per share of Series C Stock (after giving
effect to the proposed two-for-three reverse stock split). Under the terms of
the certificate of designations for the Series D Stock, a copy of which is
attached as Annex B, upon approval by our stockholders of Proposal 1 and
Proposal 3, all outstanding shares of Series D Stock will be converted into
3,550,000 shares of common stock, which reflects a conversion rate of 100 shares
of common stock per share of Series D Stock (after giving effect to the proposed
two-for-three reverse stock split).

     If our stockholders do not approve Proposal 1 and Proposal 3 by the
Conversion Date, the Series C Stock will remain outstanding on a
non-convertible, non-voting basis, and the Secured Note issued to the former
Provo stockholders will become due and payable in accordance with its terms. As
described in more detail below under "Proposal 1 -- Secured Note Rights and
Preferences," beginning on page 22, the Secured Note has economic terms that we
believe are considerably less favorable to us than the terms of our common
stock.

     If our stockholders do not approve Proposal 1 and Proposal 3 by the
Conversion Date, the Series D Stock will remain outstanding on a
non-convertible, non-voting basis, but no other consideration will accrue to the
holders of the Series D Stock.

American Stock Exchange Requirements

     The board of directors proposes to issue 22,000,000 shares of common stock
upon conversion of all outstanding shares of Series C Stock issued in connection
with the Provo acquisition, and to issue 3,550,000 shares of common stock upon
conversion of all outstanding shares of Series D Stock issued in connection with
the Provo acquisition (in each case after giving effect to the proposed
two-for-three reverse stock split), and asks for your approval for the issuance
in accordance with the rules of the AMEX.

     The AMEX rules require us to obtain stockholder approval prior to approving
the listing of additional stock to be issued in connection with an acquisition
of the stock or assets of another company if the issuance of common stock could
result in an increase in our outstanding common stock of 20% or more. Our
proposed issuance of shares of common stock upon conversion of the Series C
Stock and Series D Stock falls under this rule because the issuance of such
shares will result in an increase in outstanding common stock of more than 20%.


                                       19










Interests of Certain Persons in Approval of Series C Stock and Series D Stock
Conversion

     Interests in Frontline's Securities

     In connection with our acquisition of Provo, we issued 220,000 shares of
our preferred stock to the former stockholders of Provo, Ventura Martinez del
Rio, Sr. and Ventura Martinez del Rio, Jr., who became officers and directors of
Frontline upon our closing of the Provo acquisition. If our stockholders do not
approve the conversion of the Series C Stock by the Conversion Date, the Series
C Stock will remain outstanding on a non-convertible, non-voting basis, the
purchase price of the Provo acquisition will be increased, and the $20,000,000
Secured Note issued to these two former Provo stockholders will become due and
payable in accordance with its terms. For additional information concerning the
Secured Note, see "Proposal 1 -- Secured Note Rights and Preferences." In
connection with our acquisition of Provo, we also issued 35,550 shares of our
Series D Stock to certain of our executive officers and directors, certain other
Frontline and Provo employees (none of whom is an officer or director of
Frontline), and to other third parties.

     The following table identifies the persons to whom the Series C Stock and
Series D Stock were issued, the number of such shares issued to each such
person, and the number of shares of common stock into which such shares of
Series C Stock and Series D Stock will be converted upon approval of Proposal 1
and Proposal 3 by our stockholders (after giving effect to the proposed
two-for-three reverse stock split):




                                   Number of        Number of         Number of
            Name                Series C Shares   Series D Shares   Common Shares
            ----                ---------------   ---------------   -------------
                                                             
Ventura Martinez del Rio, Sr.       165,000                 0         16,500,000
Ventura Martinez del Rio, Jr.        55,000                 0          5,500,000
Stephen J. Cole-Hatchard                  0            10,000          1,000,000
Nicko Feinberg                            0            10,000          1,000,000
Amy Wagner-Mele                           0             1,000            100,000
Vasan Thatham                             0             1,000            100,000
Other employees                           0             5,500            550,000
Other parties                             0             8,000            800,000
                                    -------            ------         ----------
Total                               220,000            35,500         25,550,000



     We issued the Series D Stock to our executive officers and directors, and
to the Provo employees, to provide them with an incentive to continue their
service on behalf of Frontline and Provo following the completion of the Provo
acquisition. We issued the Series D stock to the third parties to compensate
them for the services they provided in connection with arranging for and
assisting with the completion of the Provo acquisition.

     Employment Agreements

     The board of directors has approved the adoption of employment agreements
between Frontline and/or its affiliates and Messrs. Martinez del Rio, Sr.,
Cole-Hatchard, Martinez Del Rio, Jr., Feinberg and Thatham, that provide for an
annual base compensation of not less than $150,000, $150,000, $120,000, $120,000
and $115,000, respectively. The agreements will provide for certain base salary
increases in the event that we complete an equity financing in excess of
$3,000,000, and for certain bonuses in the event that we achieve certain revenue
objectives. The agreements will also allow for such bonuses as the board of
directors may, in its sole discretion, from time to time determine. The
employment agreements with Messrs. Martinez Del Rio, Sr., Cole-Hatchard,
Martinez Del Rio, Jr., Feinberg and Thatham, will expire in April 2005 subject
to automatic successive one-year renewals unless either we or the employee gives
notice of intention not to renew the agreement. With the exception of Mr.
Martinez del Rio Sr., the employment agreements will provide for employment on a
full-time basis, and each of the agreements will contain a provision that the
employee will not compete or engage in a business competitive with our current
or anticipated business during the term of the employment agreement and for a
period of two years thereafter.

     All of the employment agreements will provide that the employees shall be
paid additional compensation equal to 295% of their annual base salary in the
event of a change of ownership or effective control of our company (as defined
in the agreements). The anticipated change in control as a result of the
acquisition of Provo will not trigger the additional compensation clauses of the
employment agreements.


                                       20










     In the event our stockholders fail to approve the conversion of the Series
C Stock as requested hereby, the employment agreements with Messrs. Martinez del
Rio, Sr. and Martinez del Rio, Jr. will terminate 90 days from the date that the
stockholders fail to approve such conversion.

     Bridge Loan Agreement

     As a condition precedent to the closing of the Provo acquisition and in
order to finance certain of our expenses relating to the Provo acquisition, on
April 2, 2003, we entered into a bridge financing whereby we borrowed $550,000
from IIG Equity Opportunities Fund, Ltd., an unaffiliated lender. The loan is
evidenced by a secured promissory note. On June 25, 2003, we amended this
agreement to extend its due date from July 2, 2003 to August 1, 2003. For a
further description of the terms of the bridge loan see "The Acquisition
Transaction - Material Terms of the Stock Purchase Agreement and other
Transaction Documents" beginning on page 29.

     Two of our executive officers and directors, Nicko Feinberg and Stephen J.
Cole-Hatchard, pledged shares of our common stock owned by them to IIG Equity as
additional collateral securing its bridge loan to us. In addition, Mr.
Cole-Hatchard has personally guaranteed the repayment of the bridge loan and
mortgaged certain personal real estate to IIG Equity as additional collateral
for the bridge loan. Mr. Cole-Hatchard's personal guarantee is limited to the
assets mortgaged by him and IIG Equity has no-recourse against his other assets.

     Concurrently with the execution of the bridge loan agreement, Frontline and
Provo executed a contribution agreement, whereby each company agreed that it
would be responsible for repaying 50% of the bridge loan. In the event either
Provo or Frontline pays more than its proportionate 50% of the bridge loan, such
payor shall be subrogated in the rights of IIG Equity to collect from the other
party up to its proportionate share. The contribution agreement does not grant
Provo any subrogation rights against the collateral pledged by Mr.
Cole-Hatchard. The contribution agreement will only become effective at the
earlier of the Conversion Date or if our stockholders fail to approve Proposal 1
and Proposal 2 as requested herein.

     In addition, concurrently with the execution of the bridge loan agreement,
Frontline, Ventura Martinez del Rio, Sr. and Ventura Martinez del Rio, Jr.
entered into a lien subordination agreement whereby the former stockholders of
Provo agreed to subordinate the priority of any liens they may have over the
assets of Frontline, to those liens granted to IIG Equity under the bridge loan
agreement.

Series C Stock Rights and Preferences

     The Series C Stock has designations, voting rights, preferences,
limitations and special rights as set forth in its Certificate of Designations,
filed with the Secretary of State of Delaware on April 3, 2003. The following is
a summary of the material terms of the Series C Stock. You should read the
complete Certificate of Designations which is included as Annex A to this proxy
statement.

     Dividends. The holders of Series C Stock are not entitled to receive any
dividends.

     Liquidation Preference. Each share of Series C Stock has a preference over
our common stock in all distributions upon liquidation. The liquidation
preference for the Series C Stock is $0.01 per share of Series C Stock.

     Conversion Rights. Upon obtaining the required stockholder approval, all
outstanding shares of Series C Stock will be converted into 22,000,000 shares of
common stock, at a conversion rate of 100 per share (after giving effect to the
proposed two-for-three reverse stock split).

     Voting Rights. The holders of Series C Stock are entitled to vote as a
separate class on certain corporate actions, including, changes to our
certificate of incorporation and by-laws that would adversely affect the Series
C Stock, amendments to the Certificates of Designations for the Series C Stock
and the creation of senior or equivalent shares of capital stock. On such
matters, and any other matters on which the holders of Series C Stock are
entitled under law or our certificate of incorporation to vote as a separate
class, each holder is entitled to one vote for each share of Series C Stock
held.

     Negative Covenants. Prior to the Conversion Date, we may not do any of the
following: (i) authorize any merger or certain other business combination
transactions; (ii) take any action that would result in our voluntary or


                                       21










involuntary dissolution or winding-up; (iii) amend, repeal or add any provision
to our certificate of incorporation or by-laws if it would materially adversely
effect the holders of Series C Stock; (iv) issue any options, warrants or other
securities convertible into or exchangeable for shares of our capital stock
ranking senior to the Class C Stock; (v) incur, refinance or amend the terms of
any indebtedness or any other obligation for the payment of money in an
aggregate amount of $1,000,000 or more; or (vi) enter into any agreement for the
sale of our securities or any capital financing transaction in which we issue
capital stock or other securities at price per share (or effective per share
price) lower than $1.50.

Secured Note Rights and Preferences

     If our stockholders do not approve Proposal 1 and Proposal 2 by the
Conversion Date, the Series C Stock will remain outstanding on a
non-convertible, non-voting basis and the Secured Note issued to the former
Provo stockholders will become due and payable in accordance with its terms. The
following discussion is a summary of the material terms of the Secured Note. You
should read the complete form of Secured Note, a copy of which is included as
Annex C to this proxy statement.

     The Secured Note is a $20,000,000 principal amount promissory note that we
issued to the former Provo stockholders in connection with the Provo
acquisition, which will become payable only if the Series C Stock is not
converted into common stock on or by the Conversion Date. The Secured Note will
bear interest at the rate of 8% per annum from the Conversion Date, and will
become due and payable in full on the fifteenth day following the earlier of (i)
the Conversion Date, if the stockholders have not approved Proposal 1 and
Proposal 2 by that date; or (ii) the failure of our stockholders to approve the
conversion of the Series C Stock as requested in this proxy solicitation. The
Secured Note is secured by substantially all of our assets, including the
capital stock of Provo. The Secured Note was issued and delivered on April 3,
2003.

     We believe that the issuance and eventual right to collect under the
Secured Note is considerably less favorable to us and our stockholders than the
issuance of common stock because of the following reasons:

     o    The Secured Note will be due and payable shortly after the Conversion
          Date;

     o    The principal amount of the Secured Note is a significant liability;

     o    The fact that the former stockholders of Provo have a lien on
          substantially all of our assets, including the capital stock of Provo;
          and

     o    In the event that we are unable to pay the Secured Note as it becomes
          due, the former stockholders of Provo may initiate actions against us,
          which may include foreclosure on their collateral consisting of
          substantially all of our assets.

Series D Stock Rights and Preferences

     The Series D Stock has designations, voting rights, preferences,
limitations and special rights as set forth in its Certificate of Designations,
filed with the Secretary of State of Delaware on April 3, 2003. The following is
a summary of the material terms of the Series D Stock. You should read the
complete Certificate of Designations which is included as Annex B to this proxy
statement.

     Dividends. The holders of Series D Stock are not entitled to receive any
dividends.

     Liquidation Preference. Each share of Series D Stock has a preference over
our common stock in all distributions upon liquidation. The liquidation
preference for the Series D Stock is $0.01 per share of Series C Stock.

     Conversion Rights. Upon obtaining the required stockholder approvals, all
outstanding shares of Series D Stock will be converted into 3,550,000 shares of
common stock, a conversion rate of 100 per share (after giving effect to the
proposed two-for-three reverse stock split).

     Voting Rights. The holders of Series D Stock are entitled to vote as a
separate class on certain corporate actions, including, changes to the
Certificate of Designations for the Series D Stock that would adversely affect
the Series D Stock. On such matters, and any other matters on which the holders
of Series D Stock are entitled under


                                       22










law or our certificate of incorporation to vote as a separate class, each holder
is entitled to one vote for each share of Series D Stock held.

Required Vote

     Under certificate of designations for the Series C Stock and the Series D
Stock, and under the AMEX rules, approval of the issuance of the common stock
upon conversion of the Series C Stock and the Series D Stock (Proposal 1)
requires the affirmative vote of the majority of the votes cast on the proposal,
provided that the total votes cast on the proposal represent a majority of the
outstanding common stock, which is the only outstanding class of securities
entitled to vote on the proposal. Abstentions and broker non-votes will have the
same effect as a vote against Proposal 1.

Board Recommendation

     The board of directors unanimously recommends a vote FOR Proposal 1.


                                       23










                           THE ACQUISITION TRANSACTION

General

     The Provo acquisition was approved by the board of directors prior to its
consummation. No stockholder approval of the Provo acquisition was or is
required under applicable law or under our organizational documents. The Provo
acquisition is effective regardless of whether the stockholders approve Proposal
1. We are seeking stockholder approval of Proposal 1 to satisfy the stockholder
approval requirements of the AMEX.

Background of the Provo Acquisition

     During the period between October 1998 and September 2000, we acquired 18
companies, and as a result grew our monthly revenue from approximately $30,000
to approximately $400,000 at December 31, 2002. Marketplace and technological
changes during 2000 caused us to revise our strategy and restructure our
operations during the last two quarters of 2000, in 2001 and 2002. We refined
our product offerings to exclude numerous low margin products and services as
well as those which were no longer in high demand, and raised our standard
pricing for dial up customers. During the last quarter of 2000, we commenced a
restructuring program designed to consolidate our operations and improve
cost-effectiveness, reduce personnel to leverage our manpower skills, and
upgrade our access network infrastructure. As part of our restructuring program,
during the second half of 2002, we began analyzing the possibility of looking
for a reverse merger or other business combination candidate.

     In early October 2002, our Chief Executive Officer, Stephen Cole-Hatchard,
contacted Gary R. Morris, Chairman and Chief Executive Officer of Kiboga
Systems, Inc. ("Kiboga"), a privately held software development company
headquartered in Dallas, Texas, about the possible combination of Frontline,
Kiboga and Provo. On October 10, 2002, Mr. Cole-Hatchard and Mr. Morris of
Kiboga had an initial meeting during which a possible combination transaction
was discussed in concept.

     On October 10, 2002, Frontline and Kiboga entered into a confidentiality
agreement regarding a possible transaction between the parties. Promptly
following the execution of the confidentiality agreement, the parties began
negotiating a definitive acquisition agreement and related agreements. On
November 22, 2002, Kiboga delivered an initial draft of the stock purchase
agreement to Frontline and Provo. Between November 22, 2002 and December 23,
2002, the parties exchanged multiple revised drafts of the stock purchase
agreement and related agreements and continued to negotiate the stock purchase
agreement and related agreements.

     On December 23, 2002, Frontline, Kiboga, Provo, Ventura Martinez del Rio,
Sr. and Ventura Martinez del Rio Jr., entered into a stock purchase agreement,
which provided, among other things, that the parties would conduct their
respective due diligence reviews before January 24, 2003. During the period from
January 8 to 10, 2003, representatives of Frontline, Kiboga and Provo met in
Dallas, Texas to conduct the due diligence review. On January 17, 2003, counsel
for Kiboga delivered a letter to Frontline and Provo, terminating Kiboga's
participation in the stock purchase agreement.

     On January 18, 2003, Mr. Cole-Hatchard and Mr. Martinez del Rio, Jr. held
conversations about continuing the acquisition without Kiboga. Between January
18, 2003 and January 24, 2003 Provo and Frontline continued negotiating a new
acquisition transaction. On January 24, 2003, Frontline, Provo, Ventura Martinez
del Rio, Sr. and Ventura Martinez del Rio, Jr. entered into a new stock purchase
agreement, which provided that the closing would occur upon the satisfaction or
waiver of certain conditions precedent. The Provo acquisition was announced
publicly on January 24, 2003.

     On March 13, 2003, the board of directors unanimously approved the Provo
acquisition and related transactions and authorized the execution and delivery
of the stock purchase agreement. On March 13, 2003, the parties executed all
ancillary documents to the stock purchase agreement and placed the documents in
escrow pending the satisfaction of certain conditions precedent to the
acquisition. On April 3, 2003, Frontline, Provo, Ventura Martinez del Rio Sr.
and Ventura Martinez del Rio, Jr. executed and delivered the amended and
restated stock purchase agreement. The Provo acquisition was completed on April
3, 2003, and was announced publicly on April 7, 2003.

Factors Considered by Our Board of Directors


                                       24










     In approving the Provo acquisition, the board of directors consulted with
management as well as our outside financial advisors and legal counsel, and
considered the following factors as well as the factors listed under "The
Acquisition Transaction -- Reasons for the Transaction" beginning on page 29:

     (1)  The business, operations, financial condition, earnings and prospects
          of each of Frontline and Provo; in making its determination, the board
          of directors took into account its familiarity with, and the results
          of our due diligence review of Provo's operations, financial
          condition, earnings and prospects;

     (2)  The fact that our ability to grow without access to capital or a
          substantial acquisition transaction was severely limited;

     (3)  The anticipated financial impact of the proposed transaction on our
          future financial performance;

     (4)  The fact that our viability largely depended on finding a suitable
          acquisition target for a reverse merger or other business combination
          and the fact that there were practically no alternatives to pursuing
          an acquisition of or a business combination or joint venture with an
          entity other than Provo, and the board of directors' conclusion that a
          transaction with Provo was feasible and was expected to yield greater
          benefits than failing to act at that time;

     (5)  The dilutive effect of the issuance of additional stock as
          consideration for the Provo acquisition;

     (6)  The fact that Ventura Martinez del Rio, Sr. and Ventura Martinez del
          Rio, Jr. would jointly hold, on a fully diluted basis, approximately
          64.1% of our outstanding common stock after the conversion of the
          Series C Stock issued to them in the acquisition;

     (7)  The analyses and presentations of GunAllen Financial, Inc., and
          GunAllen Financial's written opinion to the effect that, as of April
          3, 2003, and based upon and subject to the various factors and
          assumptions set forth in its opinion, the consideration to be paid by
          us in the Provo acquisition was fair from a financial point of view to
          our stockholders;

     (8)  The challenges of combining the businesses and cultures of two
          corporations of this size and the attendant risk of not achieving the
          expected cost savings, revenue and business synergies, and of
          diverting management focus and resources from other strategic
          opportunities and operational matters for an extended period of time;

     (9)  The fact that we would be more highly leveraged because the Provo
          acquisition was financed in part through the incurrence of additional
          indebtedness; and

     (10) The likelihood of consummation of the Provo acquisition.

     In view of the wide variety of factors considered in connection with its
evaluation of the Provo acquisition and the complexity of these matters, the
board of directors did not find it useful to and did not attempt to quantify,
rank or otherwise assign relative weights to these factors. The board of
directors relied on the experience and expertise of GunAllen Financial, our
financial advisors, for quantitative analysis of the financial terms of the
Provo acquisition. See "The Acquisition Transaction -- Opinion of GunAllen
Financial, Inc." beginning on page 32. In addition, the board of directors did
not undertake to make any specific determination as to whether any particular
factor, or any aspect of any particular factor, was favorable or unfavorable to
the board of directors' ultimate determination, but rather the board of
directors conducted an overall analysis of the factors described above along
with the factors listed under "The Acquisition Transaction -- Reasons for the
Transaction" beginning on page 29, including thorough discussions with and
questioning of our management and financial, legal and accounting advisors. In
considering the factors described above and under "The Acquisition Transaction
-- Reasons for the Transaction," individual members of the board of directors
may have given different weight to different factors.

     The board of directors considered all these factors as a whole, and overall
considered the factors to be favorable to and to support its determination.
However, the general view of the board of directors was that items (5), (6),
(8), and (9) above were unfavorable factors relating to the transaction, and
that the other reasons and factors described above and under "The Acquisition
Transaction -- Reasons for the Transaction" on page 29 were generally considered
favorable. The board of directors determined that, notwithstanding the
unfavorable factors


                                       25










noted above, the favorable factors outweighed the unfavorable factors, and as a
result the board of directors voted to approve the Provo acquisition.

Description of Frontline's Business

     We are a regional Internet service provider ("ISP") providing Internet
access, web hosting, website design, and related services to residential and
small business customers throughout the Northeast United States and, through a
network partnership agreement, Internet access to customers nationwide.

     Primarily through 18 acquisitions, we grew our monthly revenue from $30,000
as of October 1998 to approximately $400,000 as of December 31, 2002. During
that same period, we expanded our owned Internet access geographic footprint
from the New York/New Jersey metropolitan area, to a region that now includes
Delaware, Eastern Pennsylvania and Northern Virginia. At December 31, 2002, we
owned and operated 12 points-of-presence ("POPs") which, when combined with
1,100 POPs licensed from third parties, provide us with the capability to serve
over 75% of the U.S. population.

     During 2002, we concentrated our efforts and resources primarily on
restructuring our operations to reduce costs, increase operating efficiency and
improve customer service. As a result of our restructuring, we reduced our staff
from approximately 70 employees at March 2001 to 31 as of April 1, 2003, and
closed two regional offices, consolidating those functions into our Pearl River,
New York headquarters.

     We streamlined our product offerings, eliminating certain low margin
products and services, and added a broadband one-way satellite Internet access
product line to our group of services. We also standardized our product pricing,
and raised the monthly rates to most of our dial-up access customers to between
$17.95 and $19.95 per month, depending on the term of service purchased.

     We were formed during February 1997 as a Delaware corporation under the
name Easy Street Online, Inc. We changed our name to Frontline Communications
Corporation in July 1997. Our principal executive offices are located at One
Blue Hill Plaza, Pearl River, New York 10965, and our telephone number is (845)
623-8553. Our corporate websites are located at www.frontline.net and
www.fcc.net. Information on these Websites is not part of this proxy statement.
Unless the context indicates otherwise, the terms "Frontline," "we," "our," "the
Company" and "us" in this proxy statement include the operations of Frontline
Communications Corporation and its wholly owned subsidiaries, WowFactor, Inc.,
FNT Communications Corp., and CLEC Communications Corp.

Description of Provo's Business

     General

     Provo was formed in October 1995 by Ventura Martinez Del Rio, Sr., as a
private company headquartered in Mexico City. Provo was formed to distribute
prepaid (Ladatel) public telephone cards for Telefonos de Mexico, S.A.
("Telmex"), which were introduced in 1995. Telmex is the dominant
telecommunications provider in Mexico. Provo quickly became the leading
distributor of Ladatel cards and has maintained its leading position, which
currently stands at approximately 7% of the nationwide market. Provo also
distributes Multifon prepaid landline telephone time provided by Telmex and
prepaid Digital PCS cellular airtime provided by Radiomovil Dipsa, S.A. de C.V.
("Telcel"). Telcel is the dominant provider of cellular airtime in Mexico.

     Provo rapidly grew its sales of prepaid calling time to more than $101
million in 2002. Currently, Telcel airtime sales represent about 30% of Provo's
total annual sales, up significantly from 10% in 2000. Telcel airtime is
expected to represent an increasing proportion of Provo's sales as Ladatel sales
have begun to level off.

     Provo's principal office is located at Quintana Roo 28, Colonia Roma Sur,
06760, Mexico City, Mexico, and its telephone number is 011 52 55 5264-6442.

     Products

     The purpose of the services that Provo Mexico currently resells in Mexico
is to allow individuals who either do not own a land line phone or cell phone or
are not able to enter into continuous service contracts for these services, to
make calls on an as-needed basis, in a convenient and affordable manner.


                                       26










     Telmex calling time is offered via Ladatel cards in increments of 30, 50
and 100 pesos. Calling time is stored in a simple, single-purpose smart chip and
"burns off" as it is used. Mechanisms housed within public telephones charge
used calling time against the electronic balance stored in the card until no
calling time remains. At this point, a new card must be purchased. Prior to the
advent of these calling cards in 1995 in Mexico, public phones were coin-based.
Such coin-based phones often broke down or were the subject of significant theft
problems. The prepaid card program implemented by Telmex largely has remedied
these problems.

     Prepaid Multifon calling time is offered via personal identification number
(PIN)-based access. Multifon time is sold to groups of residents who share a
common phone in a building such as an apartment building.

     Telcel calling time is also offered via PIN-based access. Telcel calling
time is sold in increments of 100, 200, or 500 pesos. Users must own or share a
phone to use this service. A PIN must be entered prior to making the first call.
A central switch maintained by Telcel tracks remaining calling time. Users must
repurchase a new block of time with a new PIN every time they exhaust their
prepaid cellular calling time.

     Description of Commissions

     Provo has relied on Telmex to finance much of its sales growth over the
past eight years, through its provision of a credit line to Provo. Telmex
requires all of its distributors to pay for all resold calling time using cash
or their credit line with Telmex when it is ordered. Various surplus properties
owned by Provo, its principals and its business partners have been pledged to
guarantee Provo's credit lines with Telmex.

     The average discount Provo receives related to purchases of minutes from
Telmex using credit is approximately 10.8% (credit-based discounts for 30-, 50-
and 100-peso cards range from 10.0% to 12.0%). This compares to an average
discount rate of approximately 13.8% related to purchases of minutes paid for
entirely with cash (cash-based discounts for 30-, 50- and 100-pesos cards range
from 13.0% to 15.2%). Starting on March 10, 2003, Provo effectively stopped
purchasing calling cards using its credit lines with Telmex. All of Provo's
purchases from Telmex are currently paid for in cash. The shift from
credit-based purchases to cash-based purchases has increased Provo's profit
margins on the products it purchases from Telmex, however its revenue from these
products has and will continue to decrease due to Provo's current cash
constraints.

     Provo allows its external agent, distributor and point of sale partners to
retain combined commissions or discounts that typically range from 8% to 9%.
Provo pays its internal sales team members commissions of 3% to 5%. Its
distributor network is responsible for collecting approximately 50% of card sale
proceeds and remitting the proper net proceed amounts to Provo within 21 days of
taking delivery of new cards. The other half of Provo's sales are collected
directly by Provo or remitted to Provo via daily deposits by Provo's agents to
company-owned bank accounts. Provo has established strict remittance rules to
ensure that the distributors to whom it extends credit will pay all amounts owed
to Provo on a timely basis.

     Provo's distribution network includes several large retail chains,
including Wal-Mart, Carrefour and Office Max. In addition, Provo distributes its
cards in convenience stores, drug stores, restaurants, lottery stands, newspaper
and magazine stands and other general stores.

     Competition

     Approximately 140 distributors sell prepaid calling time purchased from
Telmex and Telcel in Mexico. Provo currently maintains the largest market share
position for prepaid calling time in Mexico, at approximately 7%. The next two
largest competitors that sell prepaid calling time in Mexico are Tarjetas Del
Noreste and DiCasa, each with a market share position of approximately 5% to 6%.
Telmex has attempted to curb the size of Provo in the past, by converting
sub-distributors of Provo to direct distributors for Telmex. In these instances,
Telmex has agreed to pay Provo royalties to compensate Provo for the migration
of its sub-distributors upstream.


                                       27










     Subsidiaries

     Provo currently operates as a group of seven affiliated companies. Telmex
required Provo Mexico to form some of the entities because of its dominant
presence in certain markets. On March 31, 2003, Provo acquired from members of
the Martinez del Rio family, the controlling majority of the capital stock of
the following subsidiaries: FS Provo, S.A. de C.V.; Proyecciones y Ventas
Organizadas del D.F., S.A. de C.V.; Proyecciones y Ventas Organizadas de
Occidente, S.A. de C.V.; Tilgo, S.A. de C.V.; Tarnor, S.A. de C.V. and PTL
Administradora, S.A. de C.V. Provo's audited financial statement results include
the combined total of each these companies' results, as an affiliated group.

     In October 2002, Provo formed Provo US, Inc., a Delaware corporation
wholly-owned by Provo. Provo US is currently a shell company with no operations.
It is expected that Provo US will be used for any new projects that Provo may
initiate in the United States.

     Employees

     Provo currently has no direct employees. Provo subcontracts personnel
services from SAPROV, S. C, an affiliated company. Provo currently receives from
SAPROV, S.C. services of approximately 135 full-time employees. In addition,
Provo has a network of 52 independently-owned distributorships that collectively
employ more than 400 sales people. Provo, in conjunction with its distributors,
has developed an extensive distribution network that includes more than 20,000
point-of-sale locations.

     Properties

     Provo's executive offices are located in Mexico City, Mexico where Provo
uses approximately 7,700 square feet of office space. Provo's executive offices
were given to Telmex as part of the Telmex settlement described below. Until
September 9, 2003 Provo may use the executive offices free of rent.

     Provo also leases approximately 6,000 square feet of office space in Mexico
City, Mexico, where Provo houses its accounting and human resources departments.
The lease expires on August 31, 2005 and the annual rent is 336,000 pesos
($31,758 at the current exchange rate). Unless otherwise noted, all exchange
rates used herein are made at the official exchange rate on June 19, 2003 equal
to 10.58 pesos for each $1.

     In addition, Provo leases small offices in 16 cities throughout Mexico
where it maintains regional sales and distribution offices. Provo's regional
offices are located in the following Mexican cities: Monterrey, Nuevo Leon;
Torreon, Coahuila; Monclova, Coahuila; Chihuahua, Chihuahua; Los Mochis,
Sinaloa; Guamuchil, Sinaloa; Navojoa, Sonora; Ciudad Obregon, Sonora; Agua
Prieta, Sonora; Durango, Durango; Tepic, Nayarit; Jalapa, Veracruz; Cordoba,
Veracruz; Veracruz, Veracruz; Teziutlan, Puebla; and Queretaro, Queretaro. The
aggregate annual rent for these leases is approximately $39,000.

     Provo's subsidiary, FS Provo, S.A. owns approximately 946 acres of forest
land in El Chamal, Tamaulipas, Mexico. The land has been pledged to Telmex to
secure part of Provo's credit lines with Telmex. In addition, Provo and its
subsidiaries Proyecciones y Ventas Organizadas del D.F., S.A. de C.V., F.S.
Provo, S.A. de C.V. and Tilgo, S.A. de C.V., own seven pieces of forest land
totaling approximately 605 acres in San Gabriel, San Luis Potosi, Mexico. This
land also has been pledged to Telmex to secure part of Provo's credit lines with
Telmex.

     Telmex Settlement

     In order to significantly enhance its operating margins and to position
itself for renewed sales growth, on March 10, 2003, Provo entered into a
settlement agreement with Telmex, whereby Provo transferred five non-revenue
generating properties to Telmex in exchange for offsets to its credit lines with
Telmex for 46,650,504 pesos ($4,409,310 at the current exchange rate). The
Telmex settlement agreement also provides for the transfer to Telmex of Provo's
corporate headquarters in Mexico City. The Telmex settlement agreement converted
the balance of Provo's credit line with Telmex into a number of term loans with
varying re-payment schedules. Under the settlement agreement, a payment in the
principal amount of 40,000,000 pesos ($3,780,718 at the current exchange rate)
due and payable on or before September 9, 2003. This payment bears interest at a
variable rate equal to the Mexican Interbank Equilibrium Rate multiplied by a
factor of 1.3; the current interest rate is approximately 7.8%


                                       28










per annum. Finally, the settlement agreement provides for 54 monthly payments of
746,526 pesos each ($70,560 at the current exchange rate), which will be due and
payable by Provo to Telmex commencing on July 10, 2003 and continuing until
January 10, 2008. The monthly payments bear interest at a variable rate equal to
the Mexican Interbank Equilibrium Rate multiplied by a factor of 1.3; the
current interest rate is approximately 7.8% per annum.

Reasons for the Transaction

     We believe that the Provo acquisition will enhance our potential to realize
improved long-term operating results and to achieve a stronger financial
position. We believe that the Provo acquisition will have a number of potential
benefits, including the following:

     o    Provo brings significant yearly revenues and strong operating profits.

     o    The transaction will increase our ability to participate in
          international transactions and allow us to expand our service
          offering.

     o    The transaction will enhance our ability to raise cash, which has been
          inhibited by the adverse market conditions for technology and Internet
          companies prevailing during the past 24 months.

     o    The transaction will increase our profile as a communications company.

     The foregoing discussion of the reasons for the Provo acquisition is not
intended to be exhaustive. In view of the variety of factors considered in
connection with the Provo acquisition, we did not quantify or otherwise assign
relative weights to the specific factors considered in reaching our
determinations.

No Vote Required; No Appraisal Rights

     The board of directors unanimously approved the Provo acquisition on March
13, 2003 and ratified the acquisition on April 3, 2003. No stockholder vote was
required for the Provo acquisition to be completed and it was consummated on
April 3, 2003. Under Delaware law, our stockholders do not have any "dissenters'
rights" or rights to an appraisal of the value of their shares in connection
with the Provo acquisition.

Material Terms of the Stock Purchase Agreement and other Transaction Documents

     Stock Purchase Agreement

     The following is a brief summary of the material terms of the amended and
restated stock purchase agreement, dated as of April 3, 2003, as amended, by and
among Frontline, Provo, Ventura Martinez del Rio, Sr. and Ventura Martinez del
Rio, Jr. The complete text of the stock purchase agreement, which is filed as an
exhibit to our Current Report on Form 8-K filed with the Securities and Exchange
Commission on April 18, 2003, together with the addendum thereto is filed as an
exhibit to our Current Report on Form 8-K/A, filed with the Securities and
Exchange Commission on May 6, 2003, is incorporated by reference into this proxy
statement.

     On April 3, 2003, we acquired Provo for consideration consisting of 220,000
shares of our Series C Stock, valued at $6.6 million based on the closing price
of the common stock on January 24, 2002, the date we executed the stock purchase
agreement. In connection with our acquisition of Provo, we also issued 35,500
shares of our Series D Stock to certain of our executive officers and directors,
certain Provo employees and other third parties. For information concerning the
parties to whom the Series C Stock and Series D Stock was issued, see "Proposal
1 -- Terms of the Series C Stock" and "-- Terms of the Series D Stock."

     The stock purchase agreement contained customary representations and
warranties from the parties relating, among other things, to their organization,
capitalization, corporate power and authority, financial statements, material
contracts, absence of undisclosed liabilities and conflicts, litigation, changes
in control, and contracts with respective affiliates. These representations and
warranties survive until April 3, 2005. The respective obligations of the
parties to consummate the Provo acquisition were conditioned on the satisfaction
or occurrence of certain closing conditions, including, receipt of regulatory
approvals, receipt of proceeds from a bridge loan for no less than $550,000,
receipt of opinions of counsel, absence of material litigation, absence of any
material adverse change in Provo, accuracy of representations and warranties,
and performance of all material obligations required to be performed by the
respective parties. In addition, the stock purchase agreement required us to
cause Messrs.


                                       29










Martinez del Rio, Sr., Martinez del Rio, Jr. and Miguel Madero to be named to
the board of directors. On April 3, 2003, all of the closing conditions set
forth in the stock purchase agreement were satisfied or waived, and the Provo
acquisition was consummated.

     Under the terms of the stock purchase agreement, we are entitled to
indemnification from the former stockholders of Provo under certain limited
circumstances, including the following:

     o    certain inaccuracies in, or breaches of, representations and
          warranties by made Provo, Ventura Martinez del Rio, Sr. and Ventura
          Martinez del Rio, Jr. in the stock purchase agreement; and

     o    breaches of covenants of Ventura Martinez del Rio, Sr. and Ventura
          Martinez del Rio, Jr. contained in the stock purchase agreement.

We may not seek indemnification until we have suffered damages of at least
$100,000. Our ability to recover under indemnification claims is limited to an
aggregate of $500,000.

     In addition, we have agreed to indemnify the former stockholders of Provo
under certain limited circumstances, including the following:

     o    certain inaccuracies in, or breaches of, representations and
          warranties by made us in the stock purchase agreement; and

     o    breaches of any of our covenants contained in the stock purchase
          agreement.

We are not required to indemnify the former stockholders of Provo unless and
until they have suffered damages of at least $100,000. The ability of the former
stockholders of Provo to obtain indemnification is limited to an aggregate of
$500,000.

     Registration Rights Agreement

     Concurrently with the stock purchase agreement, we entered into a
registration rights agreement, whereby we granted certain "piggyback"
registration rights to the former stockholders of Provo with respect to the
shares of common stock issuable to them upon approval of this proxy solicitation
(the "Conversion Shares"). Under the terms of the registration rights agreement,
the former stockholders of Provo may "piggyback" up to 30% of the Conversion
Shares in the event the we file a registration statement during the period
commencing on the Conversion Date and ending on the one-year anniversary of the
Conversion Date. We also granted the former stockholders of Provo the right to
demand, on up to two occasions and at any time after the first anniversary of
the Conversion Date, that we file a registration statement to register the
Conversion Shares.

     Bridge Loan Agreement

As a condition precedent to the closing of the Provo acquisition and in order to
finance certain of the Provo acquisition expenses, on April 2, 2003, we entered
into a bridge financing where we borrowed $550,000 from IIG Equity Opportunities
Fund, Ltd. The loan is evidenced by a secured promissory note that bears
interest at the rate of 14% per annum and is secured by substantially all of our
assets, other than the assets of Provo and the Provo stock. Two of our officers,
Nicko Feinberg and Stephen J. Cole-Hatchard have pledged shares of our common
stock owned by them as additional collateral to IIG Equity. In addition, Mr.
Cole-Hatchard has personally guaranteed the repayment of the promissory note,
and mortgaged certain personal real estate as collateral for the bridge loan.
Mr. Cole-Hatchard's personal guarantee is limited to the assets mortgaged by him
and IIG Equity has no-recourse against his other assets.

     In connection with the bridge financing, we issued 500,000 shares of our
common stock to IIG Equity as additional consideration. The promissory note is
repayable at the earlier of July 2, 2002 or upon our obtaining financing
collateralized by Provo's accounts receivable. On June 25, 2003, we executed an
addendum to our agreement with IIG extending the repayment date to August 1,
2003. Out of the proceeds, we used $200,000 to repay a portion of a $728,000
obligation to Delanet, Inc., which was incurred as part of a business
acquisition. The balance of the obligation was satisfied through issuance of
375,000 shares of our common stock to the Delanet, Inc. and its affiliates.


                                       30










     Concurrently with the execution of the bridge loan agreement, Frontline and
Provo executed a contribution agreement, whereby each company agreed that it
would be responsible for repaying 50% of the bridge loan. In the event either
Provo or Frontline pays more than its proportionate 50% of the bridge loan, such
payor shall be subrogated in the rights of IIG Equity to collect from the other
party up to its proportionate share. The contribution agreement does not grant
Provo any subrogation rights against the collateral pledged by Mr.
Cole-Hatchard.

     In addition, concurrently with the execution of the bridge loan agreement,
Frontline, Ventura Martinez del Rio, Sr. and Ventura Martinez del Rio, Jr.
entered into a lien subordination agreement whereby the former stockholders of
Provo agreed to subordinate the priority of any liens they may have over the
assets of Frontline, to those liens granted to IIG Equity under the bridge loan
agreement.

Accounting Treatment

     The Provo acquisition will be treated as a reverse acquisition pursuant to
which Provo is treated as the acquirer of Frontline for financial reporting
purposes. The acquisition will be accounted for using the purchase method of
accounting, and accordingly, the purchase price will be allocated to tangible
and intangible assets of Frontline acquired and the liabilities of Frontline
assumed, on the basis of their fair values as of the acquisition date in
accordance with the Statement of Financial Accounting Standards No. 141,
Business Combinations, and the results of Frontline's operations will be
included in Provo's consolidated financial statements from the date of the
acquisition. Allocation of the purchase price has been made on a preliminary
basis and is subject to adjustments. The excess of the purchase price over the
fair value of identifiable net assets acquired (goodwill) will be subject to a
review for impairment on an annual basis and whenever events or circumstances
occur which indicate that goodwill might be impaired, in accordance with
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets, adopted by us in July 2001.

Certain Federal Tax Consequences

     Introduction

     The following discussion summarizes the material United States federal
income tax consequences relevant to Provo and Frontline resulting from the
exchange of shares of the capital stock of Provo for shares of Frontline Series
C Stock pursuant to the stock purchase agreement, and the issuance of shares of
Frontline common stock upon the conversion of the Series C Stock and Series D
Stock.

     No rulings from the Internal Revenue Service or opinions of counsel with
respect to any of the matters discussed herein have been or will be requested
and, as a result, there can be no assurance that the Internal Revenue Service
will not disagree with or challenge any of the conclusions described below. This
discussion is based upon the Code, Treasury Regulations, administrative rulings
and judicial decisions currently in effect, all of which are subject to change,
possibly with retroactive effect. Any such change may or may not be retroactive.

     This summary does not purport to be a complete analysis or description of
all potential federal income tax consequences of the Provo acquisition. In
addition, the summary does not address the tax consequences to holders of Series
C Stock or Series D Stock. Moreover, the summary does not address any non-income
tax consequences or any state, local or non-U.S. tax consequence. The summary
does not address the tax consequences of any transaction other than the Provo
acquisition.

     EACH FRONTLINE STOCKHOLDER SHOULD CONSULT HIS, HER OR ITS TAX ADVISOR AS TO
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO FRONTLINE AND TO SUCH
STOCKHOLDER OF THE PROVO ACQUISITION. EACH FRONTLINE STOCKHOLDER SHOULD ALSO
CONSULT HIS, HER OR ITS TAX ADVISOR AS TO ANY STATE, LOCAL, NON-U.S. AND
NON-INCOME TAX CONSIDERATIONS RELEVANT TO SUCH STOCKHOLDER AS A RESULT OF PROVO
ACQUISITION.

     No gain or loss will be recognized by Provo or Frontline in connection with
the Provo acquisition or upon the conversion of Frontline Series C Stock and
Series D Stock into Frontline common stock.

     As of December 31, 2002, Frontline had net operating loss ("NOL")
carryforwards of approximately $22,500,000, which expire on various dates
through 2022. In addition, for the portion of its taxable year ending on the
date of the Provo acquisition, Frontline generated losses. For its 2003 tax
year, these losses will comprise a


                                       31










portion of any net operating loss, unless taxable income for the portion of its
2003 tax year beginning on the day following the Provo acquisition exceed the
operating losses generated in the first portion of the year. Under Section 382
of the Code, the use of NOLs (and certain other tax attributes) of a corporation
(a "Loss Corporation") which undergoes an "ownership change," generally will be
subject to an annual limitation. The limitation is based on a percentage of the
value of the Loss Corporation immediately prior to the ownership change. The
Provo acquisition (or, possibly, the authorization by stockholders of Frontline
to issue common stock to upon the conversion of Frontline Series C Stock)
resulted (or will result) in an ownership change of Frontline. As a result, the
utilization of Frontline's NOL carryforwards will be subject to an annual
limitation under Section 382 equal to approximately 4.5% of the value of the
outstanding stock of Frontline immediately prior to the transaction.

Regulatory Approvals

     The transaction contemplated by the Provo acquisition did not require
notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or
any other U.S. laws and regulations. The Provo acquisition also did not require
that we make any filings with, or obtain any approvals from, any Mexican merger
control authorities. Subsequent to the closing of the Provo acquisition, we
registered the Provo acquisition with the Mexican Foreign Investment Commission,
as required under applicable Mexican law.

Opinion of GunAllen Financial, Inc.

     Overview

     The board of directors retained GunAllen Financial, Inc. to act as our
financial advisor with respect to the Provo acquisition. In connection with that
engagement, we requested that GunAllen Financial evaluate the fairness, from a
financial point of view, to us of the consideration to be paid by us in the
Provo acquisition. On March 13, 2003, GunAllen Financial delivered to our board
of directors its oral opinion, which was subsequently confirmed in writing on
April 3, 2003, to the effect that, based upon and subject to the factors and
assumptions set forth in the opinion, the consideration to be paid by us in the
Provo acquisition was fair from a financial point of view to us.

     In arriving at its opinion, GunAllen Financial, among other things:

     o    reviewed certain publicly available business and financial information
          relating to us that GunAllen Financial deemed to be relevant;

     o    reviewed certain information and financial and operating projections
          and assumptions, relating to the businesses, earnings, cash flow,
          assets, liabilities and prospects of Provo, furnished to GunAllen
          Financial by our senior management and the senior management of Provo;

     o    conducted discussions with representatives and members of our senior
          management and representatives and members of the senior management
          and representatives of Provo concerning the above two matters, as well
          as their respective businesses and prospects before and after giving
          effect to the Provo acquisition;

     o    reviewed the financial condition and results of operations of Provo
          and compared them with those of certain publicly traded companies that
          GunAllen Financial deemed to be relevant;

     o    compared the proposed financial terms of the Provo acquisition with
          the financial terms of certain other transactions which GunAllen
          Financial deemed to be relevant;

     o    participated in discussions and negotiations among our representatives
          and financial and legal advisors and representatives of Provo and its
          financial and legal advisors;

     o    reviewed the potential pro forma impact of the Provo acquisition on
          us;

     o    reviewed the stock purchase agreement, the Certificate of Designations
          for the Series C Stock and the terms of the Secured Note; and


                                       32










     o    conducted such other financial studies and analyses and took into
          account such other matters as GunAllen Financial deemed necessary,
          including GunAllen Financial's assessment of general economic, market
          and monetary conditions.

     In preparing its opinion, GunAllen Financial assumed and relied on the
accuracy and completeness of all information supplied or otherwise made
available to GunAllen Financial, discussed with or reviewed by or for GunAllen
Financial, or publicly available, and GunAllen Financial has not assumed any
responsibility for independently verifying such information or undertaken an
independent evaluation or appraisal of any of our assets or liabilities or those
of Provo or been furnished with any such evaluation or appraisal. In addition,
GunAllen Financial has not assumed any obligation to conduct, nor has it
conducted, any physical inspection of our properties or facilities or those of
Provo. With respect to the financial and operating projections, analyses and
assumptions furnished to or discussed with GunAllen Financial by us, GunAllen
Financial assumed that all such information had been reasonably prepared and
reflected the best estimates and judgments of our senior management and the
senior management of Provo available as of the date of the opinion as to our
expected future financial and operating performance and the expected future
financial and operating performance of Provo and the combined entity. GunAllen
Financial expressed no view with respect to such forecasts, analyses and
assumptions and has made no independent investigation of any legal matters or
accounting advice given to us or to Provo and our respective boards of
directors, including, without limitation, advice as to the accounting and tax
consequences of the Provo acquisition.

     GunAllen Financial's fairness opinion is necessarily based on market,
economic and other conditions as they existed and could be evaluated on, and on
the information made available to GunAllen Financial as of, the date of the
opinion. For the purpose of rendering its opinion, GunAllen Financial assumed
that;

     o    the Provo acquisition would be consummated in a timely manner in
          accordance with the terms set forth in the stock purchase agreement
          and in all related documents and instruments (collectively, the
          "Documents") in all respects material to GunAllen Financial's
          analysis;

     o    the executed versions of the Documents would not differ from the
          drafts reviewed by GunAllen Financial in any respect that is material
          to GunAllen Financial's analysis;

     o    the representations and warranties of each party in the stock purchase
          agreement were true and correct;

     o    each party to the Documents would perform all of the covenants and
          agreements required to be performed by such party under the relevant
          Documents;

     o    all conditions to the consummation of the Provo acquisition would be
          satisfied without waiver thereof;

     o    our stockholders would approve the issuance of shares of common stock
          upon conversion of the shares of Series C Stock delivered by us in
          connection with the Provo acquisition prior to August 20, 2003; and

     o    the Provo acquisition would qualify as tax-free reorganization for
          United States federal income tax purposes.

     GunAllen Financial also assumed that, in the course of obtaining the
necessary regulatory or other consents or approvals (contractual or otherwise)
for the Provo acquisition, no restrictions, including any divestiture
requirements or amendments or modifications, would be imposed that would have an
adverse effect on the future results of operations or financial condition of us,
Provo or the combined entity, as the case may be, or on the contemplated
benefits of the Provo acquisition.

     In connection with its presentation to our Board of Directors advising the
Board of its opinion on March 13, 2003, GunAllen performed a variety of
financial and comparative analyses, including those described below. The
preparation of a fairness opinion involves various determinations as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances, and therefore such an opinion is
not readily susceptible to summary description. GunAllen used several methods to
arrive at a fair value for our common stock, with each method requiring
different assumptions and calculations and, therefore, resulting in different
values. In arriving at its fairness opinion, GunAllen did not attribute any
particular weights to any analysis or factor considered by it, but rather made
qualitative judgments as to the significance and relevance of each analysis and


                                       33










factor. Accordingly, GunAllen believes that its analysis must be considered as a
whole and that considering any portions of such analyses and of the factors
considered, without considering all of the analyses and factors, could create a
misleading or incomplete view of the process underlying the opinion. In its
analyses, GunAllen Financial made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond our control. Any estimates contained in these analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth in
the opinion.

     The following is a summary of the material financial and comparative
analyses performed by GunAllen Financial in arriving. The full text of GunAllen
Financial's fairness opinion, which sets forth the assumptions made, matters
considered and qualifications and limitations on the review undertaken by
GunAllen Financial, is attached as Annex E and is incorporated by reference in
this proxy statement. GunAllen Financial has consented to the use of its opinion
in Annex E of this proxy statement. The following is a summary of the material
aspects of GunAllen Financial's fairness opinion, as presented to our Board of
Directors on March 13, 2003, and we refer you to the full text of GunAllen
Financial's fairness opinion which you should read carefully and in its
entirety.

     Purchase Price Analysis

     GunAllen Financial valued the transaction at $5.9 million based upon the
issuance of 22,000,000 shares at a price of $0.27 per share. The share price was
derived by utilizing a base price of $0.18 per share, which was the closing
price of our common stock on the date the board of directors was presented with
the proposed merger, and adjusting for the 2 for 3 reverse stock split. GunAllen
Financial opted not to apply a "control premium adjustment", which is sometimes
applied in this type of analysis when the transaction involves a change of
control, because the shares we issued to the Provo stockholders are not
registered. GunAllen Financial also considered the lack of liquidity associated
with the issuance of the stock. GunAllen Financial tested the accuracy of this
analysis by conducting three other financial valuation models: a weighted
average earnings model, a discounted cash flow model and a multiple of EBIDTA
approach.

     Weighted Average Earnings Model

     Under the weighted average earnings model, GunAllen Financial valued
Provo's business at $7.3 million. For the purposes of this valuation method,
GunAllen Financial classified Provo as a communications services provider. It
based its valuation upon a price/earnings ratio of 11.39 (the lowest ratio over
the last five years) and weighted average earnings of $642,000 over the last
three years.

     Discounted Cash Flow Model

     Under this model, GunAllen Financial assumed base earnings of $775,000 and
a growth rate of 10% per year. Assuming a 17% discount rate, GunAllen Financial
valued Provo's business at $12.7 million. Utilizing a more conservative discount
rate of 30% yielded a $5.8 million value.

     EBITDA Multiple Approach

     Under the multiple of EBITDA (earnings before income taxes, depreciation
and amortization) method, GunAllen Financial valued Provo's business at $6.0
Million. This valuation was calculated by utilizing an industry multiple of 5X
EBITDA (as articulated by Standard and Poor's) and applying it to Provo's 2002
EBITDA of $1,210,000.

     Given that the valuation of Provo's business ranged from $5.8 million to
$12.7 million under these various approaches, GunAllen opined that the
$5.9 million purchase price was fair to our stockholders from a financial point
of view.

     GunAllen Financial's fairness opinion was provided to our board of
directors for its information and is directed only to the fairness from a
financial point of view to us of the consideration to be paid by us in the Provo
acquisition. GunAllen Financial's fairness opinion does not address any other
aspect of the Provo acquisition, including the merits of the our underlying
decision to engage in the Provo acquisition or the relative merits of the Provo
acquisition as compared to any alternative business strategies or transactions
that might exist for us.


                                       34










     GunAllen Financial neither considered nor expressed any opinion as to the
prices at which our common stock would trade following the announcement or the
consummation of the Provo acquisition. GunAllen Financial's opinion does not
constitute a recommendation to any of our stockholders as to how such
stockholders should vote with respect to Proposal 1 or the matters related
thereto.

     Pursuant to a letter agreement dated February 3, 2003, we agreed to pay
GunAllen Financial a fee of $35,000 upon delivery of the fairness opinion. The
Company had no previous financial relationship with GunAllen whatsoever. The fee
paid by us to GunAllen Financial was in no way contingent on the outcome of the
shareholders' vote.

     GunAllen Financial's fairness opinion is based on market, economic and
other conditions as they existed and could be evaluated on, and on the
information made available to GunAllen Financial as of, the date of the opinion.


                                       35










                 SELECTED HISTORICAL FINANCIAL DATA OF FRONTLINE

     The selected financial information presented below as of and for (i) each
of the fiscal years ended December 31, 2002 is derived from our audited
consolidated financial statements and (ii) each of the three-month periods ended
March 31, 2003 and 2002 is derived from our unaudited financial statements. In
the opinion of management, all adjustments considered necessary for a fair
presentation have been included in our unaudited consolidated financial
statements. The three-month results are not necessarily indicative of the
results that may be expected for the full fiscal year. The selected financial
information for Frontline should be read in conjunction with the other
information contained under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our annual report on Form
10-KSB for the year ended December 31, 2002 and our financial statements and the
accompanying notes thereto, and other financial and statistical data included in
our quarterly report on Form 10-QSB for the quarter ended March 31, 2003.

Consolidated Statement of Operations Data:




                                             Years ended December 31,   Three months ended March 31,
                                            -------------------------   ----------------------------
                                                2002         2001            2003          2002
                                            -------------------------     -----------   ----------
                                                                          (unaudited)   (unaudited)
                                                                             
Revenues                                    $ 5,047,098   $ 6,503,120      $1,066,127   $1,352,269

Costs and expenses:
   Cost of revenues                           2,493,337     3,482,954         495,721      681,854
   Selling, general and administrative        2,446,816     3,860,999         603,279      667,322
   Depreciation and amortization                745,135     2,943,678         143,373      194,262
   Impairment of intangibles                                2,827,993              --           --
   Non-cash compensation charge                  58,500       206,505              --           --
                                            -----------   -----------      ----------   ----------
                                              5,743,788    13,322,129       1,242,373    1,543,438
                                            -----------   -----------      ----------   ----------
Loss from operations                           (696,690)   (6,819,009)       (176,246)    (191,169)

Other income (expense) net                      (90,835)     (210,278)        (21,581)     (23,015)
                                            -----------   -----------      ----------   ----------
Net loss                                       (787,525)   (7,029,287)       (197,827)    (214,184)
                                            -----------   -----------      ----------   ----------

Preferred dividends                             297,867       320,910          74,467       79,065

                                            -----------   -----------      ----------   ----------
Net loss available to common stockholders   $(1,085,392)  $(7,350,197)     $ (272,294)  $ (293,249)
                                            ===========   ===========      ==========   ==========

Loss per common share-basic and diluted          ($0.12)       ($1.00)         ($0.03)      ($0.03)
                                            ===========   ===========      ==========   ==========

Weighted average number of common shares
   outstanding- basic and diluted             9,119,533     7,333,221       9,294,972    8,944,551
                                            ===========   ===========      ==========   ==========



Balance Sheet Data:




                                            As of December 31    As of March 31
                                                  2002          2003 (unaudited)
                                            -----------------   ----------------
                                                            
Working capital (deficiency)                   ($2,655,722)       ($2,827,010)
Total assets                                     1,258,567          1,120,524
Total liabilities                                3,287,519          3,421,770
Accumulated deficit                            (37,466,196)       (37,738,490)
Stockholders' (deficiency)                      (2,028,952)        (2,301,246)




                                       36










                   SELECTED HISTORICAL FINANCIAL DATA OF PROVO

     The selected financial information presented below as of and for (i) each
of the two years ended December 31, 2001 and 2002 is derived from Provo's
audited financial statements and (ii) each of the three -months ended March 31,
2003 and 2002 is derived from Provo's unaudited financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included in the unaudited financial statements. The
three-month results are not necessarily indicative of the results that may be
expected for the full fiscal year. The selected financial information for Provo
should be read in conjunction with the other information contained below under
the caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations of Provo" and Provo's financial statements and the
accompanying notes thereto, set forth herein beginning on page F-24.

Consolidated/Combined Statement of Operations Data:




                                                        Years ended December 31,    Three months ended March 31,
                                                      ---------------------------   ----------------------------
                                                          2002           2001           2003          2002
                                                      ---------------------------    -------------------------
                                                                                     (unaudited)   (unaudited)
                                                                                       
Revenue                                               $101,550,659   $119,766,884    $19,549,290   $21,826,788

Cost of revenue                                         96,866,869    115,100,882     18,891,342    20,540,329

Gross profit                                             4,683,790      4,666,002        657,948     1,286,459

Operating costs and expenses:
   Selling                                                 657,993        884,032         95,777       256,225
   General and administrative                            2,930,585      3,268,131        617,623       671,997
   Depreciation and amortization                            86,425         70,410         30,051        16,099
                                                      ------------   ------------    -----------   -----------
                                                         3,675,003      4,222,573        743,451       944,321
                                                      ------------   ------------    -----------   -----------
Income (loss) from operations                            1,008,787        443,429        (85,503)      342,138

Other income (expense) net                                (252,208)       281,570        182,804       (81,764)

Income before income tax, equity in net earnings of   ------------   ------------    -----------   -----------
Unconsolidated subsidiary and minority interest            756,579        724,999         97,301       260,374
                                                      ------------   ------------    -----------   -----------

Income taxes expense                                       148,395        291,065         34,730        82,700

Equity in the net earnings of unconsolidated
subsidiary                                                      --        129,976             --            --
Minority interest                                         (149,280)        20,771        (15,278)      (32,571)

                                                      ------------   ------------    -----------   -----------
Net income (loss)                                     $    458,904   $    584,681    $    47,293   $   145,103
                                                      ============   ============    ===========   ===========



Balance Sheet Data:




                                                      As of December 31    As of March 31
                                                             2002         2003 (unaudited)
                                                      -----------------   ----------------
                                                                       
Working capital                                          $ 4,595,454         $ 3,822,270
Total assets                                              18,528,186          13,315,129
Total liabilities                                         15,995,177          11,100,663
Retained earnings                                          1,568,653           1,006,369
Stockholders' equity                                       2,440,453           2,106,622




                                       37










      SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

     The following selected unaudited pro forma financial information should be
read with the section entitled "Unaudited Pro Forma Combined Financial
Information" beginning on page F-53. For purposes of the pro forma information,
the Provo and the Frontline statements of operations for the year ended December
31, 2002 and the three months ended March 31, 2003 have been combined as if the
acquisition had occurred on January 1, 2002, and the balance sheets of Provo and
Frontline at March 31, 2003 have been combined as if the acquisition had
occurred on March 31, 2003.

     The pro forma data is presented for informational purposes and does not
purport to be indicative of the results of future operations or the operating
results that would have occurred had the acquisition been consummated at the
beginning of the periods indicated. The information set forth below should be
read in conjunction with the historical financial statements and notes thereto
of Frontline, set forth herein beginning on page F-2, and the historical
financial statements and notes thereto of Provo, set forth herein beginning on
page F-24. Neither we nor Provo have paid cash dividends on our respective
common stocks for any of the periods presented.

Combined Condensed Statement of Operations:




                                                           Pro forma combined
                                                      ----------------------------
                                                      For the year   For the three
                                                         ended       months ended
                                                      December 31,     March 31,
                                                          2002           2003
                                                      ------------   -------------
                                                       (unaudited)    (unaudited)
                                                                
Revenues                                              $106,597,757    $20,615,417

Costs and expenses:
   Cost of revenues                                     99,360,206     19,387,063
   Selling, general and administrative                   6,035,394      1,316,679
   Depreciation and amortization                           831,560        173,424
   Non-cash compensation charge                            809,122
                                                      ------------    -----------
                                                       107,036,282     20,877,166
                                                      ------------    -----------
Loss from operations                                      (438,525)      (261,749)

Other income (expense) net                                (343,043)       161,223

                                                      ------------    -----------
Net loss before income tax and minority interest          (781,568)      (100,526)
                                                      ------------    -----------

Income tax                                                 148,395         34,730

                                                      ------------    -----------
Income (loss) before minority interest                    (929,963)      (135,256)

Minority interest                                          149,280         15,278

                                                      ------------    -----------
Net income (loss)                                      ($1,079,243)     ($150,534)
                                                      ------------    -----------

Deemed dividends                                            95,317           -- 

                                                      ------------    -----------
Net loss applicable to common stockholders             ($1,174,560)     ($150,534)
                                                      ============    ===========

Loss per common share- basic and diluted                    ($0.03)          $0.0
                                                      ============    ===========

Weighted average number of  common shares
   outstanding- basic and diluted                       33,615,469     33,732,428
                                                      ============    ===========

 



                                      38









Combined Condensed Balance Sheet Data:




                                                        Pro forma
                                                            at
                                                      March 31, 2003
                                                      --------------
                                                        (unaudited)
                                                     
Working capital                                         $ 1,293,982
Total assets                                             19,269,383
Total liabilities                                        14,223,711
Retained earnings                                           160,430
Stockholders' equity                                      4,937,828




                                       39











   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                      OPERATIONS OF THE PROVO BUSINESSES

Overview

     Provo has determined that the Mexican peso (Ps) is the functional currency
for financial reporting purposes. Assets and liabilities denominated in the in
Mexican peso are translated to U.S dollars ($) at the rates in effect at the
balance sheet date. Revenues and expenses are translated at the average rates
for the year. See note 1 to Provo's Combined and Consolidated Financial
Statements beginning on page F-24.

     The following table sets forth, for the fiscal years indicated, information
concerning the number of Mexican pesos for which one U.S dollar could be
exchanged.




                  Period                        Period end   Average
                  ------                        ----------   -------
                                                        
     Year ended December 31, 2001                  9.142       9.342
     Year ended December 31, 2002                 10.313       9.659
     Three months ended March 31, 2002             9.024       9.115
     Three months ended March 31, 2003            10.767      10.803



     Provo's primary business is the sale and distribution of prepaid phone
cards in Mexico. Provo sells and distributes Ladatel payphone calling cards,
Multifon prepaid telephone time for Telmex and prepaid PCS cellular airtime for
Telcel, all of which are collectively referred to as prepaid phone cards. Telmex
is the dominant telecommunications provider in Mexico and Telcel is the dominant
provider of cellular airtime in Mexico. Provo's management believes that they
account for nearly 7% of all sales of prepaid phone cards in Mexico.

     Prepaid phone cards are distributed through a vast network of retail
outlets, including convenience stores, drug stores, restaurants, lottery stands,
newspaper and magazine stands and other general stores. Provo purchases large
volumes of prepaid cards from Telmex or Telcel and sells the cards in smaller
quantities to retailers either directly or through agents or distributors.

     Provo purchases prepaid cards at a discount from the face value of the
card, and resells them to retailers or distributors at a slightly lower
discount. The difference between the two discount rates, typically from 1% to 
7%, represents the gross margin Provo retains. Cash (C.O.D) purchases result in 
a higher discount to Provo compared to purchases on credit terms from Telmex or
Telcel. In addition, the discount obtained by Provo varies by the type of card,
face value of the card and volume levels met. Similarly, the discount offered by
Provo to retailers or distributors varies by the type of card, face value of the
card and volume levels of the retailer or distributor. Accordingly, the gross
margin attained by Provo in any period is impacted by several factors. In
addition, Telmex and Telcel provide Provo additional discounts and rebates based
on certain special programs. During fiscal years 2002 and 2001, Provo received
approximately $500,000 and $400,000, respectively, of such additional
incentives. Provo's management tries to optimize the gross margins earned by
balancing volume levels with the working capital availability, and from time to
time has had to scale back volume levels due to working capital constraints.


                                       40










Results of Operations

     Comparison of three months ended March 31, 2002 and 2003:

     The following table sets forth certain financial data as a percentage of
the revenues for the periods indicated:




                                      For the three months ended
                                               March 31,
                                              (unaudited)
                                      --------------------------
                                             2003    2002
                                            -----   -----
                                              
Revenue                                     100.0%  100.0%
Cost of revenue                              96.6%   94.1%
Selling expenses                              0.5%    1.2%
General and administrative expenses           3.2%    3.1%
Depreciation and amortization                 0.2%    0.1%

                                            -----   -----
Operating (loss) income                      -0.4%    1.6%
                                            =====   =====



     Revenue. Revenue decreased for the three months ended March 31, 2003 by
$2,277,498 or 10.4% over the prior year. The revenue decrease was principally
due to a weaker Mexican peso. Excluding the impact of foreign currency
translation, revenue increased 6.1%. Provo believes that the increase in revenue
was due to the availability of a credit line with Telmex and to the absence of
deep discounting by some of its new competitors and their distributors.

     Cost of Revenue. For the three months ended March 31, 2003, cost of revenue
decreased by $1,648,987 or 8.0%. The decrease was principally due to a weaker
Mexican peso. Excluding the impact of foreign currency translation cost of
revenue increased by 9.0%. As a percentage of revenue, cost of revenue increased
from 94.1% in March 2002 to 96.6% in March 2003. In 2003, Provo purchased a
greater amount of prepaid cards on credit terms compared to 2002 resulting in a
higher cost of revenue in percentage terms.

     Selling Expenses. For the three months ended March 31, 2003, selling
expenses decreased by $160,448 for the same period last year to $95,777. The
decrease in selling expenses was due to decreased revenue levels attained in
2003. In 2003, selling expenses decreased at a higher percentage than revenue
percentage decreased, as selling expenses in 2002 included approximately $70,000
of non-recurring incentive commission expense.

     General and Administrative Expenses. For the three months ended March 31,
2003, general and administrative expenses decreased by $54,374 for the same
period last year to $617,623. The decrease in general and administrative
expenses was due to a weaker Mexican Peso. Excluding the impact of foreign
currency translation, general and administrative expenses increased by 8.9%.
Increase in insurance expenses, professional fees, communications expenses and
higher payroll costs arising from pay increases effected in the beginning of
2003 were the principal components of expense increase.

     Operating Profit. As result of the foregoing, for the three months ended
March 31, 2003, operating profit decreased by $427,641 for the same period last
year to a loss of $85,503.

     Interest Expense. Interest expense for the three months ended March 31,
2003 was $86,865 compared to an interest expense of $108,453 during the three
months ended March 31, 2002. Excluding the impact of foreign currency
translation, interest expense decreased by 5.1%. The decrease in interest
expense was due to lower debt balance off set partly by higher interest rates
in 2003. Interest rates on Provo's debt are based upon the prevailing Mexican
Interbank Equilibrium Rate ("TIIE"). Accordingly, interest expense varies in
line with TIIE. In the first quarter of 2003 the average TIIE was 9.6% compared
to 8.5% in the first quarter of 2002.


                                       41








     Gain on assets transferred in settlement. In March of 2003, Provo
transferred to Telmex its office building in Mexico City and certain non-revenue
generating real estate properties for an aggregate consideration of $4.5
million. The transfer generated a gain of approximately $245,000, which was
recorded in the results for the three months ended March 31, 2003.

     Income Taxes. For the three months ended March 31, 2003, income tax,
determined in accordance with Mexico's income tax laws, resulted in taxes of $
34,730 compared to a tax expense of $82,700 during the three months ended March
31, 2002. The effective tax rate in 2003 was 36% compared to 32% in 2002.

     Comparison of Years ended December 31, 2002 and 2001:

     The following table sets forth certain financial data as a percentage of
the revenues for the periods indicated:




                                      For the year ended
                                         December 31,
                                      ------------------
                                         2002    2001
                                        -----   -----
                                          
Revenue                                 100.0%  100.0%
Cost of revenue                          95.4%   96.1%
Selling expenses                          0.6%    0.7%
General and administrative expenses       2.9%    2.7%
Depreciation and amortization             0.1%    0.1%

                                        -----   -----
Operating income                          1.0%    0.4%
                                        =====   =====



     Revenue. Revenue decreased for the year ended December 31, 2002 by
$18,216,225 or 15.2% over the prior year. The revenue decrease, in part, was due
to a weaker Mexican peso. Excluding the impact of foreign currency translation,
revenue decreased by 12.3%. Working capital constraints in 2002 resulted in
decreased levels of prepaid calling card inventory purchases and related
revenue. In addition, Provo believes that the practice of offering deep
discounts to retailers by certain new competitors and their sub-distributors
adversely affected Provo's sales efforts. Telmex has taken corrective action on
the matter of deep discounts. Provo believes that this action will reduce the
amount of deep discounts being offered.

     Cost of Revenue. For the year ended December 31, 2002, cost of revenue
decreased by $18,234,013 or 15.8% over the prior year. The decrease in part was
due to a weaker Mexican peso. Excluding the impact of foreign currency
translation, cost of revenue decreased by 13.0%. As a percentage of revenue,
cost of revenue decreased to 95.4% in 2002 from 96.1% in 2001. In 2002, Provo
purchased a greater amount of prepaid cards on cash terms compared to 2001
resulting in a lower cost of revenue in percentage terms. In addition, Provo's
refusal to match its competitors in offering additional discounts to retailers
during the year resulted in a lower cost of revenue in percentage terms.

     Selling Expenses. For the year ended December 31, 2002, selling expenses
decreased by $226,039 over the prior year to $657,993. The decrease in selling
expenses was due principally to decreased revenue levels attained in 2002.

     General and Administrative Expenses. For the year ended December 31, 2002,
general and administrative expenses decreased by 10.3% or $337,546 over the
prior year to $2,930,585. The decrease in general and administrative expenses
was due to the weaker Mexican peso and to certain expense reductions realized
by Provo. Excluding the impact of foreign currency translation, general and
administrative expenses decreased by 7.3%. In 2002, Provo closed two of its
branches and migrated its distribution channel to agents and realized certain
expense savings. In addition, reduction of professional fees and training
expenses resulted in a further decrease in general and administrative expenses.

     Operating Profit. As a result of the foregoing, for the year ended December
31, 2002, operating profit increased by 127.5% or $565,358 over the prior year
to $1,008,787.

     Interest Expense. Interest expense for 2002 was $419,345 compared to
$448,584 in 2001. In 2002, interest expense decreased due to lower interest
rates and to a reduced debt level (including the interest bearing supplier
credit facility with


                                       42










Telmex). Interest rates on Provo's debt are based upon the prevailing TIIE.
Accordingly, interest expense varies in line with TIIE. In 2002 average TIIE was
8.1 % compared to 12.8% in 2001.

     Income Taxes. In 2002, income tax expense, determined in accordance with
Mexico's income tax laws, was $148,395 compared to $291,065 in 2001. The
effective tax rate in 2002 was 20% compared to 40% in 2001. The decreased effect
of inflation in 2002 primarily resulted in a lower effective tax rate when
compared to the prior year.

Liquidity and Capital Resources

     Provo's working capital at March 31, 2003 was $3,822,270 compared to
$4,595,454 at December 31, 2002. The decrease in working capital was due to the
acquisition of non-current real estate in settlement of accounts receivable of
approximately $1,433,000 and an expenditure of approximately $610,000 incurred
for acquisition of subsidiaries. This was partly offset by net income and
additional non-cash capital contributions from the majority shareholder.

     Provo's primary capital requirements are to fund its working capital. To
date, Provo has financed its capital requirements through equity contributions
from its majority stockholders, lines of credit from banks and a supplier credit
facility from Telmex.

     At March 31, 2003 Provo had aggregate borrowings of $1,894,661 under four
lines of credit with two banks. The lines of credit are secured by real estate
of the majority stockholder's family. The current interest rates on the lines
range between 9.5% and 10%. The lines of credit expire at various dates between
July 2003 and September of 2005 and one line requires a monthly payment of
approximately $14,000 in 2003.

     Provo has relied on Telmex to finance its inventory purchases with a line
of credit. At December 31, 2002, $11,849,727 was outstanding under this
facility. Various non-operating properties, properties owned by the majority
stockholder's family and properties of related parties, have been pledged to
guarantee Provo's credit line with Telmex. For additional information concerning
these transactions, see "Proposal 5 - Certain Relationships and Related
Transactions" beginning on page 65. In March of 2003, Provo entered into a
settlement agreement with Provo. Pursuant to the settlement agreement, Provo
transferred to Telmex its office building in Mexico City and certain non-revenue
generating real estate properties for an aggregate consideration of $4.5
million. Out of the remaining balance of $7.7 million, $3.8 million will be
payable on or about September 9, 2003 and the balance of $3.9 million will be
payable in 54 monthly installments commencing in July 2003. All of Provo's 
purchases from Telmex are currently paid in cash. The shift from credit-based 
purchases to cash-based purchases will increase Provo's profit margins on the
products purchased from Telmex, however, its revenue from these products will
continue to decrease due to Provo's current cash constraints. For further
information concerning this transaction, see "The Acquisition Transaction -
Description of Provo's Business - Telmex Settlement" beginning on page 28.

     In 2002, Provo received real estate properties in the aggregate amount of
$3.7 million in settlement of amounts due to Provo from two of its customers. In
March 2003, Provo transferred the properties with additional properties owned by
it to settle amounts owed by Provo to Telmex. In March 2003, Provo acquired real
estate property in the aggregate amount of approximately $1.6 million in
settlement of amounts owed to Provo. This property is currently securing a line
of credit with Telmex.

     In April of 2003, as more fully described under "The Acquisition
Transaction" beginning on page 24, Frontline acquired all of Provo's common
stock Under the terms of the governing stock purchase agreement, in
consideration for Provo's shares, the former stockholders of Provo received
220,000 shares of Frontline's Series C Convertible Preferred Stock. The shares
are convertible to 33 million shares of Frontline's common stock upon approval
of certain actions by Frontline's stockholders. Upon conversion, the former
stockholders of Provo will own approximately 66% of Frontline's common stock.
Accordingly, the transaction will be accounted for as a reverse acquisition in
which Provo will be the acquirer for financial reporting purposes.

     Provo together with Frontline plans to raise additional financing in the
United States. The availability of capital resources is dependent upon
prevailing market conditions, interest rates and the combined company's
financial condition. In July 2003, Frontline entered into a common stock
purchase agreement with Fusion Capital Fund II, LLC, whereby, subject to the
approval of Proposal 6 described herein by Frontline's stockholders and the
satisfaction of other applicable conditions, Fusion Capital has agreed to
purchase up to $13 million of Frontline's common stock over a 40-month period.
The transaction is subject to satisfaction of various conditions as described
under "Proposal 6" and there can be no assurance that Frontline will in fact
complete the transaction.

     Based on current plans, management anticipates that the cash on hand, cash
flow from operations and vendor credit will satisfy Provo's capital requirements
through at least the end of 2003. However, the agreement with Telmex requires
Provo to repay Telmex $3.8 million in September 2003. In addition, Provo and
Frontline are required to repay $550,000 due under a bridge financing to IIG
Equity Opportunities Fund, Ltd. on August 1, 2003. We currently lack the funds
to pay these obligations when they become due. Therefore, in order to satisfy
our debt obligations, we are currently pursuing additional sources of financing.
There can be no assurance, however, that such financing will be available on
terms that are acceptable to us, or on any terms.


                                       43










Critical Accounting Policies

     Financial Reporting Release No. 60, published by the Securities and
Exchange Commission, recommends that all companies include a discussion of
critical accounting polices used in the preparation of their financial
statements. Provo's significant accounting policies are summarized in Note 1 of
its financial statements. While all of these significant accounting policies
impact its financial condition and results of operations, Provo views certain of
these policies as critical. Policies determined to be critical are those
policies that have the most significant impact on Provo's financial statements
and require management to use a greater degree of judgment and /or estimates.
Actual results may differ from those estimates.

     Provo believes that given current facts and circumstances, it is unlikely
that applying any other reasonable judgments or estimate methodologies would
cause a material effect of Provo's results of operations, financial position or
liquidity for the periods presented in this Proxy.

     The accounting policies identified critical are as follows:

     Revenue Recognition. Provo recognizes revenue in accordance with generally
accepted accounting principles as outlined in SAB No. 101, which requires that
four basic criteria be met before revenue can be recognized: (1) persuasive
evidence of an arrangement exists; (2) product delivery, including customer
acceptance, has occurred; (3) the price is fixed or determinable; and (4)
collectibility is reasonably assured. Provo believes that its revenue
recognition policy is critical because revenue is a very significant component
of its results of operations. Decisions relative to criteria (4) regarding
collectibility are based upon management's judgments and should conditions
change in the future and cause management to determine these criteria are not
met; Provo's recognized results may be affected.

     Inventory. Inventory consists of prepaid phone cards, purchased for resale.
Inventory is valued at lower of cost ("first-in, first-out") or market. On a
periodic basis, management compares the amount of inventory on hand and under
commitment with our latest forecasted requirements to determine whether
write-downs for excess inventory are required. Although management considers the
amounts on hand to be realizable, there can be no assurance that these amounts
will prove to be realizable over time.

     Allowance for Doubtful Accounts. Provo performs ongoing credit evaluations
of its customers and adjusts credit limits based upon its customers' payment
history and current credit worthiness, as determined by a review of their
current credit information. Provo continuously monitors collections and an
allowance for estimated credit losses is maintained based upon its historical
experience and any specific customer issues that have been identified. While
such credit losses have historically been within management's expectation and
the allowances that have been established, there cannot be any guarantee that
the credit loss rates will not change in the future. Provo has a limited number
of customers with individually large amounts due at any balance sheet date. Any
unanticipated change in one of those customer's credit position could have a
material effect on Provo's results of operations in the period in which such
changes or events occur.

     Income Taxes. Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using the enacted tax rates expected to apply to
taxable income during the period in which those temporary differences are
expected to be recovered or settled. Deferred tax assets are periodically
evaluated to determine their recoverability, and where the recovery is not
likely, a valuation allowance is established. In the event that actual results
differ form management's estimates or assumptions change, the provision for
income taxes could be materially impacted.

     Real Estate Held for Sale. Provo's real estate held for sale represent
non-operating assets, purchased or acquired in settlement of trade accounts
receivable and are valued at the lower of cost or market. Although management
considers the amounts to be realizable, there can be assurance that these
amounts will prove to be realizable over time.

New Accounting Pronouncements

     In August 2001, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting
for the Impairment of Long-Lived Assets." This statement superceded SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," and the accounting and reporting provisions of
Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations
- Reporting the


                                       44










Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions" ("APB No. 30") for the disposal
of a segment of a business. Provo was required to adopt the Statement during
2002. The adoption of SFAS No. 144 did not have a material effect on Provo's
financial statements.

     In April 2002, the FASB issued Statement of Financial Accounting Standards
No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections" ("SFAS 145"). SFAS 145 prohibits
the classification of gains or losses from debt extinguishments as extraordinary
items unless the criteria outlined in APB No. 30 are met. SFAS 145 also
eliminates an inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions. SFAS 145
is effective for fiscal years beginning after May 15, 2002, with early adoption
encouraged. Provo adopted the provisions of SFAS 145 effective January 1, 2003
and this pronouncement did not have a material effect on its financial position
or results of operations.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS No. 146 replaces Emerging
Issues Task Force (EITF) Issue 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity". This standard
requires recognition of costs associated with exit or disposal activities as
they are incurred, rather than at the date of commitment to an exit or disposal
plan. This statement is effective for exit or disposal activities that are
initiated after December 31, 2002. Provo's management believes that the adoption
of this standard will not have a material effect on Provo's financial
statements.

     In November 2002, the FASB issued FIN No. 45 "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". The interpretation requires that a guarantor recognize,
at the inception of a guarantee, a liability for the fair value of the
obligation undertaken by issuing the guarantee. FIN No. 45 also requires
additional disclosures to be made by a guarantor in its interim and annual
financial statements about its obligations under certain guarantees it has
issued. The accounting requirements for the initial recognition of guarantees
are applicable on a prospective basis for guarantees issued or modified after
December 31, 2002. The disclosure requirements are effective for all guarantees
outstanding, regardless of when they were issued or modified, during the first
quarter of fiscal 2003. The adoption of FIN No. 45 did not have a material
effect on the accompanying financial statements.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51". This
Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the Interpretation. The Interpretation applies
immediately to variable interests in variable interest entities created after
January 31, 2003, and to variable interests in variable interest entities
obtained after January 31, 2003. The adoption of this Interpretation did not
have a material effect on Provo's financial statements.


                                       45










                                   PROPOSAL 2

    APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF DESIGNATIONS PERTAINING TO
   THE SERIES B STOCK TO PROVIDE FOR THE MANDATORY CONVERSION OF ALL SERIES B
   STOCK UPON THE ELECTION OF THE HOLDERS OF A MAJORITY OF THE SERIES B STOCK,
     AND THE EFFECTUATION OF THE MANDATORY CONVERSION OF THE SERIES B STOCK

Introduction

     The background information necessary to understand fully this Proposal 2
and the reasons why Frontline is seeking stockholder approval of this proposal
are set forth above in the section captioned "Questions and Answers About
Proposals 1, 2 and 3". We urge you to read that background section carefully.

     Proposal 2 relates to:

     o    approval of an amendment of the certificate of designations pertaining
          to the Series B Stock to provide for the mandatory conversion of all
          outstanding Series B Stock upon the election of the holders of a
          majority of the outstanding Series B Stock; and

     o    the election by the holders of the Series B Stock to effectuate the
          mandatory conversion of all of the outstanding Series B Stock at a
          conversion ratio of six shares of common stock for each shares of the
          Series B Stock (four shares after giving effect to the proposed
          two-for-three reverse split of our common stock).

Existing Terms of the Series B Stock

     Currently, each share of Series B Stock currently may be converted, at the
option of its holder, into 3.4 shares of common stock. Holders of Series B Stock
are entitled to receive cumulative dividends at the rate of $0.60 per share of
Series B Stock per annum. Payments are to be made semi-annually in June and
December of each year. Only holders of our Series B Stock as of the record date
in June and December of each year are entitled to receive dividends. The
dividends payable in June 2002, December 2002 and June 2003 are accrued and
unpaid, and our directors have not set a record date for payment of such
dividends. Thus, as of the date hereof, dividends of $0.90 per share of Series B
Stock are accrued and unpaid.

     We may pay the dividends in cash or in shares of common stock, at our
discretion. If the dividends are to be paid in common stock, the amount of
common stock to be received by the holders of our Series B Stock shall be equal
to the average daily closing price of our common stock on the AMEX on the five
consecutive trading days immediately preceding the day prior to the record date
for the determination of the stockholders entitled to receive such dividend (the
"Closing Price").

     The certificate of designations for the Series B Stock does not clearly
specify how many shares of common stock are to be issued in payment of accrued
dividends in a case where the board does not specify a record date with respect
to a particular dividend payment date. One alternative would be to utilize the
Closing Prices as of the relevant dividend payment dates, which would result in
the issuance of 3.21 shares of common stock in payment of the accrued dividends
on each share of Series B Stock, for a conversion ratio of 6.61. A second
alternative would be to utilize the Closing Price as of June 25, 2003, the date
on which the board approved Proposal 2, which would result in the issuance of
2.14 shares of common stock in payment of the accrued dividends on each share of
Series B Stock, for a conversion ratio of 5.54.

     In an effort to balance the interests of the holders of the Series B Stock
and of our other stockholders, in approving Proposal 2 our board adopted a
conversion of six shares of common stock for each shares of Series B Stock (four
shares of common stock for each share of Series B Stock after giving effect to
the proposed two-for-three reverse split of our common stock). Such conversion
ratio provides for the payment in full of all accrued and unpaid dividends on
the Series B Stock in shares of common stock.

Specifics of the Mandatory Conversion Proposal

     At present, the conversion of Series B Stock into common stock is at the
election of each individual holder of Series B Stock. The amendment in this
Proposal 2 would add a new Section 10 to the terms of the certificate of


                                       46










designations pertaining to the Series B Stock that would provide that if the
holders of a majority of the outstanding Series B Stock elect to convert their
shares of Series B Stock to common stock, then all of the outstanding Series B
Stock will automatically and without any further action convert into six shares
of our common stock (four shares after giving effect to the proposed
two-for-four reverse split of our common stock).

     Adoption of Proposal 2 (after giving effect to the proposed two-for-three
reverse stock split ) will result in a conversion ratio of four shares of common
stock for each share of the Series B Stock and the conversion of all 496,445
shares of Series B Stock outstanding as of June 30, 2003 into an aggregate of
approximately 1,985,780 shares of common stock.

     By Proposal 2, in addition to amending the certificate of designations
pertaining to the Series B Stock to provide for its mandatory conversion upon
the approval of the holders of a majority of the outstanding Series B Stock,
Frontline is requesting that the holders of the Series B Stock elect to
effectuate the mandatory conversion of all of the outstanding Series B Stock to
our common stock. Thus, if Proposal 2 is adopted, all of the Series B Stock will
automatically be converted to common stock.

     Proposal 2 provides a mechanism to effect the mandatory conversion of the
Series B Stock by requiring all of the outstanding shares to be converted upon
the approval by the holders of a majority of the outstanding shares of Series B
Stock. A copy of the proposed certificate of amendment to the certificate of
designations pertaining to the Series B Stock is attached to this proxy
statement as Annex F. You are encouraged to read the certificate of amendment
carefully.

     The amendments to the certificate of designations would become effective
upon filing the certificate of amendment with the Delaware Secretary of State,
which would occur as soon as possible following the approval of this Proposal 2
by the requisite stockholder votes at the annual meeting. The mandatory
conversion of the Series B Stock to common stock as described above would occur
immediately upon the filing of the certificate of amendment to the certificate
of designations.

Purpose and Background of the Mandatory Conversion Proposal

     The Series B Stock currently is traded on the AMEX under the symbol FNT.PR.
To maintain the listing of the Series B Stock on the AMEX, we must meet certain
listing standards established by the AMEX. We are not in compliance with the
AMEX listing standards with respect to the Series B Stock. We are proposing to
convert the Series B Stock into common stock to avoid the Series B Stock being
delisted from the AMEX.

     The AMEX rules require, among other things, that as a condition of the
continued listing of a security, the aggregate market value of shares of such
security publicly held must not fall below $1,000,000. In the event the
aggregate market value of shares of a security publicly held fall below
$1,000,000 for more than 90 consecutive days, the AMEX will consider suspending
dealings in, or removing from the list, such security.

     On January 16, 2003, the AMEX advised us that it is considering filing an
application to delist our Series B Stock because the aggregate market value of
the Series B Stock publicly held was less than $1,000,000 for more than 90
consecutive days. The AMEX granted us through February 21, 2003 to submit a plan
to the AMEX to achieve compliance with the AMEX listing standards.

     In order to address the AMEX listing issue, the board of directors convened
a meeting during which it evaluated potential plans that could be undertaken to
avoid the delisting of the Series B Stock from the AMEX, recognizing that such
an outcome was in the best interests of our stockholders. The board of directors
determined that the primary factor that has led to the Series B Stock falling
out of compliance with the AMEX listing requirements is that the holders of a
majority of the initially outstanding shares of Series B Stock have voluntarily
converted their Series B Stock into common stock, resulting in a diminution in
the aggregate market value of the publicly held Series B Stock that has not been
offset by an increase in the price of the Series B Stock. The board of directors
further determined that a plan aimed towards increasing the stock price of the
Series B Stock would be ineffective. Therefore, on February 21, 2003, after
considering a variety of alternatives, we submitted a plan of compliance to the
AMEX in which we stated that, to avoid delisting of the Series B Stock from the
AMEX, we intend to seek the necessary approvals to cause the holders of the
Series B Stock to convert all of the Series B Stock into common stock. The AMEX
has indicated that it will not take steps to delist the Series B Stock, provided
that we take timely action to convert the Series B Stock into common stock.


                                       47










Interests of Certain Persons in Approval of Series B Stock Conversion

     Interests in Frontline's Securities

     Certain of our directors and executive officers hold shares of our Series B
Stock. The following table identifies the directors and executive officers who
currently hold shares of our Series B Stock, the number of such shares held by
each such person, and the number of shares of common stock into which such
shares of Series B Stock will be converted upon approval of Proposal 2 by our
stockholders (after giving effect to the proposed two-for-three reverse stock
split):




                             Number of         Number of
     Name                    Series B Shares   Common Shares
     ----                    ---------------   -------------
                                            
     Stephen Cole-Hatchard        50,450          201,800
     William A. Barron               200              800



Consequences of the Mandatory Conversion Proposal

     Issuance of Common Stock

     After giving effect to the conversion of the Series C Stock and Series D
Stock pursuant to Proposal 1, the conversion of the Series B Stock pursuant to
Proposal 2, and the two-for-three reverse stock split pursuant to Proposal 3,
Frontline's total outstanding shares of common stock would be 34,315,761, of
which approximately 5.8% would be owned by the former holders of the Series B
Stock.

     Elimination of Series B Stock

     Upon conversion of the Series B Stock into shares of common stock,
Frontline would no longer have any shares of Series B Stock outstanding. The
elimination of the outstanding Series B Stock would have several important
implications to the holders of Frontline's common stock and Series B Stock:

     Ranking. The Series B Stock ranks senior to our common stock, Series C
Stock and Series D Stock in right of payment of dividends and distributions upon
liquidation, dissolution or winding up of Frontline. The Series B Stock will
also rank senior to any other class of preferred stock that may be established
in the future, unless the holders of a majority of the outstanding shares of the
Series B Stock vote in favor of the establishment of a senior class of preferred
stock.

     Dividends. Holders of shares of Series B Stock are entitled to receive
annual cumulative dividends of $.60 per share, out of legally available funds,
payable semi-annually on June 30 and December 31 of each year, commencing June
30, 2000. The dividends are payable either in cash or in shares of common stock,
in Frontline's option (except that dividends payable upon a redemption of the
Series B Stock will be payable only in cash). Dividends are cumulative and
accrue from the date of first issuance of the Series B Stock and are payable to
holders of record as they appear on Frontline's stock books on the record dates
to be fixed by the board of directors. The number of shares of common stock to
be issued as a dividend are based on the average closing sales price of the
common stock on the five trading days immediately preceding the record date for
each dividend. No fractional shares of common stock will be issued. Instead,
Frontline must pay the cash equivalent of any fractional share.

     Liquidation Preference. In the event of any liquidation, dissolution or
winding up of Frontline, holders of shares of Series B Stock are entitled to
receive, out of legally available assets, a liquidation preference of $15.00 per
share, plus an amount equal to any accrued and unpaid dividends up to the
payment date, before any payment or distribution will be made to the holders of
common stock or any other capital stock that ranks junior to the Series B Stock.
Holders of shares of the Series B Stock will not be entitled to receive any
liquidation preference on their shares until the liquidation preference of any
senior capital stock has been paid in full.

     Optional Redemption. If at any time after the date of issuance of the
Series B Stock, the closing sales price of the common stock has been $8.80 or
more for any 15 consecutive trading days, Frontline may, at its option, by


                                       48










giving notice to the holders of the Series B Stock at any time during the five
business days after the last trading day in the 15 day trading period, redeem
all of the Series B Stock for $15.00 plus the amount of accrued and unpaid
dividends. Frontline also has the option to redeem all of the Series B Stock for
a payment in cash of $16.50 per share, plus accrued and unpaid dividends.

     Conversion. The Series B Stock is convertible into shares of common stock
at the option of the holder at any time after it is issued and up to the day
before the date fixed for redemption, if any. Shares of common stock currently
are issuable upon conversion of a share of the Series B Stock at a price of
$4.41 (equivalent to a conversion rate of 3.4 shares of common stock for each
share of Series B Stock). The conversion rate is subject to adjustment for stock
splits, reverse stock splits and other similar capitalization changes. Also, the
conversion rate is subject to adjustment for the issuance of rights or warrants
to holders of common stock entitling them to purchase common stock at a price
below the then-current market price, and for extraordinary dividends to holders
of stock junior or equal to the Series B Stock. No fractional shares of common
stock will be issued upon conversion. Instead, Frontline will pay the cash
equivalent of any fractional shares.

     Special Voting Rights. Generally, the holders of Series B Stock are not
entitled to voting rights unless required by law or except as to matters
affecting their rights as preferred stockholders, including the issuance of
stock ranking on a parity with or senior to the Series B Stock upon liquidation
or dissolution of Frontline. If dividends on the Series B Stock are in arrears
and unpaid for six or more dividend periods (whether or not consecutive), then
the board of directors will be increased by two members, who will be elected by
the holders of the then-outstanding shares of Series B Stock. These voting
rights will continue until all dividends in arrears on the Series B Stock are
paid in full, or the Series B Stock is redeemed. In any case, the voting rights
will terminate if at any time there are fewer than 25,000 shares of Series B
Stock outstanding. After the voting rights are terminated, the terms of the
directors elected by the holders of Series B Stock will terminate and the size
of the board of directors will be reduced by two members. In connection with any
vote where holders of Series B Stock have the right to vote, each outstanding
share of Series B Stock will be entitled to one vote.

     The approval of Proposal 2 will eliminate each of the these rights and
privileges (for both Frontline and the holders of Series B Stock) and convert
the Series B Stock into common stock as set forth in "Conversion" above.

Resale of Common Stock Exchanged for Series B Stock

     The conversion of the Series B Stock into common stock of Frontline will be
made pursuant to an exemption from registration under Section 3(a)(9) of the
Securities Act of 1933. For purposes of the Securities Act, the shares of common
stock to be issued in exchange for the Series B Stock will be subject to the
same restrictions on resale, if any, as are applicable at present to the Series
B Stock of such holder. Affiliates of Frontline and holders of restricted shares
will continue to be subject to the resale restrictions specified in Rule 144
issued under the Securities Act.

Certain Federal Tax Consequences

     Introduction

     The following discussion summarizes certain United States federal income
tax consequences to Frontline and its stockholders of the conversion of the
Series B Stock to common stock pursuant to Proposal 2. This summary does not
purport to be complete. It does not address all of the United States federal
income tax considerations, including considerations that may be relevant to
Frontline stockholders in light of their individual circumstances or to
Frontline stockholders that are subject to special rules, such as financial
institutions, tax-exempt organizations, insurance companies, dealers in
securities, traders who mark to market, non-U.S. stockholders, stockholders who
hold shares of Frontline stock as part of a straddle, hedge, or conversion
transaction, stockholders who acquired their shares of Frontline stock pursuant
to the exercise of employee stock options or otherwise as compensation,
stockholders who are subject to the federal alternative minimum tax, and
stockholders not holding their shares of Frontline stock as a capital asset.
This discussion also does not address any non-income tax consequences or any
state, local, or non-U.S. tax consequences.

     No rulings from the Internal Revenue Service or opinions of counsel have
been or will be requested with respect to any of the matters discussed herein
and, as a result, there can be no assurance that the Internal Revenue Service
will not disagree with or challenge any of the conclusions described below. The
discussion below is based


                                       49










upon the provisions of the Code, the Treasury Regulations promulgated
thereunder, judicial decisions and administrative rulings currently in effect,
all of which are subject to change, possibly on a retroactive basis. The summary
does not address the tax consequences of any transaction other than the
conversion of the Series B stock.

     EACH FRONTLINE STOCKHOLDER SHOULD CONSULT HIS, HER OR ITS TAX ADVISOR AS TO
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO FRONTLINE AND TO SUCH
STOCKHOLDER OF THE CONVERSION OF THE SERIES B STOCK. EACH FRONTLINE STOCKHOLDER
SHOULD ALSO CONSULT HIS, HER OR ITS TAX ADVISOR AS TO ANY STATE, LOCAL, NON-U.S.
AND NON-INCOME TAX CONSIDERATIONS RELEVANT TO SUCH STOCKHOLDER AS A RESULT OF
THE CONVERSION OF THE SERIES B STOCK.

     Tax Consequences to Frontline Stockholders

     General. Under Section 354 of the Code, a stockholder who exchanges stock
or securities of a corporation solely for stock or securities of the same
corporation, in a transaction that constitutes a "recapitalization" within the
meaning of Section 368(a)(1)(E) of the Code, generally will not recognize gain
or loss on the exchange. Frontline believes that the conversion of the Series B
Stock pursuant to Proposal 2 will constitute a "recapitalization" within the
meaning of Section 368(a)(1)(E) of the Code. The remainder of this discussion
assumes that the conversion will be treated as a "recapitalization" within the
meaning of Section 368(a)(1)(E) of the Code.

     Treatment of existing holders of Frontline common stock. The existing
holders of shares of Frontline common stock will not recognize gain or loss as a
result of the conversion of the Series B Stock pursuant to Proposal 2.

     Treatment of Frontline stockholders that exchange shares of Frontline
Series B Stock for shares of Frontline common stock. As discussed above, a
stockholder exchanging stock or securities solely for other stock or securities
in a "recapitalization" within the meaning of Section 368(a)(1)(E) of the Code
generally will not recognize gain or loss on the exchange. However, under
Section 305 of the Code and the Treasury Regulations thereunder, under certain
circumstances, a recapitalization may be deemed to result in a taxable
distribution with respect to the preferred stock. In particular, a deemed
distribution will occur if (i) the recapitalization is pursuant to a plan to
periodically increase a stockholder's proportionate interest in the assets or
earnings and profits of the corporation, or (ii) a stockholder holding preferred
stock with dividends in arrears exchanges his stock for other stock and, as a
result, increases his proportionate interest in the assets or earnings and
profits of the corporation.

     Frontline believes that the conversion of the Series B Stock is an isolated
transaction, and not part of a plan to periodically increase a stockholder's
proportionate interest in Frontline. Nevertheless, because there are accrued and
unpaid dividends with respect to the Series B Stock, holders of Series B Stock
potentially could be treated as receiving a distribution from Frontline. The
amount of a deemed distribution resulting because dividends in arrears is
limited to the lesser of (i) the amount by which the fair market value of the
Frontline common stock received (determined immediately following the conversion
of Series B Stock) exceeds the issue price of the Series B Stock surrendered, or
(ii) the amount of the dividends in arrears. The issue price of the Series B
Stock significantly exceeds the current fair market value of the common stock
that holders of Series B Stock will receive in connection with the conversion of
the Series B Stock pursuant to Proposal 2.

     The Internal Revenue Service, however, may take the position that the
amendments the certificate of designations pertaining to the Series B Stock
necessary to permit the conversion of the Series B Stock pursuant to Proposal 2
should be analyzed separately from the conversion itself. A change in the
conversion rate of preferred stock generally results in deemed distribution
under Section 305 of the Code. If the Internal Revenue Service were to
successfully assert that those amendments (which alter the terms of the Series B
Stock) themselves caused a deemed distribution, then the amount of the deemed
distribution resulting therefrom would not be subject to the limitations
described above. Nevertheless, Frontline believes, and the remainder of this
discussion assumes, that the conversion of the Series B Stock pursuant to
Proposal 2 will not result in a deemed distribution to Frontline stockholders.

     In light of the foregoing, Frontline believes that a holder of shares of
Series B Stock who receives shares of common stock in exchange for shares of the
Series B Stock in connection with the conversion of the Series B Stock pursuant
to Proposal 2 will not recognize gain or loss upon such exchange.


                                       50










     Tax basis of Frontline common stock. The aggregate tax basis of the
Frontline common stock received by Frontline stockholders in exchange for their
shares of Series B Stock will be the same as the aggregate tax basis of the
shares of Series B Stock surrendered in connection with the conversion of the
Series B Stock pursuant to Proposal 2.

     Holding period of Frontline common stock. The holding period of the
Frontline common stock received by Frontline stockholders in exchange for their
shares of Series B Stock in connection with the conversion of the Series B Stock
pursuant to Proposal will include the holding period of the shares of Series B
Stock surrendered in exchange therefor.

     Information Reporting. Frontline stockholders who receive shares of
Frontline common stock in connection with the conversion of the Series B Stock
pursuant to Proposal 2 will be required to attach a statement to their tax
returns for the year in which the conversion occurs that contains the
information listed in Treasury Regulation Section 1.368-3(b). Such statement
must include the holder's tax basis in that holder's shares of Series B Stock
surrendered in connection with the conversion and a description of the shares of
common stock received in the conversion.

     Tax Consequences to Frontline

     Frontline will not recognize gain or loss by reason of the conversion of
the Series B Stock pursuant to Proposal 2.

Accounting Treatment of the Preferred Conversion

     The conversion of the Series B Stock at the proposed conversion ratio of
6.1 would result in the reclassification of the Series B Stock account balance
($4,964 as of March 31, 2003) to Frontline's stockholders' equity accounts,
specifically common stock and additional paid-in capital. Additionally, the
excess of the fair value of the common stock issued to the holders of Series B
Stock over the fair value of the securities issuable pursuant to the original
conversion terms is considered to be a deemed dividend to the holders of Series
B Stock. Accordingly, such dividend would be reflected as a reduction to
retained earnings and an increase in the net loss applicable to common
stockholders for purposes of computing net loss per share of common stock.
Assuming a fair value of $0.42 per share of common stock, the increase in net
loss applicable to common stockholders would be $95,317.

Dissenters' Rights of Appraisal

     Delaware law does not provide for appraisal rights with respect to the
amendments to the certificate of designations to be effected pursuant to
Proposal 2.

Required Vote

     Under Delaware law, approval of Proposal 2 requires the affirmative vote
of:

     o    the holders of a majority of the outstanding shares of Series B Stock,
          voting separately as a single class; and

     o    the holders of a majority of outstanding shares of the common stock,
          voting separately as a single class.

Abstentions and broker non-votes have the effect of a vote against Proposal 2.

Board Recommendation

     The board of directors unanimously recommends a vote FOR Proposal 2.


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                                   PROPOSAL 3

             AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO EFFECT
           A REVERSE SPLIT OF THE COMMON STOCK AND AN INCREASE IN THE
                   NUMBER OF AUTHORIZED SHARES OF COMMON STOCK

General

     The background information necessary to understand fully this Proposal 3
and the reasons why Frontline is seeking stockholder approval of this proposal
are set forth above in the section captioned "Questions and Answers About
Proposals 1, 2 and 3". We urge you to read that background section carefully.

     Proposal 3 relates to adoption of amendments to our certificate of
incorporation authorizing the following:

     o    a reverse stock split in which all outstanding shares of our common
          stock would be exchanged at a ratio of two-for-three; and

     o    an increase in the number of authorized shares of common stock from
          25,000,000 shares to 100,000,000 shares.

     The test of the proposed amendments to our certificate of incorporation
pertaining to the proposed reverse stock split and increase in authorizes shares
is incorporated as paragraphs 7 and 8 of the certificate of amendment, attached
to this proxy statement as Annex G. The amendments to the certificate of
incorporation would become effective upon filing the amendment with the Delaware
Secretary of State, which would occur as soon as possible following the approval
of this Proposal 3 by the stockholders at the annual meeting.

The Reverse Split

     Purpose and Background of the Reverse Split

     Our primary objective in proposing the reverse split is to attempt to raise
the per share trading price of our common stock. The closing bid price of our
common stock has been below $1.00 per share since October 3, 2000. On June 30,
2003, the closing price was $0.38.

     The board of directors believes that the low per share market price of the
common stock impairs its marketability to and acceptance by institutional
investors and other members of the investing public and creates a negative
impression of Frontline generally. Theoretically, decreasing the number of
shares of common stock outstanding should not, by itself, affect the
marketability of the shares, the type of investor who would be interested in
acquiring them, or our reputation in the financial community. In practice,
however, many investors and market makers consider low-priced stocks as unduly
speculative in nature and, as a matter of policy, avoid investment and trading
in such stocks. The presence of these negative perceptions may be adversely
affecting, and may continue to adversely affect, not only the pricing of the our
common stock, but also its trading liquidity. In addition, these perceptions may
affect our commercial business and our ability to raise additional capital
through the sale of stock or the cost of debt we may incur.

     We hope that the decrease in the number of shares of our outstanding common
stock resulting from the reverse split, and the anticipated increase in the
price per share, will encourage greater interest in the common stock among
members of the financial community and the investing public and possibly create
a more liquid market for our stockholders with respect to those shares presently
held by them. However, the possibility exists that stockholder liquidity may be
adversely affected by the reduced number of shares which would be outstanding if
the reverse split is effected, particularly if the price per share of the common
stock begins a declining trend after the reverse split is effected.

     There can be no assurance that the reverse split will achieve any of the
desired results. There also can be no assurance that the price per share of the
common stock immediately after the reverse split will increase proportionately
with the reverse split, or that any increase will be sustained for any period of
time.

     We are not aware of any present efforts by anyone to accumulate the common
stock, and the proposed reverse split is not intended to be an anti-takeover
device.


                                       52










     Effect on Outstanding Common Stock; No Fractional Shares

     The principal effects of the reverse split will be to decrease the number
of outstanding shares of our common stock. The total number of shares of common
stock each stockholder holds will be reclassified automatically into the number
of shares equal to the number of shares each stockholder held immediately before
the reverse split in accordance with the two-for-three exchange ratio. If the
total number of shares a stockholder holds is not evenly divisible by the
two-for-three exchange ratio, that stockholder will not receive a fractional
share but instead will receive cash in an amount equal to the fraction of a
share that stockholder otherwise would have been entitled to receive multiplied
by the last reported sale price of the common stock before the reverse split
takes effect.

     The reverse split will result in some stockholders owning "odd-lots" of
less than 100 shares of common stock. Brokerage commissions and other costs of
transactions in odd-lots are generally higher than the costs of transactions in
"round-lots" of even multiples of 100 shares.

     The proposed reverse stock split will not otherwise alter or modify the
rights, preferences, privileges or restrictions of the common stock.

     Effect on Outstanding Preferred Stock, Options and Warrants

     Under the terms of our outstanding Series B Stock, Series C Stock, Series D
Stock, options and warrants, when the reverse split becomes effective, the
number of shares of common stock covered by each of them will be decreased and
the conversion or exercise price per share will be increased in accordance with
the two-for-three exchange ratio of the reverse split.

     No Effect on Legal Ability to Pay Dividends

     The board of directors has not in the past declared, nor does it have any
plans to declare in the foreseeable future, any distributions of cash, dividends
or other property to the holders of common stock. We are not in arrears on any
dividends to the holders of common stock. Holders of our Series B Stock are
entitled to receive annual cumulative dividends of $.60 per share payable
semi-annually in June and December of each year. The dividends may be paid in
cash or in shares of common stock, at our discretion. In June and December 2002
and June 2003, our directors did not declare a dividend on our Series B Stock.
Under the terms of the Series B Stock, failure to declare a dividend for six ore
more dividend periods constitutes a default which would confer certain voting
rights upon the holders of the Series B Stock, and empower them to elect two
directors to the board of directors. At December 31, 2002, unpaid dividends
represented $297,867. We do not believe that the reverse split will have any
effect with respect to future distributions, if any, to our stockholders.

     Payment for Fractional Shares; Exchange of Stock Certificates

     We will appoint our transfer agent, American Stock Transfer & Trust
Company, at 59 Maiden Lane, New York, New York 10038, to act as exchange agent
for holders of the common stock in connection with the reverse split. We will
deposit with the exchange agent, as soon as practicable after the effective date
of the reverse split, cash in an amount equal to the value of the estimated
aggregate number of fractional shares that will result from the reverse split.
The funds required to purchase the fractional share interests are available and
will be paid from our current cash reserves. Our stockholder list shows that
some of the outstanding common stock is registered in the names of clearing
agencies and broker nominees. Because we do not know the numbers of shares held
by each beneficial owner for whom the clearing agencies and broker nominees are
record holders, we cannot predict with certainty the number of fractional shares
that will result from the reverse split or the total amount it will be required
to pay for fractional share interests. However, we do not expect that the amount
will be material.

     As of the record date for the annual meeting, there were approximately 255
holders of record of our common stock (although we had significantly more
beneficial holders). We do not expect the reverse split and the payment of cash
in lieu of fractional shares to result in a significant reduction in the number
of record holders. We presently do not intend to seek any change in our status
as a reporting company for federal securities law purposes, either before or
after the reverse split.

     On or after the effective date of the reverse split, we will mail a letter
of transmittal to each stockholder. Each stockholder will be able to obtain a
certificate evidencing its post-reverse split shares and, if applicable, cash in


                                       53










lieu of a fractional share only by sending the exchange agent its old stock
certificate(s), together with the properly executed and completed letter of
transmittal and such evidence of ownership of the shares as we may require.
Stockholders will not receive certificates for post-reverse-split shares unless
and until their old certificates are surrendered. Stockholders should not
forward their certificates to the exchange agent until they receive the letter
of transmittal, and they should only send in their certificates with the letter
of transmittal. The exchange agent will send each stockholder's new stock
certificate and payment in lieu of any fractional share promptly after receipt
of that stockholder's properly completed letter of transmittal and old stock
certificate(s).

     Stockholders will not have to pay any service charges in connection with
the exchange of their certificates or the payment of cash in lieu of fractional
shares.

     Certain Federal Tax Consequences

     The following discussion summarizes certain United States federal income
tax consequences to Frontline and its stockholders of the reverse stock split
pursuant to Proposal 3. This summary does not purport to be complete. It does
not address all of the United States federal income tax considerations,
including considerations that may be relevant to Frontline stockholders in light
of their individual circumstances or to Frontline stockholders that are subject
to special rules, such as financial institutions, tax-exempt organizations,
insurance companies, dealers in securities, traders who mark to market, non-U.S.
stockholders, stockholders who hold shares of Frontline stock as part of a
straddle, hedge, or conversion transaction, stockholders who acquired their
shares of Frontline stock pursuant to the exercise of employee stock options or
otherwise as compensation, stockholders who are subject to the federal
alternative minimum tax, and stockholders not holding their shares of Frontline
stock as a capital asset. This discussion also does not address any non-income
tax consequences or any state, local, or non-U.S. tax consequences.

     No rulings from the Internal Revenue Service or opinions of counsel have
been or will be requested with respect to any of the matters discussed herein
and, as a result, there can be no assurance that the Internal Revenue Service
will not disagree with or challenge any of the conclusions described below. The
discussion below is based upon the provisions of the Code, the Treasury
Regulations promulgated thereunder, judicial decisions and administrative
rulings currently in effect, all of which are subject to change, possibly on a
retroactive basis. The summary does not address the tax consequences of any
transaction other than the reverse stock split.

     EACH FRONTLINE STOCKHOLDER SHOULD CONSULT HIS, HER OR ITS TAX ADVISOR AS TO
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO FRONTLINE AND TO SUCH
STOCKHOLDER OF THE REVERSE STOCK SPLIT. EACH FRONTLINE STOCKHOLDER SHOULD ALSO
CONSULT HIS, HER OR ITS TAX ADVISOR AS TO ANY STATE, LOCAL, NON-U.S. AND
NON-INCOME TAX CONSIDERATIONS RELEVANT TO SUCH STOCKHOLDER AS A RESULT OF THE
REVERSE STOCK SPLIT.

     Tax Consequences to Frontline Stockholders

     General. Under Section 354 of the Code, a stockholder who exchanges stock
or securities of a corporation solely for stock or securities of the same
corporation, in a transaction that constitutes a "recapitalization" within the
meaning of Section 368(a)(1)(E) of the Code, generally will not recognize gain
or loss on the exchange. Frontline believes that the reverse stock split
pursuant to Proposal 3 will constitute a "recapitalization" within the meaning
of Section 368(a)(1)(E) of the Code. The remainder of this discussion assumes
that the conversion will be treated as a "recapitalization" within the meaning
of Section 368(a)(1)(E) of the Code.

     Tax basis of Frontline common stock. The aggregate tax basis of the
Frontline common stock received by Frontline stockholders in exchange for their
common stock (including fractional shares of common stock that are converted to
cash) will be the same as the aggregate tax basis of the shares of common stock
surrendered in connection with the reverse stock split pursuant to Proposal 3.

     Holding period of Frontline common stock. The holding period of the
Frontline common stock received by Frontline stockholders in exchange for their
shares of common stock in connection with the reverse stock split pursuant to
Proposal 3 (including fractional shares of common stock that are converted to
cash) will include the holding period of the shares of common stock surrendered
in exchange therefor.


                                       54










     Receipt of cash in lieu of fractional shares of Frontline common stock. A
holder of shares of Frontline common stock who receives cash in lieu of a
fractional share of Frontline common stock will be treated as having received
that fractional share in connection with the conversion and then as having
exchanged that fractional share for cash in a redemption by Frontline. The
holder will recognize gain or loss on this deemed redemption in an amount equal
to the difference between the portion of the tax basis of the holder's shares of
common stock surrendered in connection with the reverse stock split that is
allocated to that fractional share and the cash received in lieu thereof. Such
gain or loss generally will be capital gain or loss, and will be long-term
capital gain or loss if the holding period of the shares of common stock
surrendered in connection with the common stock is more than one year as of the
effective date of the reverse stock split.

     Information Reporting. Frontline stockholders who receive shares of
Frontline common stock in connection with the reverse stock split pursuant to
Proposal 3 will be required to attach a statement to their tax returns for the
year in which the conversion occurs that contains the information listed in
Treasury Regulations Section 1.368-3(b). Such statement must include the
holder's tax basis in that holder's shares of common stock surrendered in
connection with the reverse stock split.

     Tax Consequences to Frontline

     Frontline will recognize neither gain nor loss by reason of the reverse
stock split pursuant to Proposal 3.

     Miscellaneous

     The common stock is currently registered under the Securities Exchange Act
of 1934, as amended, and, as a result, we are subject to the periodic reporting
and other requirements of the Securities Exchange Act. The reverse split will
not affect the registration of the common stock under the Securities Exchange
Act. The par value of the common stock will not change as a result of the
reverse split. Accordingly, the common stock account on our consolidated balance
sheet will be reduced with the additional paid-in capital account being credited
with the amount by which the common stock account was reduced.

Increase in Authorized Shares of Common Stock

     Current Capitalization

     Our authorized capital currently consists of 25,000,000 shares of common
stock, par value $.01 per share, and 2,000,000 shares of preferred stock, par
value $.01 per share. Under the terms of our certificate of incorporation and
bylaws, the board of directors has the authority to divide the shares of our
preferred stock into series, to establish and modify the preferences,
limitations and relative rights of each share of our preferred stock, and
otherwise to impact or modify our capitalization. The board of directors has
invoked such authority to establish three classes of preferred stock, the Series
B Stock, of which 1,250,000 shares are authorized (and of which 496,445 shares
are outstanding as of the record date), the Series C Stock, of which 220,000
shares are authorized (and of which 220,000 shares are outstanding as of the
record date), and the Series D Stock, of which 35,500 shares are authorized (and
of which 35,500 shares are outstanding as of the record date).

     As of the record date for the annual meeting, and without giving effect to
the proposed two-for-three reverse split, our capitalization was as follows:

     o    10,169,972 shares of common stock were outstanding;

     o    1,687,913 shares of common stock were reserved for future issuance
          upon conversion of our Series B Stock;

     o    33,000,000 shares of common stock were reserved for future issuance
          upon conversion of our Series C Stock;

     o    5,325,000 shares of common stock were reserved for future issuance
          upon conversion of our Series D Stock; and

     o    3,800,000 shares of common stock were reserved for future issuance
          under our stock incentive plans and employee stock plans, of which
          approximately 1,283,200 were covered by outstanding options; and


                                       55










     o    1,365,000 shares reserved for future issuance under other outstanding
          options and warrants.

     Thus, as of the record date, and without giving effect to the proposed
two-for-three reverse stock split, a total of 55,347,885 shares of common stock
were either issued and outstanding or reserved for issuance upon conversion or
exercise of other outstanding securities. Such amount exceeded our authorized
common stock by 30,347,885 shares.

     Purpose and Background of the Increase in Authorized Shares

     The number of shares of common stock reserved for future issuance exceeds
the number of shares authorized for issuance by 30,347,885 shares. We are
proposing to increase the total number of our authorized shares of common stock
to 100,000,000 so that we will have sufficient authorized but unissued common
stock to permit conversion and exercise of all of our currently outstanding
securities, and in addition enable us to respond quickly to opportunities to
raise capital in public or private offerings and issue shares in business
combinations. The additional authorized shares may be used for any proper
corporate purpose approved by the board of directors (subject only to such
stockholder approval requirements as may apply in the case of business
combination transactions). The availability of additional authorized shares will
enable the board of directors to act with flexibility and dispatch when
favorable opportunities arise to enhance our capital structure. Additional
shares may be issued in connection with public or private offerings for cash,
acquisitions of other businesses, employee benefit plans and stock dividends.

     We believe that the proposed increase in authorized common stock will make
sufficient shares available for use pursuant to the purposes described herein.
Other than as specified above and as permitted or required under our employee
benefit plans and under outstanding options, warrants and other securities
convertible into common stock, we have no present arrangements, agreements or
understandings for the use of the additional shares proposed to be authorized.
No additional action or authorization by the stockholders would be necessary
prior to the issuance of any additional shares, unless required by applicable
law or the rules of any stock exchange or quotation system on which the common
stock is then listed or quoted. We reserve the right to seek a further increase
in authorized shares from time to time in the future as we consider appropriate.

     Effect on Outstanding Common Stock

     The additional shares of common stock authorized by the proposed amendment
would have the same privileges as the shares of common stock currently
authorized and issued. Stockholders do not have preemptive rights under our
certificate of incorporation and will not have such rights with respect to the
additional authorized shares of common stock. The increase in authorized shares
would not affect the terms or rights of holders of existing shares of common
stock. All outstanding shares of common stock would continue to have one vote
per share on all matters to be voted on by the stockholders, including the
election of directors.

     The issuance of any additional shares of common stock may, depending on the
circumstances under which those shares are issued, reduce stockholders' equity
per share and, unless additional shares are issued to all stockholders on a pro
rata basis, will reduce the percentage ownership of common stock of existing
stockholders. In addition, if the board of directors elects to issue additional
shares of common stock, such issuance could have a dilutive effect on the
earnings per share, voting power and shareholdings of current stockholders. We
expect, however, to receive consideration for any additional shares of common
stock issued, thereby reducing or eliminating any adverse economic effect to
each stockholder of such dilution.

     The proposed increase in the authorized number of shares of common stock
will not otherwise alter or modify the rights, preferences, privileges or
restrictions of the common stock.

     Potential Anti-Takeover Effect

     The proposed amendment to increase the number of authorized shares of
common stock could, under certain circumstances, have an anti-takeover effect.
For example, in the event of a hostile attempt to take over control of
Frontline, it may be possible for us to endeavor to impede the attempt by
issuing shares of common stock, thereby diluting or impairing the voting power
of the other outstanding shares of common stock and increasing the potential
costs to acquire control of Frontline. The amendment therefore may have the
effect of discouraging unsolicited takeover attempts, thereby potentially
limiting the opportunity for our stockholders to dispose of their


                                       56










shares at the higher price generally available in takeover attempts or that may
be available under a merger proposal. The proposed amendment may have the effect
of permitting our current management, including the current board of directors,
to retain its position, and place it in a better position to resist changes that
stockholders may wish to make if they are dissatisfied with the conduct of our
business. This proposal to increase the authorized common stock has been
prompted by business and financial considerations.

Dissenters' Rights of Appraisal

     Delaware law does not provide for appraisal rights with respect to the
amendments to the certificate of incorporation to be effected pursuant to
Proposal 3.

Required Vote

     The affirmative vote of the holders of not less than a majority of the
outstanding shares of common stock is required to approve the proposed
amendments to the certificate of incorporation to effect a two-for-three reverse
split of the common stock and an increase in the number of authorized shares of
common stock from 25,000,000 shares to 100,000,000 shares (Proposal 3).
Abstentions and broker non-votes will have the effect of a vote against Proposal
3.

Board Recommendation

     The board of directors unanimously recommends a vote FOR Proposal 3.


                                       57










                                   PROPOSAL 4

    AN AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO CHANGE OUR NAME FROM
        FRONTLINE COMMUNICATIONS CORPORATION TO PROVO INTERNATIONAL, INC.

General

     Proposal 4 relates to adoption of an amendment to our certificate of
incorporation to change our name from Frontline Communications Corporation to
Provo International, Inc. The board of directors believes that, as a result of
the Provo acquisition, the name Provo International, Inc. better reflects our
current and anticipated future business.

     If Proposal 4 is approved, we will amend Section 1 of our certificate of
incorporation to change our name to Provo International, Inc. If Proposal 4 is
not so approved, Section 1 of our current certificate of incorporation will
remain in effect and our name will remain Frontline Communications, Inc. If
Proposal 4 is approved, without any further action by our stockholders, after
the name change, our name will be Provo International, Inc. and the outstanding
shares of our common stock shall be deemed to be common stock Provo
International, Inc. The voting and other rights that characterize the common
stock will remain the same and will not be altered by the name change.

     The text of the proposed amendment to our certificate of incorporation
pertaining to the proposed name change is incorporated in paragraph 6 to the
certificate of amendment, attached to this proxy statement as Annex G. The
amendment to the certificate of incorporation would become effective upon filing
the amendment with the Delaware Secretary of State, which would occur as soon as
possible following the approval of Proposal 4 by the stockholders at the annual
meeting.

Required Vote

     The affirmative vote of the holders of not less than a majority of the
outstanding shares of common stock is required to approve the proposed amendment
to the certificate of incorporation to change our name from Frontline
Communications, Inc. to Provo International, Inc. (Proposal 4). Abstentions and
broker non-votes will have the effect of a vote against Proposal 4. Approval of
Proposal 1 is necessary in order for Frontline to undertake Proposal 4.
Accordingly, unless our stockholders approve Proposal 1, we will be unable to
effect Proposal 4.

Board Recommendation

     The board of directors unanimously recommends a vote FOR Proposal 4.


                                       58










                                   PROPOSAL 5

                              ELECTION OF DIRECTORS

General

     The nine individuals nominated for election to our board of directors are
William A. Barron, Stephen Cole-Hatchard, Nicko Feinberg, Miguel Madero, Jaime
Marti, Ventura Martinez del Rio, Sr., Ventura Martinez del Rio, Jr., Jesus
Rodriguez] and Ronald C. Signore. Messrs. Barron, Cole-Hatchard, Feinberg,
Madero, Martinez del Rio Sr., Martinez del Rio, Jr. and Signore, are currently
Frontline directors.

     The board of directors believes that all of the nominees are willing and
able to serve as directors. Directors hold office for a term of one year and
until their successors have been duly elected and qualified. However, if the
directors appoint individuals to fill vacancies on the board of directors, such
appointed directors serve until the next annual meeting of stockholders and
until their successors are duly elected and qualified.

Required Vote

     Assuming that a quorum is present at the annual meeting, the nine nominees
receiving the highest number of affirmative votes of the shares of our common
stock present in person or represented by proxy at the annual meeting and
entitled to vote, shall be elected as directors. The shares represented by the
proxies will be voted in favor of the election as directors of the persons named
below unless authority to do so is withheld. Any shares not voted at the annual
meeting with respect to the election of directors (whether as a result of
abstentions, broker non-votes or otherwise) will have no impact on the vote.

Board Recommendation

     The board of directors unanimously recommends a vote FOR the election as
directors of the nine nominees identified herein.

Nominees

     The board of directors has fixed the number of directors to be elected at
the annual meeting at nine. The directors elected will hold office until the
next annual meeting of stockholders currently expected to be held on or about
June 30, 2004, and their respective successors are duly elected and qualified.
The nominees named below were nominated for election to the board of directors
by management. The name, age, business experience and public directorships of
each nominee are as set forth in the table (and accompanying nominee
descriptions) below:




              Name                  Age   Position Currently Held with Frontline
              ----                  ---   --------------------------------------
                                    
Ventura Martinez del Rio, Sr. (1)    53   Chairman of the Board
Stephen J. Cole-Hatchard             45   CEO, Director
Nicko Feinberg                       31   President U.S. Division, Director
Ventura Martinez del Rio, Jr.(1)     30   President Mexico Division, Director
William A. Barron                    54   Director
Miguel Madero                        54   Director
Jaime Marti(2)                       58   None
Jesus Rodriguez                      81   None
Ronald C. Signore                    42   Director



----------
(1)  Ventura Martinez del Rio, Sr. is the father of Ventura Martinez del Rio,
     Jr.

(2)  Jaime Marti is the brother-in-law of Ventura Martinez del Rio, Sr.


                                       59










     Following is additional information with respect to our directors:

     Ventura Martinez Del Rio, Sr. founded Provo in October 1995, and has served
as chairman of the board of Provo since its inception. He has been our chairman
since our acquisition of Provo in April 2003. From 1983 to 1994, Mr. Martinez
Del Rio, Sr. served in many executive leadership roles for the Mexican National
Lottery. Mr. Martinez Del Rio, Sr. earned an undergraduate degree in economics
from the Universidad Anahuac in Mexico in 1972 and an MBA from the University of
Texas in 1974. He is currently the president of the Texas EX's in Mexico, an
alumni organization of the University of Texas.

     Stephen J. Cole-Hatchard has been our chief executive officer since August
1997. Mr. Cole-Hatchard was our vice president of Finance from February 1997 to
August 1997, our president from August 1997 to July 2001, our chairman from
August 1997 to April 2003 and has been one of our directors since February 1997.
Mr. Cole-Hatchard was chief financial officer of Hudson Technologies, Inc., a
refrigerant services company specializing in recovery and decontamination
services, from 1993 to 1996. He has been a licensed attorney in New York since
1988. During the period from February 1997 until April 2001, Mr. Cole-Hatchard
also worked intermittently as a police officer for the town of Clarkstown, New
York.

     Nicko Feinberg founded Frontline in 1995, has been a director since
February 1997, and was appointed as president, U.S. operations in April 2003. He
was our executive vice president of Technology from November 1996 to July 2001,
Chief Information Officer from August 1997 to July 2001and president and chief
operating officer from July 2001 to April 2003. From 1994 to 1995 Mr. Feinberg
was a sales manager and, from April 1991 to April 1994, a sales account
executive, for Microage Computer Outlet, Inc., a company engaged in computer
sales.

     Ventura Martinez Del Rio, Jr. has been a director and president of Mexican
operations since our acquisition of Provo in April 2003. Mr. Martinez Del Rio,
Jr. joined Provo in 1996 as its chief operating officer, co-led the company
through its rapid growth from 1996 to 2001 and was named its chief executive
officer in 2001. He holds a BBA degree from the Universidad Anahuac in Mexico
and a graduate degree in business from Ipade Business School of Mexico City.

     William A. Barron has been a director since January 2000. Mr. Barron served
as vice president and chief financial officer of Hudson Technologies, Inc. from
July 1996 to March 1997. Previously, Mr. Barron was president and chief
operating officer for Diagnostek, Inc., a pharmacy benefit management company,
from May 1994 to October 1995, and executive vice president and chief financial
officer for Diagnostek, Inc. from March 1993 to April 1994. From February 2001
through July 2001, as part of our restructuring program, Mr. Barron served as
our interim vice president and chief operating officer.

     Miguel Madero has been a director since April 2003. Mr. Madero earned a BA
in Industrial Engineering from the Universidad Iberoamericana in Mexico City in
1971, and obtained an MBA from the University of Texas at Austin in 1975. In
September 1985, he co-founded Fomento y Direccion Economica, S.A. de C.V., a
financial advisory and investment banking firm in Mexico City where he currently
serves as a Managing Director. Mr. Madero is a director of Credito Inmobiliario
S.A. de C.V., a real estate financing company in Mexico.

     Jaime Marti earned a BA degree in Engineering from Philadelphia University
in 1969 and obtained an MBA from Ipade Business School of Mexico City in 1972.
In 2000 he co-founded JPJ Comunicacion, S.A. a pre-paid calling card
distributing company in Mexico where he currently serves as its Chairman and
Chief Executive Officer. From 1990 to 2000 he was the general manager of
Imprenta Madero S.A., a printing and editorial company in Mexico. In 1997
Imprenta Madero was merged with Refosa, S.A. and subsequently in 1998, the
company was acquired by G.T.C. Transcontinental of Canada.

     Jesus Rodriguez has been an external advisor to the Minister of Finance of
Mexico since 1998. Mr. Rodriguez has had a distinguished political and financial
career in Mexico. From 1994 to 1997 he was a member of the Mexican Congress and
a Senator from 1988 to 1994. Previously, Mr. Rodriguez held numerous high level
positions within Mexico's financial sector, including President of the Mexican
National Lottery, President of the Mexican Federal Securities Depository,
Mexico's representative and a director of the Inter-American Development Bank in
Washington, D.C. and undersecretary of the treasury in Mexico. Mr. Rodriguez
obtained a law degree from the National Autonomous University of Mexico in
Mexico City.


                                       60










     Ronald C. Signore has been a director since December 1997. Mr. Signore has
been a partner in the accounting firm of Gray, Signore & Co., LLP for more than
the past five years.

     Following is information with respect to certain of our officers:




     Name         Age      Position Currently Held with Frontline       Other Directorships
     -----        ---      --------------------------------------       -------------------
                                                                       
Vasan Thatham      45   Vice President and Chief Financial Officer              None

Amy Wagner-Mele    35   Executive Vice President, General Counsel and           None
                        Secretary



     Vasan Thatham, has been our vice president and chief financial officer
since February 1999. From 1994 through 1998, Mr. Thatham was vice president and
chief financial officer of Esquire Communications Ltd., a company engaged in
providing legal support services.

     Amy Wagner-Mele, has been our executive vice president and general counsel
since December 1998, and our secretary since September 1998. She served as our
vice president and corporate counsel from September 1998 to December 1998. From
September 1997 to August 1998, Ms. Wagner-Mele was an associate with the
national law firm of Winston & Strawn. From 1993 to 1997, Ms. Wagner-Mele was an
associate with the law firm of Podvey, Sachs, Meanor, Catenacci, Hildner &
Cocoziello, P.C.

Board Committees and Meetings

     During the fiscal year ended December 31, 2002, the board of directors held
ten meetings. In addition, the board took other action by unanimous written
consent in lieu of a meeting. During 2002, each member of the board participated
in at least 75% of all board and applicable committee meetings during the period
for which he was a director.

     The board of directors has an audit committee comprised of Messrs. Barron,
Madero and Signore, each of whom is an "independent director" under the rules of
the AMEX. The audit committee has a written charter that sets forth the duties
and responsibilities of its members. The audit committee supervises our audit
and financial procedures. During the fiscal year ended December 31, 2002, the
audit committee held four meetings.

     The board of directors also has a compensation/stock option committee which
makes recommendations to the board of directors concerning compensation and
stock options to executive officers and directors. The compensation committee is
comprised of Messrs. Barron Madero and Signore. During the fiscal year ended
December 31, 2002, the compensation/stock option committee held no meetings.

     The board of directors established a nominating committee in May 2003,
which recommends candidates for election to the board of directors. The
nominating committee is comprised of Messrs. Barron, Madero and Signore. The
nominating committee will consider nominees recommended by stockholders. The
nominating committee has not established any formal procedures to be followed in
submitting recommendations.

Executive Compensation

     The following table sets forth compensation paid to our chief executive
officer and our two other most highly compensated executive officers (each of
whom was serving at the end of our fiscal year ended December 31, 2002) during
the years ended December 31, 2002, 2001 and 2000. None of our other executive
officers received aggregate compensation which exceeded $100,000 during the year
ended December 31, 2002. We refer to these three executive officers as our
"Named Executives."


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                                                         Long-Term Compensation
                                                                Awards
      Name and                                            Securities Underlying
   Principal Position      Year    Salary     Bonus          Options/SARs (#)
   ------------------      ----   --------   -------     ----------------------
                                                    
Stephen J. Cole-Hatchard   2002   $112,482   $     0                 0
Chief Executive Officer    2001    114,423    67,725(1)         52,000
                           2000    117,692    34,500            25,000

Nicko Feinberg             2002   $107,761         0                 0
President                  2001    109,518    49,175(2)         52,000
                           2000    110,000    24,500            27,000

Vasan Thatham              2002   $105,265         0                 0
Chief Financial Officer    2001    109,518    15,051(3)         27,000
                           2000    110,000    18,500            12,000



----------
(1)  Includes $43,725, representing the fair market value on the date of the
     award of 291,500 shares of common stock issued under our 2001 Stock
     Incentive Plan.

(2)  Includes $35,175, representing the fair market value on the date of the
     award of 234,500 shares of common stock issued under our 2001 Stock
     Incentive Plan.

(3)  Includes $13,425, representing the fair market value on the date of the
     award of 89,500 shares of common stock issued under our 2001 Stock
     Incentive Plan.

     During the year ended December 31, 2002, we did not grant options to any of
our to our Named Executives. The following table sets forth information
concerning the number of options owned by our Named Executives, the value of any
in-the-money unexercised options as of December 31, 2002 and information
concerning options exercised by our Named Executives during the year ended
December 31, 2002:

           Aggregated Option Exercises and Year-End Option/SAR Values




                              Shares                        Number of Securities           Value of Unexercised
                             Acquired       Value          Underlying Unexercised              In-The-Money
                           On Exercise   Realized ($)    Options/SARs at 12/31/2002   Options/SARs at 12/31/2002 (1)
                           -----------   ------------   ---------------------------   -----------------------------
Name                                                    Exercisable   Unexercisable     Exercisable   Unexercisable
----                                                    -----------   -------------     -----------   -------------
                                                                                         
Stephen J. Cole-Hatchard        0             $0          302,000           0              $2,080          $0

Nicko Feinberg                  0              0          245,000           0               2,080           0

Vasan Thatham                   0              0          100,000           0              $1,080           0



----------
(1)  The year-end values for unexercised in-the-money options represent the
     positive difference between the exercise price of the options and the
     year-end market value of our common stock. An option is "in-the-money" if
     the year-end fair market value of our common stock exceeds the option
     exercise price. The closing sale price of our common stock on December 31,
     2002 was $.26.

Employment Agreements

     The board of directors has approved the adoption of employment agreements
between Frontline and/or its affiliates and Messrs. Martinez del Rio, Sr.,
Cole-Hatchard, Martinez Del Rio, Jr., Feinberg and Thatham that provide for an
annual base compensation of not less than $150,000, $150,000, $120,000, $120,000
and $115,000, respectively. The agreements will provide for certain base salary
increases in the event that we complete an equity financing in excess of
$3,000,000, and for certain bonuses in the event that we achieve certain revenue
objectives. The agreements will also allow for such bonuses as the board of
directors may, in its sole discretion, from time to


                                       62










time determine. The employment agreements with Messrs. Martinez Del Rio, Sr.,
Cole-Hatchard, Martinez Del Rio, Jr., Feinberg and Thatham will expire in April
2005, subject to automatic successive one-year renewals unless either we or the
employee gives notice of intention not to renew the agreement. With the
exception of Mr. Martinez del Rio Sr., the employment agreements will provide
for employment on a full-time basis, and each of the agreements will contain a
provision that the employee will not compete or engage in a business competitive
with our current or anticipated business during the term of the employment
agreement and for a period of two years thereafter.

     All of the employment agreements will provide that the employees shall be
paid additional compensation equal to 295% of their annual base salary in the
event of a change of ownership or effective control of our company (as defined
in the agreements). The anticipated change in control as a result of the
acquisition of Provo will not trigger the additional compensation clauses of the
employment agreements.

     In the event our stockholders fail to approve the conversion of the Series
C Stock as requested hereby, the employment agreements with Messrs. Martinez del
Rio, Sr. and Martinez del Rio, Jr. will terminate 90 days after the date that
the stockholders fail to approve such conversion.

Director Compensation

     Each of our non-employee directors received an annual retainer of $6,000 in
2002, and was reimbursed for his out-of-pockets costs incurred in attending
board meetings. The annual retainer has been increased to $12,000 per annum for
2003.

1997 Stock Option Plan

     In February 1997, the board of directors and stockholders adopted our 1997
Stock Option Plan, pursuant to which 500,000 shares of common stock were
reserved for issuance upon exercise of options. In June 2000, the board of
directors and our stockholders approved an amendment to increase to 2,000,000
the number of shares of common stock available for issuance upon exercise of
options under the Option Plan. Our Option Plan is designed to serve as an
incentive for retaining qualified and competent employees, directors and
consultants.

     The board of directors or a committee of our board administers our Option
Plan and is authorized, in its discretion, to grant options under that plan to
all eligible employees, including our officers, directors (whether or not
employees) and consultants. Our Option Plan provides for the granting of both
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended) and non-qualified stock options. Options can be
granted under our Option Plan on such terms and at such prices as determined by
the board of directors or its committee, except that the per share exercise
price of options will not be less than the fair market value of the common stock
on the date of the grant. In the case of an incentive stock option granted to a
stockholder who owns stock possessing more than 10% of the total combined voting
power of all of our classes of stock, the per share exercise price will not be
less than 110% of the fair market value on the date of grant. The aggregate fair
market value (determined on the date of grant) of the shares covered by
incentive stock options granted under our Option Plan that become exercisable by
a grantee for the first time in any calendar year is subject to a $100,000
limit.

     Options granted under our Option Plan will be exercisable during the period
or periods specified in each option agreement. Options granted under our Option
Plan are not exercisable after the expiration of ten years from the date of
grant (five years in the case of incentive stock options granted to a
stockholder owning stock possessing more than 10% of the total combined voting
power of all of our classes of stock) and are not transferable other than by
will or by the laws of descent and distribution.

2001 Stock Incentive Plan

     In June and July 2001, the board of directors and stockholders,
respectively, adopted our 2001 Stock Incentive Plan pursuant to which the grant
of any or all of the following types of awards may be made under the Incentive
Plan (collectively, "Awards"): (i) stock options, (ii) restricted stock, (iii)
deferred stock and (iv) other stock-based awards. Awards may be granted singly,
in combination, or in tandem, as determined by the administrators of the
Incentive Plan. A total of 1,800,000 shares of our common stock, subject to
anti-dilution adjustment as provided in the Incentive Plan, have been reserved
for distribution pursuant to the Incentive Plan. The maximum number of shares of
common stock that may be issued upon the grant of an Award to any individual
participant cannot exceed 500,000 shares during the term of the Incentive Plan.


                                       63










     The Incentive Plan can be administered by the board of directors or a
committee consisting of two or more non-employee members of the board of
directors appointed by the board. The board or the committee will determine,
among other things, the persons to whom Awards will be granted, the type of
Awards to be granted, the number of shares subject to each Award and the share
price. The board or the committee will also determine the term of each Award,
the restrictions or limitations thereon, and the manner in which each such Award
may be exercised or, if applicable, the extent and circumstances under which
common stock and other amounts payable with respect to an Award will be
deferred. Unless sooner terminated, the Incentive Plan will expire at the close
of business on June 20, 2011.

     The Incentive Plan provides for the grant of both incentive stock options
and non-qualified stock options. The exercise price of an incentive stock option
or a non-qualified stock option will not be less than the fair market value of
the shares underlying the option on the date the option is granted, provided,
however, that the exercise price of an incentive stock Option granted to a
stockholder who possesses more than 10% of the combined voting power of all
classes of our stock may not be less than 110% of such fair market value. The
aggregate fair market value (determined at the time the option is granted) of
the shares of common stock covered by an incentive stock option granted under
the Incentive Plan that become exercisable by a grantee for the first time in
any calendar year cannot exceed $100,000.

     The Incentive Plan contains anti-dilution provisions authorizing
appropriate adjustments in certain circumstances. Shares of common stock subject
to Awards which expire without being exercised or which are cancelled as a
result of the cessation of employment are available for further grants. Options
become exercisable in such amounts, at such intervals and upon such terms and
conditions as the board of directors or the committee provides.

     Under the Incentive Plan, the board or the committee may grant shares of
restricted common stock either alone or in tandem with other Awards. restricted
and deferred stock awards give the recipient the right to receive a specified
number of shares of common stock, subject to such terms, conditions and
restrictions as the board or the committee deems appropriate.

     Other stock-based Awards, which may include performance shares and shares
valued by reference to the performance of the Company or any parent or
subsidiary of the Company, may be granted under the Incentive Plan either alone
or in tandem with other Awards.

Voting Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth certain information relating to the
beneficial ownership of shares of our common stock by (i) each person or entity
who is known by us to own beneficially 5% or more of the outstanding common
stock, (ii) each of our directors, (iii) each of the Named Executives, and (iv)
all of our directors and executive officers as a group. Such information is as
of June 30, 2003, the record date for the annual meeting, and as of such date
but giving effect to the conversion of the Series B Stock, Series C Stock and
Series D Stock and in each case after giving effect to the proposed
two-for-three reverse stock split:




                                              Number of Shares
                                           Beneficially Owned (2)          Percentage Ownership
                                       ------------------------------   ---------------------------
Name of Beneficial Owner (1)           Actual (3)     As Adjusted (4)   Actual (3)   As Adjusted (4)
----------------------------          -----------     ---------------   ----------   ---------------
                                                                              
Ventura Martinez Del Rio, Sr.                 --       16,500,000(5)         --           48.1%
Stephen J. Cole-Hatchard               1,066,718(6)     1,798,592(7)       10.0%           5.2%
Nicko Feinberg                           866,500(8)     1,577,666(9)        8.2%           4.6%
Ventura Martinez Del Rio, Jr.                 --        5,500,000(10)        --           16.0%
William Barron                           178,972(11)      119,661(12)       1.7%           0.3%
Miguel Madero                                 --               --            --             --
Jaime Marti                                   --               --            --             --
Jesus Rodriguez
Ronald Signore                           329,032(13)      219,354           3.2%           0.6%
Vasan Thatham                            195,500(14)      230,334(15)       1.9%           0.7%
All directors and executive
   officers as a group (11 persons)    2,942,222(16)   26,249,273(17)      25.5%          74.7%



----------


                                       64










(1)  The address of each of the named persons is c/o Frontline Communications
     Corporation, P.O. Box 1548, Pearl River, New York 10965.

(2)  Unless otherwise indicated, we believe that all persons named in the table
     have sole voting and investment power with respect to all shares of common
     stock beneficially owned by them.

(3)  Actual ownership as of June 30, 2003.

(4)  As adjusted to give effect to the conversion of the Series B Stock, Series
     C Stock and Series D Stock and the proposed two-for-three reserve stock
     split.

(5)  Includes 16,500,000 shares issuable upon conversion of 165,000 shares of
     Series C Stock.

(6)  Includes 144,000 shares held by the Cole-Hatchard Family Limited
     Partnership, of which Mr. Cole-Hatchard is a general partner, 302,000
     shares issuable upon exercise of options and 171,530 shares issuable upon
     conversion of 50,450 shares of Series B Stock.

(7)  Includes 201,800 shares issuable upon conversion of 50,450 shares or
     Series B Stock and 1,000,000 shares issuable upon conversion of 10,000
     shares of Series D Stock.

(8)  Includes 125,000 shares issuable upon exercise of warrants and 245,000
     shares issuable upon exercise of options.

(9)  Includes 1,000,000 shares issuable upon conversion of 10,000 shares of
     Series D Stock.

(10) Includes 5,500,000 shares issuable upon conversion of 55,000 shares of
     Series C Stock.

(11) Includes 87,000 shares issuable upon exercise of options and 680 shares
     issuable upon conversion of 200 shares of Series B Stock.

(12) Includes 800 shares issuable upon conversion of 200 shares of Series B
     Stock.

(13) Includes 125,000 shares issuable upon exercise of warrants and 80,000
     shares issuable upon exercise of options

(14) Includes 100,000 shares issuable upon exercise of options.

(15) Includes 100,000 shares issuable upon conversion of 1,000 shares of Series
     D Stock.

(16) Includes 1,214,000 shares issuable upon exercise of options and warrants,
     172,210 shares issuable upon conversion of 50,650 shares of Series B Stock.

(17) Includes 24,402,600 shares issuable upon conversion of 50,650 Series B
     Stock, upon conversion of 220,000 shares of Series C Stock and upon
     conversion of 22,000 shares of Series D Stock.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act requires our directors,
executive officers and greater than 10% stockholders to file reports of their
ownership and any changes in ownership of our common stock with the Securities
and Exchange Commission. These directors, executive officers and greater than
10% stockholders are required by regulation to provide us with a copy of any
Section 16(a) reports they file. Based on our review of copies of these reports
received by it and written representations made to us by these persons, we
believe that all Section 16(a) filing requirements applicable to our directors,
executive officers and greater than 10% stockholders were satisfied during the
year ended December 31, 2002.

Certain Relationships and Related Transactions

     Credit Facilities and Guaranties - Frontline


                                       65










     In June 2002, two of our executive officers and directors, Nicko Feinberg
and Ronald Signore, purchased $50,000 in aggregate principal amount of our
promissory notes pursuant to our June 2002 private placement, and received
warrants to purchase 250,000 shares, in the aggregate, of our common stock at an
exercise price of $.08 per share. These purchases were all on terms and
conditions identical to those of the other investors in the private placement.
The promissory notes issued as a result of our June 2002 private placement,
which total $200,000, are due and payable upon a "change of control" of the
company. The issuance of shares of common stock upon conversion of the Series C
and Series D stock will constitute a change of control, and will trigger
repayment of these promissory notes.

     As a condition precedent to the closing of the Provo acquisition and in
order to finance certain of our expenses relating to the Provo acquisition, on
April 2, 2003, we entered into a bridge financing whereby we borrowed $550,000
from IIG Equity Opportunities Fund, Ltd., an unaffiliated lender. The loan is
evidenced by a secured promissory note. Two of our executive officers and
directors, Nicko Feinberg and Stephen J. Cole-Hatchard, pledged shares of our
common stock owned by them to IIG Equity as additional collateral securing its
bridge loan to us. In addition, Mr. Cole-Hatchard has personally guaranteed the
repayment of the bridge loan and mortgaged certain personal real estate to IIG
Equity as additional collateral for the bridge loan. For a description of the
terms of the bridge loan see "The Acquisition Transaction - Material Terms of
the Stock Purchase Agreement" beginning on page 29.

     Credit Facilities and Guaranties - Provo

     On June 29, 2001, Provo entered into a 6,000,000 pesos ($567,107 at the
current exchange rate) revolving line of credit with BBVA Bancomer, S.A. in
Mexico. The loan, which is due and payable in full on June 28, 2004, bears
interest at the Mexican Interbank Equilibrium Rate plus 4%; the current interest
rate is 10% per annum. The loan has been personally guaranteed by our chairman,
Ventura Martinez del Rio, Sr. In addition, Gloria Requejo-Martinez del Rio, the
wife of our chairman, mortgaged a house owned by her as collateral for the loan.

     On September 25, 2002, Provo entered into a 6,000,000 pesos ($567,107 at
the current exchange rate) revolving line of credit arrangement with BBVA
Bancomer, S.A. in Mexico. The loan, which is due and payable in full on
September 24, 2005, bears interest at the Mexican Interbank Equilibrium Rate
plus 4%; the current interest rate is 10% per annum. The loan has been
guaranteed by Inmobiliaria Turin, S.A. de C.V. ("Turin"), a company that is
owned by Gloria Requejo-Martinez del Rio, the wife of our chairman, and by her
brother, Alberto Requejo. As collateral for the loan, Turin mortgaged an
apartment building owned by it. Turin's guaranty obligation is without recourse
to any of its assets other than this mortgaged collateral.

     On September 25, 2002, Provo also entered into a 4,000,000 pesos ($378,071
at the current exchange rate) line of credit arrangement with BBVA Bancomer,
S.A. in Mexico. The loan bears interest at the Mexican Interbank Equilibrium
Rate plus 4%; the current interest rate is 10% per annum. The governing credit
agreement obligates Provo to make monthly payments of 100,000 pesos during the
first 12 months that the loan remains outstanding, and to make monthly payments
of 200,000 pesos during the subsequent 24 months that the loan remains
outstanding. The balance of the loan is due and payable in full on September 24,
2005. The loan has been guaranteed by Turin. Turin's guaranty obligation is
without recourse to any of its assets other than this mortgaged collateral.

     On June 30, 2001, Provo entered into a 5,000,000 pesos ($472,589 at the
current exchange rate) revolving line of credit with Scotiabank Inverlat, S.A.
in Mexico. The loan, which is due and payable in full on July 29, 2003, bears
interest at the Mexican Interbank Equilibrium Rate plus 3.5%; the current
interest rate is 9.5% per annum. The loan has been personally guaranteed by our
chairman, Ventura Martinez del Rio, Sr. In addition, Gloria Requejo-Martinez del
Rio, the wife of our chairman, mortgaged a ranch owned by her and pledged
certain funds on deposit with Scotiabank Inverlat, S.A. as collateral for
repayment of the loan.

     As security for Turin's guaranties of Provo's credits, Provo granted Turin
a lien on certain of its accounts receivable from selected customers (Wal-Mart,
S.A. de C.V., Operadora VIPS, S.A. de C.V., El Palacio de Hierro, S.A. de C.V.,
Cafeterias Toks, S.A. de C.V., CENCA Comercializadora, S.A. de C.V. and
Carrefour de Mexico, S.A. de C.V.). As of March 31, 2003, the aggregate face
value of these accounts receivable was 14,889,486 pesos ($1,407,323 at the
current exchange rate).

     It is our intention, as soon as practicable, to eliminate the personal
guaranties described above and to substitute collateral owned by us for the
existing collateral granted to BBVA Bancomer, S.A. and Scotiabank Inverlat, S.A.
by Mrs. Requejo-Martinez del Rio and Turin.


                                       66










     Transactions With Affiliated Companies - Provo

     Equity Ownership in Related Company. During 2001, Provo owned a 50% equity
interest in Provoloto, S.A. de C.V. ("Provoloto"), a lottery company. The
remaining 50% equity interest in Provoloto was owned by Comercializadora VGI,
S.A. de C.V. ("VGI"), owned by our chairman, Ventura Martinez del Rio, Sr., and
his three adult children (including our executive officer and director, Ventura
Martinez del Rio, Jr.). Provo accounted for this investment under the equity
method of accounting. During 2001, Provo recorded equity of $129,976 in the
earnings of Provoloto, representing its 50% interest in Provoloto's total
earnings. As of December 31, 2001, Provo's investment in Provoloto was $187,203,
representing its initial investment plus its share of Provoloto's cumulative
earnings. In January 2002, Provo transferred its investment in Provoloto to
Proyectos y Disenos Especializados, S.A. de C.V. ("PRODIES"), a lottery company
that is 90% owned by our chairman, Ventura Martinez del Rio, Sr., for cash
consideration of $141,053. In connection with this transfer, the excess of the
cash consideration received by Provo over the amount of Provo's investment in
Provoloto (in the amount of $46,150) was treated as a distribution by Provo to
Ventura Martinez del Rio, Sr. Subsequent to the divestiture of its interest in
Provoloto, Provo has had no ongoing involvement with Provoloto.

     Purchase of Real Estate. On March 10, 2003, Provo received in settlement
of accounts receivable an approximately 946-acre timberlands property located
in El Chamal, State of Tamaulipas, Mexico, from Inmobiliaria Nextar, S.A. de
C.V. ("Nextar"), a holding company wholly-owned by VGI. This property is
currently securing a line of credit with Telmex for 38,500,000 pesos ($3,680,000
at the current exchange rate). Provo purchased this property at a discount from
the property's appraised value. The price for this property was approximately
$1,592,000 (16,500,000 Mexican Pesos at the then prevailing exchange rate), of
which approximately $1,433,000 was paid by the transfer of aged accounts
receivable and $159,000 is payable pursuant to a promissory note. Such note
issued to Nextar bears interest at the Mexican Interbank Equilibrium Rate plus
3.5% (the current rate is 9.5% per annum), and is payable in 24 monthly payments
commencing on December 31, 2002 and continuing until December 31, 2004. As of
June 30, 2003, Provo has made no payments under such note. Nextar has not taken
any action regarding these loans. In addition, the note must be prepaid in full
in the event that we complete an equity financing in excess of $3,000,000.

     Settlement with Customer and Transfer of Real Estate to Telmex. During
2002, Provo held discussions with Jose L. Alfaro, an unrelated customer, wherein
Mr. Alfaro proposed to satisfy certain amounts owed by him to Provo and certain
of its affiliates by transferring to them certain real property. At the same
time, Provo held discussions with Telmex, whereby Provo proposed to satisfy
certain amounts owed by it to Telmex by transferring to Telmex certain real
property, including the real property proposed to be transferred to Provo by Mr.
Alfaro.

     On December 12, 2002, Provo entered into a settlement agreement with Mr.
Alfaro, whereby he transferred to Provo certain real property known as "Rancho
La Providencia" located in Coatepec, State of Mexico, Mexico, and valued by
Telmex at approximately 30 million pesos, in satisfaction of debts totaling
30,402,105 pesos ($2,873,544 at the current exchange rate) owed by Mr. Alfaro to
Provo and certain of Provo's affiliates and related companies, as follows:




                                                           Amount
       Party to Which Debt Owed                          (In pesos)
       ------------------------                          ----------
                                                      
Provo                                                     1,793,177
Proyecciones y Ventas Organizadas
   del D.F., S.A. de C.V. ("Provo DF")(1)                11,423,321
Ventura Martinez del Rio, Sr.                            11,200,000
PRODIES                                                   4,164,473
Provoloto                                                 1,821,134
                                                         ----------
   Total                                                 30,402,105



----------
(1)  A wholly-owned subsidiary of Provo.

     On March 10, 2003, as part of a settlement agreement entered into with
Telmex, Provo transferred the "Rancho La Providencia" property to Telmex in
satisfaction of 30,763,182 ($2,907,673 at the current exchange rate)


                                       67










of indebtedness owed by Provo to Telmex. For additional information regarding
the Telmex settlement see "The Acquisition Transaction -- Description of Provo's
Business - Telmex Settlement."

     To enable Provo to enter into the settlement agreement with Mr. Alfaro, on
December 12, 2002 Ventura Martinez del Rio, Sr., PRODIES and Provoloto each
assigned to Provo their respective rights to the sums owed to them by Mr. Alfaro
as set forth in the preceding table. As consideration for the assignment of
their rights against Mr. Alfaro, PRODIES and Provoloto each received a
promissory note in the amount of 1,821,134 pesos and 4,164,473 pesos,
respectively. As consideration for the assignment of his rights against Mr.
Alfaro, Provo transferred the following property to Ventura Martinez del Rio,
Sr.:

     o    accounts payable to Provo in the face amount of 7,068,150 pesos,
          payable by Desarrollo Arboledas, S.A. de C.V. (an unaffiliated Mexican
          real estate company that in 1999 had received a loan from Provo);

     o    accounts payable to Provo in the face amount of 846,000 pesos, payable
          by Pablo Marti (an unrelated customer of Provo);

     o    12 parcels of real estate located in Los Cabos, State of Baja
          California, Mexico, valued by an independent appraiser at 1,200,060
          pesos and owned by Provo;

     o    the discharge of indebtedness in the amount of 978,487 pesos owed to
          Provo by Ventura Martinez del Rio Sr.; and

     o    a promissory note for 1,107,303 pesos.

The promissory notes issued by Provo to PRODIES, Provoloto and Ventura Martinez
del Rio Sr. as described above each bear interest at the Mexican Interbank
Equilibrium Rate plus 3.5% (currently 9.5% per annum). The notes are payable in
24 monthly payments commencing on December 31, 2002 and continuing until
December 31, 2004. As of June 30, 2003, Provo has made no payments under such
notes to any of the related parties. The related parties have not taken any
action regarding these notes. In addition, the notes must be prepaid in full in
the event that we complete an equity financing in excess of $3,000,000.

     In March 2003, Ventura Martinez del Rio, Sr. forgave $94,669 in debt that
Provo owed him.

     Loans with Related Parties. In addition to the transactions listed above,
as part of its operations, Provo and its subsidiaries have historically received
loans from certain of their current officers and directors as well as from other
Mexican companies affiliated with Ventura Martinez del Rio, Sr. and Ventura
Martinez del Rio, Jr., our current executive officers and directors. As of March
31, 2003, Provo and its subsidiaries were indebted to affiliated entities as
follows:

     o    2,656,108 pesos ($251,050 at the current exchange rate) to Provoloto;

     o    5,756,441 pesos ($544,087 at the current exchange rate) to PRODIES;
          and

     o    1,650,000 pesos ($155,954 at the current exchange rate) to Nextar.

The amounts listed above include the principal amounts owed by Provo under the
notes payable to Provoloto, PRODIES and Nextar as described in the preceding
paragraphs.

     Employment Matters. Provo, which has no employees, subcontracts personnel
services from SAPROV, S. C., a partnership created by Ventura Martinez del Rio,
Sr., Rocio Pasquel and Jorge Dehesa, who are officers of Provo. For the years
ended December 31, 2002 and 2001, Provo paid SAPROV $1,599,702 and $1,745,748
for such services.

     Series D Stock

     In connection with the Provo acquisition, we issued to 18 individuals an
aggregate of 35,500 shares of our Series D Stock, including 10,000 shares to
Stephen J. Cole-Hatchard, our chief executive officer, 10,000 shares to Nicko
Feinberg, our president U.S. operations and a director, 5,000 shares of Series D
to Joseph Donahue, then a director, 1,000 shares to Vasan Thatham, our vice
president and chief financial officer, and 1,000 to Amy Wagner-Mele, our
executive vice president and general counsel.


                                       68










     For additional information concerning such stock issuance, see
"Proposal 1 -- Interests of Certain Persons in Approval of Series C Stock and 
Series D Stock Conversion."


                                       69










                                   PROPOSAL 6

       APPROVAL OF THE COMMON STOCK PURCHASE AGREEMENT WITH FUSION CAPITAL

Introduction

     To raise additional capital to fund our operations, we entered into a
common stock purchase agreement with Fusion Capital Fund II, LLC on July 1,
2003. The common stock purchase agreement provides for the sale of up to $13.0
million of our common stock. The purchase price will be based upon the future
market price of our common stock without any fixed discount. In addition, the
common stock purchase agreement provides us with an option to enter into a
second common stock purchase agreement with Fusion Capital for the sale to
Fusion Capital of up to an additional $13.0 million of our common stock on
substantially similar terms to the first common stock purchase agreement. We
cannot exercise the option to enter into the second common stock purchase
agreement until we have terminated the first common stock purchase agreement.

American Stock Exchange Requirements

     We are seeking stockholder approval of the Fusion transaction in order to
comply with the rules of the AMEX, which require stockholder approval in
connection with a transaction involving the issuance or potential issuance of
common stock, or securities convertible into or exercisable for common stock,
equal to 20% or more of the common stock outstanding before the issuance for
less than the greater of book or market value of the stock. Because the sale of
shares to Fusion Capital under the first stock purchase agreement (and the
second stock purchase agreement, should we exercise our option to enter into
such agreement) could result in an issuance of more than 20% of our common stock
outstanding before the issuance and may be deemed to have been issued for less
than the greater of book or market value of the stock, we are seeking
stockholder approval of the transaction with Fusion Capital. By approving the
transaction with Fusion Capital, you are also approving our right to enter into
a second common stock purchase agreement and issue and sell to Fusion Capital up
to an additional $13.0 million of our common stock. Approval of the transaction
with Fusion Capital by our stockholders is not required under applicable law or
our organizational documents.

     The Board of Directors believes that the transaction with Fusion Capital is
in the best interests of Frontline and its stockholders because it will provide
additional funding that we need for general corporate purposes.

The Fusion Transaction

     General

     On July 7, 2003, we entered into a common stock purchase agreement with
Fusion Capital Fund II, LLC pursuant to which Fusion Capital agreed to purchase
on each trading day during the term of the agreement, $16,250 of our common
stock or an aggregate of $13.0 million. Copies of the fusion transaction
documents are included herein as Annex H. The $13.0 million of common stock
is to be purchased over a 40-month period, subject to earlier termination at our
discretion. The purchase price of the shares of common stock will be equal to a
price based upon the future market price of the common stock without any fixed
discount to the market price. Fusion Capital does not have the right or the
obligation to purchase shares of our common stock in the event that the price of
our common stock is less than $0.25. The sale of our common stock to Fusion
Capital will commence on or after satisfaction of customary conditions outside
the control of Fusion Capital, including the Securities and Exchange Commission
declaring effective a registration statement registering the shares issuable to
Fusion Capital under the agreement.

     We have authorized the sale and issuance of 10,000,000 shares of our common
stock to Fusion Capital under the common stock purchase agreement. We estimate
that the maximum number of shares that we will sell to Fusion Capital under the
common stock purchase agreement will be 10,000,000 shares (exclusive of the
1,200,000 shares issued or issuable to Fusion Capital as the commitment fee),
assuming Fusion Capital purchases all $13.0 million of common stock. Under the
common stock purchase agreement, we have the option of selling to Fusion Capital
up to an additional $13.0 million of our common stock on substantially the same
terms and conditions as the sale of the first $13.0 million of stock to Fusion
Capital. We cannot exercise the option to enter into the second common stock
purchase agreement until we have terminated the first common stock purchase
agreement.

     Purchase of Shares Under the Common Stock Purchase Agreement


                                       70










     Under the common stock purchase agreement, on each trading day Fusion
Capital is obligated to purchase a specified dollar amount of our common stock.
Subject to our right to suspend such purchases at any time, and our right to
terminate the agreement with Fusion Capital at any time, each as described
below, Fusion Capital shall purchase on each trading day during the term of the
agreement $16,250 of our common stock. This daily purchase amount may be
decreased by us at any time. We also have the right to increase the daily
purchase amount at any time, provided however, we may not increase the daily
purchase amount above $16,250 unless our stock price is above $1.50 per share
for ten consecutive trading days. The purchase price per share is equal to the
lesser of:

     o    the lowest sale price of our common stock on the purchase date; or

     o    the average of the three lowest closing sale prices of our common
          stock during the twelve consecutive trading days prior to the date of
          a purchase by Fusion Capital.

     The purchase price will be adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, or other similar transaction
occurring during the trading days in which the closing bid price is used to
compute the purchase price. Fusion Capital may not purchase shares of our common
stock under the common stock purchase agreement if Fusion Capital, together with
its affiliates, would beneficially own more than 9.9% of our common stock
outstanding at the time of the purchase by Fusion Capital. However, even though
Fusion Capital may not receive additional shares of our common stock in the
event that the 9.9% limitation is ever reached, Fusion Capital is still
obligated to pay to us $16,250 on each trading day, unless the common stock
purchase agreement is suspended, an event of default occurs or the agreement is
terminated. Under these circumstances, Fusion Capital would have the right to
acquire additional shares in the future should its ownership subsequently become
less than the 9.9%. Fusion Capital has the right at any time to sell any shares
purchased under the common stock purchase agreement which would allow it to
avoid the 9.9% limitation. Therefore, we do not believe that Fusion Capital will
ever reach the 9.9% limitation.

     Minimum Purchase Price

     We have the right to set a minimum purchase price ("floor price") at any
time. Currently, the floor price is $1.00. We can increase or decrease the floor
price at any time upon one trading day prior notice to Fusion Capital.
Nevertheless, the floor price cannot be less than $0.25. Fusion Capital will not
have the right or the obligation to


                                       71










purchase any shares of our common stock in the event that the purchase price is
less than the then applicable floor price.

     Our Right to Suspend Purchases

     We have the unconditional right to suspend purchases at any time for any
reason effective upon one trading day's notice. Any suspension would remain in
effect until our revocation of the suspension. To the extent we need to use the
cash proceeds of the sales of common stock under the common stock purchase
agreement for working capital or other business purposes, we do not intend to
restrict purchases under the common stock purchase agreement.

     Our Right to Increase and Decrease the Daily Purchase Amount

     Under the common stock purchase agreement, Fusion Capital has agreed to
purchase on each trading day during the 40-month term of the agreement, $16,250
of our common stock or an aggregate of $13.0 million. We have the unconditional
right to decrease the daily amount to be purchased by Fusion Capital at any time
for any reason effective upon one trading day's notice. We also have the right
to increase the daily purchase amount as the market price of our common stock
increases upon five trading day's notice. Specifically, for every $0.50 increase
in threshold price above $1.00, we will have the right to increase the daily
purchase amount by up to an additional $3,250. For example, if the threshold
price is $1.50 we would have the right to increase the daily purchase amount to
up to an aggregate of $19,500. For these purposes, the "threshold price" is the
lowest sale price of our common stock during the five trading days immediately
preceding our notice to Fusion Capital to increase the daily purchase amount. If
at any time during any trading day the sale price of our common stock is below
the threshold price, the applicable increase in the daily purchase amount will
be void.

     Our Termination Rights

     We have the unconditional right at any time for any reason to give notice
to Fusion Capital terminating the common stock purchase agreement. Such notice
shall be effective one trading day after Fusion Capital receives such notice.

     Effect of Performance of the Common Stock Purchase Agreement on our
Stockholders

     Once the sale of common stock to Fusion Capital commences, all shares
issued to Fusion Capital will be freely tradable. It is anticipated that shares
issued to Fusion Capital will be sold over a period of up to 40 months. The sale
of a significant amount of shares at any given time could cause the trading
price of our common stock to decline and to be highly volatile. Fusion Capital
may ultimately purchase all of the shares of common stock issuable under the
common stock purchase agreement, and it may sell some, none or all of the shares
of common stock it acquires upon purchase. Therefore, the purchases under the
common stock purchase agreement may result in substantial dilution to the
interests of other holders of our common stock. Nonetheless, we have the right
at any time for any reason to:

     o    reduce the daily purchase amount;

     o    suspend purchases of the common stock by Fusion Capital; and

     o    terminate the common stock purchase agreement.

     No Short-Selling or Hedging by Fusion Capital

     Fusion Capital has agreed that neither it nor any of its affiliates shall
engage in any direct or indirect short-selling or hedging of our common stock
during any time prior to the termination of the common stock purchase agreement.

     Events of Default

     Generally, Fusion Capital may terminate the common stock purchase agreement
without any liability or payment to us upon the occurrence of any of the
following events of default:


                                       72










     o    the effectiveness of the registration statement that we are required
          to file lapses for any reason (including, without limitation, the
          issuance of a stop order) or is unavailable to Fusion Capital for sale
          of our common stock and such lapse or unavailability continues for a
          period of ten consecutive trading days or for more than an aggregate
          of 30 trading days in any 365-day period;

     o    suspension by our principal market of our common stock from trading
          for a period of three consecutive trading days;

     o    the de-listing of our common stock from the AMEX, provided our common
          stock is not immediately thereafter trading on the Nasdaq National
          Market, the Nasdaq National SmallCap Market, or the New York Stock
          Exchange;

     o    the transfer agent's failure for five trading days to issue to Fusion
          Capital shares of our common stock which Fusion Capital is entitled to
          under the common stock purchase agreement;

     o    any material breach of the representations or warranties or covenants
          contained in the common stock purchase agreement or any related
          agreements which has or which could have a material adverse affect on
          us subject to a cure period of ten trading days;

     o    a default by us of any payment obligation in excess of $1.0 million;
          or

     o    any participation or threatened participation in insolvency or
          bankruptcy proceedings by or against us.

     Commitment Shares Issued to Fusion Capital

     Under the terms of the common stock purchase agreement, Fusion Capital has
received 500,000 shares of our common stock as a commitment fee. At such time as
Fusion Capital has purchased $4,329,000 of our common stock, we will issue to
Fusion Capital an additional 400,000 shares of our common stock. At such time as
Fusion Capital has purchased $8,671,000 of our common stock, we will issue to
Fusion an additional 300,000 shares of our common stock. Unless an event of
default occurs, these shares must be held by Fusion Capital until 40 months from
the date of the common stock purchase agreement or the date the common stock
purchase agreement is terminated.

     No Variable Priced Financings

     Until the termination of the common stock purchase agreement, we have
agreed not to issue, or enter into any agreement with respect to the issuance
of, any variable priced equity or variable priced equity-like securities unless
we have obtained Fusion Capital's prior written consent.

     Use of Proceeds

     We intend to use the proceeds, if any, from the sale of common stock to
Fusion Capital to support general corporate purposes, including working capital
and capital expenditures.

Required Vote

     Under the AMEX rules, approval of the issuance of the common stock to
Fusion Capital as described herein requires the affirmative vote of the majority
of the votes cast on the proposal, provided that the total votes cast on the
proposal represent a majority of the outstanding common stock, which is the only
outstanding class of securities entitled to vote on the proposal. Abstentions
and broker non-votes will have the same effect as a vote against Proposal 6.

Board Recommendation

     The board of directors unanimously recommends a vote FOR Proposal 6.


                                       73










                                   PROPOSAL 7

              RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS

General

     The board of directors, upon the recommendation of its audit committee, has
appointed BDO Hernandez Marron y Cia, S.C., to serve as our independent public
accountants for the 2003 fiscal year, subject to ratification by the holders of
the common stock. BDO Hernandez Marron y Cia, S.C. is headquartered in Mexico
City and is a member of BDO International, a worldwide accounting network. In
taking this action, the members of the board of directors considered carefully
BDO Hernandez Marron y Cia, S.C.'s independence with respect to the services to
be performed, their general reputation for adherence to professional auditing
standards and their ability to audit our subsidiaries in Mexico. In the event
that the common stockholders fail to ratify the selection of BDO Hernandez
Marron y Cia, S.C., the board of directors would reconsider such selection. A
representative of BDO Hernandez Marron y Cia, S.C. will be present at the annual
meeting to respond to appropriate questions and to make a statement if such
representative desires to do so.

Former Accountants

     On May 16, 2003, we dismissed Goldstein Golub Kessler LLP as our principal
accountants and engaged BDO Hernandez Marron y Cia, S.C. in such capacity. None
of our former accountants' reports on our financial statements contained an
adverse opinion, disclaimer of opinion, or a modified or qualified opinion. The
report of Godstein Golub Kessler LLP on our financial statements for the fiscal
year ended December 31, 2002, contained an emphasis of a matter relating to our
ability to continue as a going concern. Furthermore, we had no disagreements
with our former accountants on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure; we had no
disagreements with our former accountants with respect to internal controls
necessary for us to develop reliable financial statements; our former
accountants have not advised us of any material matters with respect to our
reports or financial statements or of information that had come to our former
accountants' attention that had led them no longer to be able to rely on
management's representations, that made them unwilling to be associated with
financial statements prepared by management, that led them to advise us of the
need to expand the scope of its audit or that led them to question the fairness
or reliability of reports or financial statements. BDO Hernandez Marron y Cia,
S.C. was not consulted on any matter during 2001 or 2002 on either the
application of accounting principles to a specified transaction or an audit
opinion, or any matter on which there was a disagreement with our former
accountants.

     Goldstein Golub Kessler LLP has a continuing relationship with American
Express Tax and Business Services, Inc. ("TBS") from which it leases its
auditing staff who are full-time, permanent employees of TBS and through which
its partners provide non-audit services. As a result of this arrangement,
Goldstein Golub Kessler LLP has no full-time employees and therefore, none of
the audit services performed until May 16, 2003, were provided by permanent
full-time employees of Goldstein Golub Kessler LLP. Goldstein Golub Kessler LLP
manages and supervises the audit staff, and is exclusively responsible for the
opinions rendered in connection with its examination.

Audit Committee Report

     On March 14, 2003, the audit committee met with management to review and
discuss the audited financial statements for the fiscal year 2002. The audit
committee also conducted discussions with the Former Auditors, regarding the
matters required by the Statement on Auditing Standards No. 61. As required by
Independence Standards Board Standard No. 1, "Independence Discussion with Audit
Committees," the audit committee has discussed with and received the required
written disclosures and confirming letter from the Former Auditors regarding
their independence, and has discussed with the Former Auditors their
independence. Based upon the review and discussions referred to above, the audit
committee recommended to the board of directors that the audited financial
statements be included in our Annual Report on Form 10-KSB for the year ended
December 31, 2002.

     As part of its duties, the audit committee also considered whether the
provision of services other than audit services during fiscal year 2002 by the
Former Accountants, our independent public accountants, is compatible with
maintaining the accountants.


                                       74










     Fees for all services provided by the Former Accountants for fiscal year
2002 are as follows:

     Audit Fees. Amounts billed by the Former Accountants related to the 2002
annual financial statement audit and reviews of quarterly financial statements
filed in the report on Form 10-QSB were approximately $54,786.

     All Other Fees. Amounts billed by the Former Accountants in fiscal 2002
were approximately $8,900 for tax related services provided to Frontline by TBS.

Required Vote

     Neither Delaware law, our certificate of incorporation or bylaws or the
AMEX rules require that our stockholders ratify the selection of BDO Hernandez
Marron y Cia, S.C. as our independent auditors. We are requesting stockholder
ratification as a matter of good corporate practice. The board of directors has
determined that the affirmative vote of the holders of a majority of the shares
of our common stock represented at the annual meeting, in person or by proxy,
will constitute ratification of the selection of BDO Hernandez Marron y Cia,
S.C. as our independent auditors. If the stockholders do not ratify the
selection, the board and the audit committee will reconsider whether or not to
retain BDO Hernandez Marron y Cia, S.C., but may retain BDO Hernandez Marron y
Cia, S.C. Even if the selection is ratified, the board and the audit committee
in their discretion may change the appointment at any time during the year if
they determine that such change would be in our best interests.

     Abstentions will have the effect of a vote against Proposal 7. Broker
non-votes will have no effect on the outcome of the vote on Proposal 7.

Board Recommendation

     The board of directors unanimously recommends a vote FOR Proposal 7.

                  STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING

     Stockholders who wish to present proposals appropriate for consideration at
our annual meeting of stockholders to be held in 2004 must submit the proposal
in proper form and in accordance with applicable SEC regulations to us at our
address set forth on the first page of this proxy statement not later than
January 22, 2004 in order for the proposition to be considered for inclusion in
our proxy statement and form of proxy relating to such annual meeting. Any such
proposals, as well as any questions related thereto, should be directed to Amy
Wagner-Mele, our secretary.

     After the January 22, 2004 deadline, a stockholder may present a proposal
at our 2004 annual meeting it is submitted to our secretary at the address set
forth above no later than April 9, 2004. If timely submitted, in proper form,
the stockholder may present the proposal at the 2004 annual meeting, but we are
not obligated to include the matter in our proxy statement.


                                       75










                  INCORPORATION OF OTHER DOCUMENTS BY REFERENCE

     The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. You may read and copy any materials we file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The information
incorporated by reference is an important part of this proxy statement. We
incorporate by reference the documents listed below under Item 13(b), Item
14(b)4, Item 14(b)(8)-(11), and Item 14(c) of Schedule 14A of Regulation 14A
under the Securities Exchange Act:

     o    Annual report on Form 10-KSB for the year ended December 31, 2002,
          filed on April 15, 2003;

     o    Quarterly reports on Form 10-QSB for the quarter ended March 31, 2003,
          filed on May 13, 2003;

     o    Form 8-Ks filed on March 31, 2003, April 18, 2003 and May 20, 2003;
          and

     o    Form 8-K/As filed on May 6, 2003, June 17, 2003 and June 18, 2003.

     You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:

               Frontline Communications Corporation
               One Blue Hill Plaza
               P.O. Box 1548
               Pearl River, NY 10965
               Attention: Corporate Secretary
               (845) 623-8553

     If so requested, we will provide a copy of the incorporated filings by
first class mail or equally prompt means within one business day of our receipt
of your request.

     All documents that we file pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act subsequent to the date of this proxy statement and
prior to our Annual Meeting shall be deemed to be incorporated by reference into
this proxy statement and to be a part hereof from the date of filing of such
documents.

     Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this proxy statement to the extent that a statement contained in
this proxy statement, or in any other subsequently filed document which is also
incorporated herein by reference, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed to constitute a
part of this proxy statement except as so modified or superseded.


                                       76










                                  OTHER MATTERS

     The board of directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.

By Order of the Board of Directors

Amy Wagner-Mele
Secretary

July 17, 2003


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                          INDEX OF FINANCIAL STATEMENTS

                      FRONTLINE COMMUNICATIONS CORPORATION

                        Consolidated Financial Statements




                                                                                                    Page
                                                                                                    ----
                                                                                              
Report of Independent Certified Public Accountants.......................................................F-2
Consolidated Financial Statements;
   Balance Sheet at December 31, 2002....................................................................F-4
   Statements of Operations for the Years Ended December 31, 2001 and 2002...............................F-5
   Statements of Stockholders' Equity (deficit) for the Years Ended December 31, 2001
      And 2002...........................................................................................F-6
   Statements of Cash Flows for the Years Ended December 31, 2001 and 2002...............................F-7
   Notes to Consolidated Financial Statements............................................................F-9

                      FRONTLINE COMMUNICATIONS CORPORATION

              Unaudited Condensed Consolidated Financial Statements 

Balance Sheet at March 31, 2002 (unaudited).............................................................F-18
Statements of Operations (unaudited) for the Three Months Ended March 31, 2002 and 2003.................F-19
Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2002 and 2003.................F-20
Notes to Condensed Consolidated Financial Statements (unaudited)........................................F-21

                 PROYECCIONES Y VENTAS ORGANIZADAS, S.A. DE C.V.

                              Financial Statements

Report of Independent Certified Public Accountants......................................................F-24
   Balance Sheet at December 31, 2002...................................................................F-26
   Statements of Operations for the Years Ended December 31, 2001 and 2002..............................F-28
   Statements of Stockholders' Equity for the Years Ended December 31, 2001 and 2002....................F-29
   Statements of Cash Flows for the Years Ended December 31, 2001 and 2002..............................F-31
   Notes to Financial Statements........................................................................F-33
Unaudited Financial Statements;
   Balance Sheet at March 31, 2003......................................................................F-26
   Statements of Operations (unaudited) for the Three Months Ended March 31, 2002 and 2003..............F-28
   Statement of Stockholders' Equity (unaudited) for the Three Months Ended March 31, 2003..............F-29
   Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2002 and 2003..............F-31
Notes to Financial Statements (unaudited)...............................................................F-33

                      FRONTLINE COMMUNICATIONS CORPORATION

               Unaudited Pro Forma Combined Financial Information

Introduction to Pro Forma...............................................................................F-53
Unaudited Pro Forma Combined Balance Sheet at March 31, 2003 ...........................................F-55
Unaudited Pro Forma Combined Statement of Operations for the Year Ended December 31, 2002...............F-56
Unaudited Pro Forma Combined Statement of Operations for the Three Months Ended March 31, 2003..........F-57
Notes to Unaudited Pro Forma Combined Financial Information ............................................F-58




                                      F-1











INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Frontline Communications Corporation

We have audited the accompanying consolidated balance sheet of Frontline
Communications Corporation and Subsidiaries (the "Company") as of December 31,
2002 and the related consolidated statements of operations, stockholders' equity
(deficiency), and cash flows for each of the two years in the period then ended.
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 of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Frontline
Communications Corporation and Subsidiaries as of December 31, 2002, and the
results of their operations and their cash flows for each of the two years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America.

In April 2003, as discussed in Note 10 of the notes to consolidated financial
statements, the Company entered into an agreement with the shareholders of
Proyecciones y Ventas Organizadas, S.A. de C.V. ("Provo"), a corporation
organized under the laws of the Republic of Mexico to acquire Provo. Upon
completion of the transaction described in Note 10 and the approval of the
proposed stock conversion by the Company's shareholders, it is expected that the
shareholders of Provo will control the Company.


                                      F-2










The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 of the
notes to consolidated financial statements, the Company has suffered recurring

losses from operations, has a working capital deficiency and a stockholders'
deficiency, which raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

GOLDSTEIN GOLUB KESSLER LLP
New York, New York

February 20, 2003, except for Note 10,

as to which the date is April 3, 2003


                                      F-3










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                                      CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------




December 31, 2002
--------------------------------------------------------------------------------
                                                                
ASSETS

Current:
   Cash and cash equivalents                                       $    208,502
   Accounts receivable, less allowances for doubtful accounts
      of $25,000                                                        212,397
   Prepaid expenses and other                                            57,778
-------------------------------------------------------------------------------
      Total current assets                                              478,677

Property and Equipment, net                                             671,013

Other                                                                   108,877
-------------------------------------------------------------------------------
      Total Assets                                                 $  1,258,567
===============================================================================

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
   Accounts payable                                                $    765,749
   Accrued expenses                                                     903,710
   Current portion of long-term debt                                    940,202
   Deferred revenue                                                     524,738
-------------------------------------------------------------------------------
      Total current liabilities                                       3,134,399

Long-term Debt, less current portion                                     11,453

Promissory Notes Payable (face value $200,000, including
   $50,000 payable to officers and directors), net of
   unamortized discount of $58,333                                      141,667
-------------------------------------------------------------------------------
      Total liabilities                                               3,287,519
-------------------------------------------------------------------------------
Commitments and Contingencies

Stockholders' Deficiency:
   Preferred stock - $.01 par value; authorized 2,000,000
      shares, issued and outstanding 496,445 shares
      (liquidation preference of $7,446,675)                              4,964
   Common stock - $.01 par value; authorized 25,000,000
      shares, issued 9,940,424 shares                                    99,404
   Additional paid-in capital                                        36,204,292
   Accumulated deficit                                              (37,466,196)
-------------------------------------------------------------------------------
                                                                     (1,157,536)
   Treasury stock, at cost, 645,452 shares                             (871,416)
-------------------------------------------------------------------------------
      Stockholders' deficiency                                       (2,028,952)
-------------------------------------------------------------------------------
      Total Liabilities and Stockholders' Deficiency               $  1,258,567
===============================================================================



                                  See Notes to Consolidated Financial Statements


                                      F-4










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                            CONSOLIDATED STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------




Year ended December 31,                                                 2002          2001
---------------------------------------------------------------------------------------------
                                                                            
Revenue                                                             $ 5,047,098   $ 6,503,120
---------------------------------------------------------------------------------------------
Costs and expenses:
   Cost of revenue                                                    2,493,337     3,482,954
   Selling, general and administrative                                2,446,816     3,860,999
   Depreciation and amortization                                        745,135     2,943,678
   Impairment of intangibles                                                 --     2,827,993
   Noncash compensation charge                                           58,500       206,505

---------------------------------------------------------------------------------------------
                                                                      5,743,788    13,322,129
---------------------------------------------------------------------------------------------
   Loss from operations                                                (696,690)   (6,819,009)

Other income (expense):
   Interest income                                                        7,796        53,887
   Interest expense                                                     (95,417)     (131,778)
   Loss on disposal of property and equipment                            (3,214)     (132,387)
---------------------------------------------------------------------------------------------

Net loss                                                               (787,525)   (7,029,287)

Preferred dividends                                                     297,867       320,910

---------------------------------------------------------------------------------------------
Net loss available to common shareholders                           $(1,085,392)  $(7,350,197)
=============================================================================================

Loss per share - basic and diluted                                  $     (0.12)  $     (1.00)
=============================================================================================

Weighted-average number of shares outstanding - basic and diluted     9,119,533     7,333,221
=============================================================================================



                                  See Notes to Consolidated Financial Statements


                                      F-5










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
--------------------------------------------------------------------------------

Years ended December 31, 2002 and 2001




----------------------------------------------------------------------------------------------------------
                                                       Preferred Stock       Common Stock       Additional
                                                      ----------------   -------------------     Paid-in
                                                       Shares   Amount     Shares     Amount     Capital
----------------------------------------------------------------------------------------------------------
                                                                                
Balance at December 31, 2000                          597,800   $5,978   7,164,793   $71,648   $35,570,119
Purchase of treasury stock, at cost (6,800 shares)         --       --          --        --            --
Conversion of Series B preferred stock                (70,700)    (707)    240,380     2,404        (1,697)
Common stock issued for services                           --       --   1,376,700    13,767       192,738
Dividends on preferred stock                               --       --     779,324     7,793       313,117
Net loss                                                   --       --          --        --            --
----------------------------------------------------------------------------------------------------------
Balance at December 31, 2001                          527,100    5,271   9,561,197    95,612    36,074,277
Purchase of treasury stock, at cost (28,806 shares)        --       --          --        --            --
Common stock issued for services                           --       --     275,000     2,750        55,750
Conversion of Series B preferred stock                (30,655)    (307)    104,227     1,042          (735)
Dividends on preferred stock                               --       --          --        --            --
Warrants issued with promissory notes payable              --       --          --        --        75,000
Net loss                                                   --       --          --        --            --
----------------------------------------------------------------------------------------------------------
Balance at December 31, 2002                          496,445   $4,964   9,940,424   $99,404   $36,204,292
==========================================================================================================


----------------------------------------------------------------------------------------------
                                                                                     Total
                                                        Treasury                 Stockholders'
                                                       Accumulated     Stock,       Equity
                                                         Deficit      at Cost    (Deficiency)
----------------------------------------------------------------------------------------------
                                                                         
Balance at December 31, 2000                          $(29,030,607)  $(860,539)   $ 5,756,599
Purchase of treasury stock, at cost (6,800 shares)              --      (4,113)        (4,113)
Conversion of Series B preferred stock                          --          --             --
Common stock issued for services                                --          --        206,505
Dividends on preferred stock                              (320,910)         --             --
Net loss                                                (7,029,287)         --     (7,029,287)
----------------------------------------------------------------------------------------------
Balance at December 31, 2001                           (36,380,804)   (864,652)    (1,070,296)
Purchase of treasury stock, at cost (28,806 shares)             --      (6,764)        (6,764)
Common stock issued for services                                --          --         58,500
Conversion of Series B preferred stock                          --          --             --
Dividends on preferred stock                              (297,867)         --       (297,867)
Warrants issued with promissory notes payable                   --          --         75,000
Net loss                                                  (787,525)         --       (787,525)
----------------------------------------------------------------------------------------------
Balance at December 31, 2002                          $(37,466,196)  $(871,416)   $(2,028,952)
==============================================================================================



                                  See Notes to Consolidated Financial Statements


                                      F-6










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                            CONSOLIDATED STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------




Year ended December 31,                                                 2002         2001
--------------------------------------------------------------------------------------------
                                                                           
Cash flows from operating activities:
   Net loss                                                          $(787,525)  $(7,029,287)
   Adjustments to reconcile net loss to net cash provided by
      (used in) operating activities:
      Depreciation and amortization                                    745,135     2,943,678
      Debt discount amortization                                        16,667            --
      Noncash compensation charge                                       58,500       206,505
      Impairment of intangibles                                             --     2,827,993
      Loss on disposal of property and equipment                         3,214       132,387
      Changes in operating assets and liabilities:
         Decrease in marketable securities                                  --     1,808,210
         Decrease in accounts receivable                                51,860       312,567
         (Increase) decrease in prepaid expenses and other             (24,755)       93,675
         (Increase) decrease in other assets                            (4,488)       10,597
         Decrease in accounts payable and accrued expenses            (390,355)     (563,729)
         Decrease in deferred revenue                                  (90,612)     (474,854)
--------------------------------------------------------------------------------------------
            Net cash provided by (used in) operating activities       (422,359)      267,742
--------------------------------------------------------------------------------------------

Cash flows from investing activities:
   Acquisition of property and equipment                               (14,895)      (51,148)
   Proceeds from disposal of property and equipment                      5,000        51,886
--------------------------------------------------------------------------------------------
            Net cash provided by (used in) investing activities         (9,895)          738
--------------------------------------------------------------------------------------------

Cash flows from financing activities:
   Principal payments on long-term debt                               (155,014)     (442,915)
   Proceeds from issuance of promissory notes payable                  200,000            --
   Payments to acquire treasury stock                                   (6,764)       (4,113)
--------------------------------------------------------------------------------------------
               Net cash provided by (used in) financing activities      38,222      (447,028)
--------------------------------------------------------------------------------------------

Net decrease in cash and cash equivalents                             (394,032)     (178,548)

Cash and cash equivalents at beginning of year                         602,534       781,082
--------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                             $ 208,502   $   602,534
============================================================================================

Supplemental disclosure of cash flow information:

   Cash paid during the year for interest                            $  83,000   $   132,000
============================================================================================



                                                                     (continued)

                                  See Notes to Consolidated Financial Statements


                                      F-7










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                            CONSOLIDATED STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------




Year ended December 31,                                                      2002       2001
----------------------------------------------------------------------------------------------
                                                                                
Supplemental schedule of noncash investing and financing activities:

   Warrants issued with promissory notes payable                           $ 75,000         --
==============================================================================================
   Capital lease obligations incurred                                            --   $ 48,098
==============================================================================================
   Dividends on Series B preferred stock paid in common stock or accrued   $297,867   $320,910
==============================================================================================
   Common stock issued for services                                        $ 58,500         --
==============================================================================================



                                  See Notes to Consolidated Financial Statements


                                      F-8










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.   SUMMARY OF SIGNIFICANT    Frontline Communications Corporation ("Frontline"
     ACCOUNTING POLICIES:      or the "Company") is an Internet company that
                               offers Internet access; Web site development and
                               Internet presence services.

                               The accompanying consolidated financial
                               statements have been prepared assuming that the
                               Company will continue as a going concern. The
                               Company has suffered recurring losses from
                               operations, has a net working capital deficiency
                               of $2,655,722 and a stockholders' deficiency of
                               $2,028,952 at December 31, 2002. These factors
                               raise substantial doubt about its ability to
                               continue as a going concern. Management has
                               entered into an agreement with the shareholders
                               of Proyecciones y Ventas Organizadas, S.A. de
                               C.V. ("Provo"), a corporation organized under the
                               laws of the Republic of Mexico to acquire Provo.
                               This agreement, which is discussed in Note 10, is
                               expected to transfer control of the Company to
                               the shareholders of Provo upon approval by the
                               Frontline shareholders. The Company's operations
                               will then include the historical operations of
                               the Company and the operations of Provo, which is
                               engaged in the distribution of calling card and
                               cellular phone airtime in Mexico. Management of
                               the Company feels that the addition of Provo to
                               the operations of the Company will enable it to
                               continue to meet its obligations as they come due
                               and to continue as a going concern. The
                               consolidated financial statements do not include
                               any adjustments that might result from the
                               outcome of this uncertainty.

                               The consolidated financial statements include the
                               accounts of the Company and its wholly owned
                               subsidiaries. Intercompany balances and
                               transactions have been eliminated.

                               In preparing the consolidated financial
                               statements in conformity with accounting
                               principles generally accepted in the United
                               States of America, management is required to make
                               estimates and assumptions that affect the
                               reported amounts of assets and liabilities and
                               the disclosure of contingent assets and
                               liabilities at the date of the consolidated
                               financial statements, and the reported amount of
                               revenue and expenses during the reporting period.
                               Actual results could differ from those estimates.
                               Many of the Company's estimates and assumptions
                               used in the financial statements are related to
                               the Company's industry, which is subject to rapid
                               technological change. It is reasonably possible
                               that changes may occur in the near term that
                               would affect management's estimates with respect
                               to the carrying values of property and equipment
                               and intangibles.

                               Monthly subscription service revenue for Internet
                               access is recognized over the period in which
                               services are provided. Fee revenue for Web site
                               development and Internet Web site presence
                               services are recognized as services are
                               performed. Deferred revenue represents prepaid
                               access fees by subscribers.

                               Accounts receivable are reported at their
                               outstanding unpaid principal balances reduced by
                               an allowance for doubtful accounts. The Company
                               estimates doubtful accounts based on historical
                               bad debts, factors related to specific customers'
                               ability to pay, and current economic trends. The
                               Company writes off accounts receivable against
                               the allowance when a balance is determined to be
                               uncollectible.

                               Property and equipment is stated at cost, less
                               accumulated depreciation and amortization.
                               Depreciation and amortization is computed over
                               the estimated useful lives of the assets using
                               the straight-line method.


                                      F-9










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                               Intangible assets consisted of purchased customer
                               bases. Amortization was computed using the
                               straight-line basis over three years. The
                               intangible was fully amortized at December 31,
                               2002. Amortization expense for the years ended
                               December 31, 2002 and 2001 amounted to $140,738
                               and $2,255,310, respectively.

                               Long-lived assets, such as property and
                               equipment, intangibles and customer bases, are
                               evaluated for impairment when events or changes
                               in circumstances indicate that the carrying
                               amount of the assets may not be recoverable
                               through the estimated undiscounted future cash
                               flows from the use of these assets. When any such
                               impairment exists, the related assets will be
                               written down to fair value. During the year ended
                               December 31, 2001, goodwill and purchased
                               customer bases were written down by $2,827,993,
                               due to impairment of such assets.

                               Deferred income taxes are provided on differences
                               between the financial reporting and income tax
                               bases of assets and liabilities based upon
                               statutory tax rates enacted for future periods.
                               Valuation allowances are established when
                               necessary to reduce deferred tax assets to the
                               amount expected to be realized.

                               Financial instruments which potentially subject
                               the Company to concentrations of credit risk
                               consist principally of temporary cash investments
                               and trade accounts receivable. The Company's cash
                               investments are placed with high credit quality
                               financial institutions and may, at times, exceed
                               the amount of federal deposit insurance.
                               Concentrations of credit risk with respect to
                               trade receivables are limited due to the large
                               number of customers comprising the Company's
                               customer base.

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

                               The Company applies Accounting Principles Board
                               Opinion No. 25, Accounting for Stock Issued to
                               Employees, and related interpretations by
                               recording compensation expense for the excess of
                               fair market value over the exercisable price per
                               share, as of the date of the grant, in accounting
                               for its stock options.

                               SFAS No. 123 requires the Company to provide pro
                               forma information regarding net loss and net loss
                               per share as if compensation cost for the
                               Company's stock options 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 option at the date
                               of the grant using the Black Scholes
                               option-pricing model with the following
                               weighted-average assumptions used for options in
                               2001:




                               Year ended December 31, 2001
                               -------------------------------------------------
                                                                      
                               Risk-free interest rate                     4.65%
                               Expected life                             5 years
                               Expected volatility                          169%
                               Dividend yield                               None
                               -------------------------------------------------




                                     F-10










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

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




                               Year ended December 31,                          2002         2001
                               ----------------------------------------------------------------------
                                                                                    
                               Net loss available to common shareholders:
                                  As reported                               $(1,085,392)  $(7,350,197)
                                  Stock-based compensation using the fair
                                     value method                               (55,991)     (100,110)
                               ----------------------------------------------------------------------
                                  Pro forma                                  (1,141,383)   (7,450,307)
                               Net loss per share (basic and diluted):
                                  As reported                                     (0.12)        (1.00)
                                  Pro forma                                       (0.13)        (1.02)
                               ----------------------------------------------------------------------



                               All costs associated with advertising services
                               are expensed in the period incurred. Advertising
                               expense was approximately $43,000 and $130,000
                               for the years ended December 31, 2002 and 2001,
                               respectively.

                               The Company follows SFAS No. 128, Earnings per
                               Share, which provides for the calculation of
                               "basic" and "diluted" earnings per share ("EPS").
                               Basic EPS includes no dilution and is computed by
                               dividing income or loss available to common
                               shareholders by the weighted-average number of
                               common shares outstanding for the period. Diluted
                               earnings per share reflect the potential dilution
                               that could occur through the effect of common
                               shares issuable upon exercise of stock options
                               and warrants and convertible securities.
                               Potential common shares have not been included in
                               the computation of diluted EPS since the effect
                               would be antidilutive.

                               In November 2002, the EITF issued EITF Issue No.
                               00-21, Revenue Arrangements with Multiple
                               Deliverables, which addresses certain aspects of
                               the accounting by a vendor for arrangements under
                               which it will perform multiple revenue-generating
                               activities. Specifically, EITF Issue No. 00-21
                               addresses how to determine whether an arrangement
                               involving multiple deliverables contains more
                               than one unit of accounting. EITF Issue No. 00-21
                               is effective for the Company for revenue
                               arrangements entered into beginning July 1, 2003.
                               The Company does not expect the adoption of EITF
                               Issue No. 00-21 to have a material impact on its
                               2003 consolidated financial statements.

                               The Company does not believe that any other
                               recently issued, but not yet effective,
                               accounting standards, if currently adopted, will
                               have a material effect on the Company's
                               consolidated financial position or results of
                               operations.


                                     F-11










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

2.   PROPERTY AND EQUIPMENT:   Property and equipment, at cost, consists of the
                               following at December 31, 2002:




                                                                                   Estimated
                                                                                     Useful
                                                                                      Life
                               ---------------------------------------------------------------
                                                                            
                               Computer and office equipment        $ 2,611,297   3 to 5 years
                               Furniture and fixtures                    74,825        5 years
                               Leasehold improvements                   149,365     Lease term
                               ---------------------------------------------------------------
                                                                      2,835,487
                               Less accumulated depreciation and
                                  amortization                       (2,164,474)
                               ---------------------------------------------------------------
                                                                    $   671,013
                               ===============================================================



                               Depreciation and amortization for the years ended
                               December 31, 2002 and 2001 amounted to
                               approximately $604,000 and $689,000,
                               respectively.

3.   ACCRUED EXPENSES:         Accrued expenses consist of the following at
                               December 31, 2002:



                                                                        
                               Accrued Internet connection and telephone   $355,363
                               Lease cancellations and related costs         98,750
                               Dividends payable                            297,867
                               Accrued professional fees                     46,268
                               Accrued wages and salaries                    82,896
                               Other                                         22,566
                               ----------------------------------------------------
                                                                           $903,710
                               ====================================================



4.   LONG-TERM DEBT:           Long-term debt consists of the following at
                               December 31, 2002:



                                                                        
                               Present value of net minimum lease
                                  payments (a)                             $223,055
                               Promissory note payable (b)                  728,600
                               ----------------------------------------------------
                                                                            951,655
                               Less current portion                         940,202
                               ----------------------------------------------------
                                                                           $ 11,453
                               ====================================================



                               (a)  The Company leases computer and other
                                    equipment under capital leases. The assets
                                    acquired under capital leases have a cost of
                                    approximately $1,155,000 and accumulated
                                    depreciation of approximately $887,000 as of
                                    December 31, 2002.


                                     F-12







 


                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                                   The following is a schedule of future minimum
                                   lease payments under capitalized leases,
                                   together with the present value of the net
                                   minimum lease payments at December 31, 2002:



                                   Year ending December 31,
                                                                               
                                             2003                                 $222,073
                                             2004                                   10,958
                                             2005                                    1,279
                                   -------------------------------------------------------
                                   Total minimum lease payments                    234,310
                                   Less amount representing interest                11,255
                                   -------------------------------------------------------
                                   Present value of net minimum lease payments     223,055
                                   Less current portion                            211,602
                                   -------------------------------------------------------
                                       Long-term lease obligations                $ 11,453
                                   =======================================================



                               (b) A promissory note, issued as part of a
                                   business acquisition, in the principal amount
                                   of $728,600. The promissory note bears
                                   interest at 4% and is payable in June 2003.
                                   The Company has the option to convert the
                                   principal amount due under the promissory
                                   note to shares of its common stock at a
                                   conversion price of $8 per share
                                   (significantly greater than the market value
                                   of the common stock at the acquisition date),
                                   under certain circumstances, as defined in
                                   the acquisition agreement, such as the market
                                   price of the Company's common stock exceeding
                                   $10 per share. See Note 10.

                                   The carrying amount of the Company's
                                   long-term debt approximates fair value using
                                   the Company's estimated incremental
                                   borrowing rate.

5.   PROMISSORY NOTES:         In June 2002, the Company completed a private
                               placement of 8% promissory notes and received
                               proceeds of $200,000 (including $50,000 from
                               officers and directors). The promissory notes
                               bear interest at 8% and mature in three years
                               from the date of issuance. The Company has the
                               option to convert the principal amount due under
                               the promissory notes into shares of its common
                               stock at a conversion price of $4.80 per share,
                               under certain circumstances, as defined in the
                               agreement with the promissory note holders, such
                               as the market price of the Company's common stock
                               exceeding $6 per share. The Company also issued
                               to the note holders warrants to purchase an
                               aggregate of 1,000,000 shares of its common stock
                               at an exercise price of $.08 per share. Out of
                               the proceeds, $75,000 was allocated as the value
                               of the warrants and is recorded as a discount on
                               the notes payable in the accompanying
                               consolidated balance sheet. The discount is being
                               amortized as additional interest over the terms
                               of the promissory notes. At December 31, 2002,
                               the promissory notes payable included on the
                               accompanying consolidated balance sheet amounting
                               to $141,667 are net of unamortized discounts of
                               $58,333. The fair value of the notes approximates
                               the carrying amount based on rates available to
                               the Company.


                                     F-13










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

6.   COMMITMENTS AND           The Company rents office space and equipment
     CONTINGENCIES:            under operating lease agreements expiring at
                               various dates through 2005.

                               Future minimum rental payments required under
                               operating leases are approximately as follows:



                               Year ending December 31,
                                                                     
                                          2003                          $379,000
                                          2004                           226,000
                                          2005                             5,000
                               -------------------------------------------------
                                                                        $610,000
                               =================================================



                               Rental expense was approximately $341,000 and
                               $438,000 for the years ended December 31, 2002
                               and 2001, respectively.

                               In connection with the Company's lease for its
                               main office space, the Company has opened an
                               irrecoverable letter of credit with a bank for
                               approximately $65,000 in lieu of a security
                               deposit.

7. STOCK OPTIONS:              The Company has a stock option plan (the "Plan")
                               which authorizes the issuance of incentive
                               options and nonqualified options to purchase up
                               to 2,000,000 shares of common stock. The Plan has
                               a 10-year term. The board retained the authority
                               to determine the individuals to whom, and the
                               times at which, stock options would be granted,
                               along with the number of shares, vesting schedule
                               and other provisions related to the stock
                               options.

                               A summary of the status of the Company's stock
                               option plan as of December 31, 2002 and 2001, and
                               changes during the years ended on those dates, is
                               presented below:




                               December 31,                                 2002                     2001
                               ----------------------------------------------------------------------------------
                                                                                Weighted-               Weighted-
                                                                                 average                 average
                                                                                 Exercise                Exercise
                                                                      Shares      Price       Shares      Price
                               ----------------------------------------------------------------------------------
                                                                                              
                               Outstanding at beginning of year     1,458,900     $2.67     1,347,768     $4.19
                               Granted                                                        445,000      0.22
                               Forfeited                             (169,900)     1.68      (333,868)     4.97
                               ----------------------------------------------------------------------------------
                               Outstanding at end of year           1,289,000     $2.81     1,458,900     $2.67
                               ==================================================================================
                               Options exercisable at year-end      1,289,000     $2.81     1,442,900     $2.64
                               ==================================================================================
                               Weighted-average fair value of
                                  options granted during the year          --        --            --     $0.21
                               ==================================================================================




                                     F-14










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                               The following table summarizes information about
                               stock options outstanding and exercisable at
                               December 31, 2002:




                                                    Options Outstanding and Exercisable
                                                 ----------------------------------------
                                                     Number                     Weighted-
                                                 Outstanding at    Remaining     average
                                   Range of       December 31,    Contractual   Exercise
                               Exercise Prices        2002           Life         Price
                               ----------------------------------------------------------
                                                                         
                               $0.22 to $1.00         501,000       3.1 years     $0.31
                               $1.00 to $2.50         184,800        .9            2.37
                               $2.50 to $4.00          97,000        .8            3.58
                               $4.00 to $6.00         433,200       1.95           5.16
                               $6.00 to $6.75          73,000       1.1            6.10
                               ----------------------------------------------------------
                                                    1,289,000                     $2.81
                               ==========================================================



8.   STOCKHOLDERS' EQUITY      In April 2000, the Company's board of directors
     (DEFICIENCY):             authorized the Company to purchase up to
                               $1,000,000 worth of its common stock from time to
                               time, as the Company deems appropriate, through
                               open market purchases or in privately negotiated
                               transactions. As of December 31, 2002, the
                               Company had acquired 413,932 shares of common
                               stock for an aggregate consideration of
                               approximately $607,000.

                               In September 2001, the Company granted 1,376,700
                               restricted shares of its common stock to its
                               employees under the Company's 2001 Stock
                               Incentive Plan. Accordingly, $206,505,
                               representing the fair value of the shares
                               granted, was charged to operations as a noncash
                               compensation charge.

                               During 2001, the Company issued: (i) 240,380
                               shares of common stock upon conversion of 70,700
                               shares of Series B Convertible Redeemable
                               preferred stock, and (ii) 779,324 shares of
                               common stock as dividends to the holders of
                               Series B Convertible Redeemable preferred stock.

                               In May 2002, the Company entered into a
                               consulting agreement for marketing services and
                               issued to the consultant 250,000 shares of common
                               stock as consideration for the services rendered
                               by the consultant. Accordingly, $50,000,
                               representing the fair value of the shares issued,
                               was charged to operations.

                               In June 2002, the Company issued, in a private
                               sale of 8% promissory notes, warrants to purchase
                               an aggregate of 1,000,000 shares of its common
                               stock at an exercise price of $.08 per share.

                               In August 2002, the Company entered into a
                               consulting agreement for marketing services and
                               issued to the consultant 25,000 shares of common
                               stock as consideration for the services rendered
                               by the consultant. Accordingly, $8,500,
                               representing the fair value of the shares issued,
                               was charged to operations.


                                     F-15










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                               During 2002, the Company issued 104,227 shares of
                               common stock upon conversion of 30,655 shares of
                               Series B Convertible Redeemable preferred stock.

                               In addition, at December 31, 2002, other warrants
                               to purchase 2,516,300 shares of common stock were
                               outstanding and exercisable at prices ranging
                               between $4.80 and $8.50 per share, expiring at
                               various times through 2004.

9.   INCOME TAXES:             At December 31, 2002, the tax effects of loss
                               carryforwards and the valuation allowance that
                               give rise to deferred tax assets are as follows:



                                                                 
                               Net operating losses                 $ 7,650,000
                               Less valuation allowance              (7,650,000)
                               -------------------------------------------------
                                  Deferred tax assets               $     - 0 -
                               =================================================



                               The provision (benefit) for income taxes differs
                               from the amount computed using the federal
                               statutory rate of 34% as a result of the
                               following:




                               December 31,                       2002     2001
                               ------------------------------------------------
                                                                    
                               Federal statutory rate              (34)%    (34)%
                               Increase in valuation allowance      34       34
                               ------------------------------------------------
                                                                 - 0 -%   - 0 -%
                               ================================================



                               The Company had net operating loss carryforwards
                               of approximately $22,500,000 at December 31,
                               2002, which expire through 2022. The tax benefit
                               of these losses has been completely offset by a
                               valuation allowance due to the uncertainty of its
                               realization.

                               Internal Revenue Code Section 382 provides for
                               limitations on the use of net operating loss
                               carryforwards in years subsequent to a more than
                               50% change in ownership (as defined by Section
                               382), which limitations can significantly impact
                               the Company's ability to utilize its net
                               operating loss carryforwards. As a result of the
                               sale of the preferred shares in the public
                               offering in February and March 2000, changes in
                               ownership may have occurred which might result in
                               limitations of the utilization of the net
                               operating loss carryforwards. The extent of any
                               limitations as a result of changes in ownership
                               has not been determined by the Company.

10.  SUBSEQUENT EVENT:         In April 2003, the Company entered into an
                               amended and restated stock purchase agreement
                               with the two stockholders of Provo, a corporation
                               organized under the laws of the Republic of
                               Mexico, to acquire from them all the issued and
                               outstanding shares of Provo. As consideration,
                               the Company issued 220,000 shares of Series C
                               Convertible Preferred Stock ("Series C
                               Preferred") of the Company to the two
                               stockholders of Provo. Provo and its subsidiaries
                               are engaged in the distribution of prepaid
                               calling cards and cellular phone airtime in
                               Mexico.


                                     F-16










                           FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                               Each share of Series C Preferred will
                               automatically convert into 150 shares of the
                               Company's common stock after the transaction is
                               approved by the Company's shareholders. In
                               connection with the transaction, the Company will
                               require shareholder approval for (i) the issuance
                               of shares of common stock upon conversion of
                               Series C Preferred, (ii) the change in control
                               contemplated by the Provo transaction, (iii) an
                               increase in authorized common stock to 75,000,000
                               shares, and (iv) a reverse split of all of the
                               issued and outstanding shares of common stock.
                               Upon such approval, Series C Preferred will
                               convert into common stock representing
                               approximately 66% of the combined Company. The
                               Company issued 35,500 Series D Preferred shares
                               ("Series D Preferred") to certain brokers,
                               finders and certain of the Company's officers and
                               directors in accordance with the terms of certain
                               consulting agreements. Each share of Series D
                               Preferred can be converted into 150 shares of the
                               Company's common stock after the shareholder
                               approval is obtained for (i) the issuance of the
                               shares of common stock upon conversion of the
                               Series D Preferred, (ii) an increase in the
                               Company's authorized common stock to 75,000,000
                               and (iii) a reverse split of the common stock.

                               In the event the Company's shareholders do not
                               approve the conversion of Series C Preferred into
                               the Company's common stock, the Company will be
                               obligated to pay $20,000,000 to the Series C
                               Preferred stockholders.

                               In April 2003, the Company borrowed $550,000 from
                               an unaffiliated entity (the "Lender") and issued
                               a secured promissory note (the "Note") to the
                               Lender. The Note bears interest of 14% and is
                               secured by substantially all of the Company's
                               assets. Two officers have pledged shares of the
                               Company's common stock owned by them as
                               additional collateral to the Lender. In
                               connection with the financing, the Company issued
                               500,000 shares of common stock to the Lender as
                               additional consideration. The Note is payable at
                               the earlier of 90 days or upon financing of
                               Provo's accounts receivable. Out of the proceeds,
                               the Company used $200,000 to settle a promissory
                               note, issued as a part of a business acquisition,
                               in the principal amount of $728,600. The balance
                               of the promissory note was settled through
                               issuance of 375,000 shares of common stock to the
                               promissory note holders.


                                     F-17










Frontline Communications Corporation
Condensed Consolidated Balance Sheets




                                                                                March 31,
                                                                                  2003
                                                                              ------------
                                                                              (Unaudited)
                                                                           
ASSETS
Current:
   Cash and cash equivalents                                                  $    214,909
   Accounts receivable, net of allowance for doubtful accounts                     165,992
   Prepaid expenses and other                                                       61,245
                                                                              ------------
         Total current assets                                                      442,146

Property and equipment, net                                                        528,055
Deferred transaction costs                                                          49,441
Other                                                                              100,882

                                                                              ------------
                                                                              $  1,120,524
                                                                              ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
   Accounts payable                                                           $    873,818
   Accrued expenses                                                                914,295
   Deferred revenue                                                                561,960
   Current portion of long-term debt                                               919,083
                                                                              ------------
         Total current liabilities                                               3,269,156

Capitalized lease obligation                                                         4,697
Promissory notes payable, net of unamortized discount of
   $ 52,083 and $ 58,333, respectively                                             147,917
                                                                              ------------
      Long-term debt, less current portion                                         152,614
                                                                              ------------

                                                                              ------------
         Total liabilities                                                       3,421,770
                                                                              ------------

Stockholders' deficiency:
   Preferred stock, $.01 par value, 2,000,000 shares authorized, issued and
      outstanding 496,445 shares.                                                    4,964
      Liquidation preference $7,446,675.
   Common Stock, $.01 par value, 25,000,000 shares authorized, 9,940,424
      shares issued and 9,294,972 shares outstanding                                99,404
   Additional paid-in capital                                                   36,204,292
   Accumulated deficit                                                         (37,738,490)
   Treasury stock, at cost, 645,452 shares                                        (871,416)
                                                                              ------------
         Total stockholders' deficiency                                         (2,301,246)

                                                                              ------------
                                                                              $  1,120,524
                                                                              ============



See notes to condensed consolidated financial statements.


                                     F-18










FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)




                                                For the three months ended
                                                --------------------------
                                                   March 31,    March 31,
                                                     2003         2002
                                                  ----------   ----------
                                                         
Revenues                                          $1,066,127   $1,352,269

Costs and expenses:
      Cost of revenues                               495,721      681,854
      Selling, general and administrative            603,279      667,322
      Depreciation and amortization                  143,373      194,262
                                                  ----------   ----------
                                                   1,242,373    1,543,438
                                                  ----------   ----------
Loss from operations                                (176,246)    (191,169)

Other income (expense):
   Interest income                                       307        1,742
   Interest expense                                  (21,888)     (21,543)
   Loss on disposal of property and equipment                      (3,214)
                                                  ----------   ----------
Net loss                                            (197,827)    (214,184)
                                                  ----------   ----------

Preferred dividends                                   74,467       79,065

                                                  ----------   ----------
Net loss available to common shareholders           (272,294)    (293,249)
                                                  ==========   ==========

Loss per common share-basic and diluted               ($0.03)      ($0.03)
                                                  ==========   ==========

Weighted average number of common shares
   outstanding- basic and diluted                  9,294,972    8,944,551
                                                  ==========   ==========



See notes to condensed consolidated financial statements.


                                     F-19










FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)




                                                               For the three months ended
                                                               --------------------------
                                                                  March 31,    March 31,
                                                                    2003         2002
                                                                 ----------   ----------
                                                                        
Cash flow from operating activities:
   Net loss                                                       ($197,827)   ($214,184)
   Adjustments to reconcile net loss to net cash provided by
      (used in) operating activities:
      Depreciation and amortization                                 143,373      194,262
      Debt discount amortization                                      6,250
      Loss on disposal of property and equipment                                   3,214
      Changes in operating assets and liabilities
         Accounts receivable                                         46,405       33,734
         Prepaid expenses and other                                  (3,467)     (11,962)
         Other assets                                                 7,581        2,359
         Accounts payable and accrued expenses                       44,186     (191,317)
         Deferred revenue                                            37,222       66,666
                                                                 ----------   ----------
Net cash (used in) provided by operating activities                 83,723     (117,228)
                                                                 ----------   ----------

Cash flows from investing activities:
   Acquisition of property and equipment                                          (6,343)
   Proceeds from disposal of property and equipment                                5,000
   Deferred transaction costs                                       (49,441)
                                                                 ----------   ----------
Net cash used in investing activities                               (49,441)      (1,343)
                                                                 ----------   ----------

Cash flows from financing activities:
   Principal payments on long-term debt                             (27,875)     (70,473)

                                                                 ----------   ----------
Net cash provided by (used in) financing activities                 (27,875)     (70,473)
                                                                 ----------   ----------

Net decrease in cash and cash equivalents                             6,407     (189,044)

Cash and cash equivalents, beginning of period                      208,502      602,534

                                                                 ----------   ----------
Cash and cash equivalents, end of period                         $  214,909   $  413,490
                                                                 ==========   ==========

Supplemental information:
Approximate interest paid during the period                      $    4,000   $   14,000
                                                                 ==========   ==========

Dividends on Series B Preferred stock accrued                    $   74,467   $   79,065
                                                                 ==========   ==========



See notes to condensed consolidated financial statements.


                                     F-20










FRONTLINE COMMUNICATIONS CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2003

NOTE A- BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 (b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for fair presentation have
been included. The results for the interim periods are not necessarily
indicative of the results that may be attained for an entire year or any future
periods. For further information, refer to the Financial Statements and
footnotes thereto in the Company's annual report on Form 10-KSB for the fiscal
year ended December 31, 2002. There have been no significant changes in
accounting policies since December 31, 2002.

     The condensed consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

NOTE B- LOSS PER SHARE

     The Company follows SFAS No. 128, "Earning per Share", which provides for
the calculation of "basic" and "diluted" earning per share ("EPS"). Basic EPS
includes no dilution and is computed by dividing income or loss available to
common shareholders by the weighted - average number of common shares
outstanding for the period. Diluted earnings per share reflect the potential
dilution that could occur through the effect of common shares issuable upon
exercise of stock options and warrants and convertible securities. Potential
common shares have not been included in the computation of diluted loss since
the effect would be antidilutive.

NOTE C- ADOPTION OF NEW ACCOUNTING LITERATURE

     The Company does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, will have a material
effect on the Company's consolidated financial position or results of
operations.

NOTE D- STOCK OPTIONS

     Statement of Financial Accounting Standard No. 123 requires the Company to
provide pro forma information regarding net loss and net loss per share as if
compensation cost for the stock options had been determined in accordance with
the fair-value-based method prescribed in SFAS No. 123. For the three months
ended March 31, 2003 and 2002, the pro forma net loss and loss per share
calculated under the provisions of SFAS No. 123 would have been the same as
reported numbers.


                                     F-21










FRONTLINE COMMUNICATIONS CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2003

NOTE E- SUBSEQUENT EVENT

     In April 2003, the Company entered into an amended and restated stock
purchase agreement with the two stockholders of Proyecciones y Ventas
Organizadas, S.A de C.V., a corporation organized under the laws of the Republic
of Mexico ("Provo"), to acquire from them all the issued and outstanding shares
of Provo. As consideration, the Company issued 220,000 shares of its Series C
Convertible Preferred Stock ("Series C Preferred") to the two stockholders of
Provo. Provo and its subsidiaries are engaged in the distribution of prepaid
calling cards and cellular phone airtime in Mexico.

     Each share of Series C Preferred will automatically convert into 150 shares
of the Company's common stock after the transaction is approved by the Company's
shareholders. In connection with the transaction, the Company will require
shareholder approval for (i) issuance of common stock upon conversion of Series
C Preferred, (ii) the change in control contemplated by the Provo transaction,
(iii) an increase in authorized common stock to 75,000,000 shares, and (iv) a
reverse split of all of the issued and outstanding shares of common stock. Upon
such approval, Series C Preferred will convert into common stock representing
approximately 66% of the combined company. The Company issued 35,500 Series D
Preferred shares ("Series D Preferred") to certain brokers, finders and certain
of the Company's officers and directors in accordance with the terms of certain
consulting agreements. Each share of Series D Preferred can be converted into
150 shares of the Company's common stock after shareholder approval is obtained
for (i) the issuance of the shares of common stock upon conversion of the Series
D Preferred, (ii) an increase in the Company's authorized common stock to
75,000,000 and (iii) a reverse split of the common stock.

     In the event the Company's shareholders do not approve the conversion of
Series C Preferred into the Company's common stock on or prior to July 18, 2003
or such later date as agreed to by the holders of a majority of Series C
Preferred, (which date shall be extended for a period of up to 30 days due to
actions or inactions of Securities and Exchange Commission or American Stock
Exchange), the Company will be obligated to pay $20,000,000 to the Series C
Preferred stockholders.

     At March 31, 2003 approximately $ 49,000 of costs incurred in connection
with the transaction were deferred, which together with additional related costs
will be charged to additional paid in capital upon completion of the
transaction.


                                     F-22










FRONTLINE COMMUNICATIONS CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2003

     In April 2003, the Company borrowed $550,000 from an unaffiliated entity
(the "Lender") and issued a secured promissory note (the "Note") to the Lender.
The Note bears interest at the rate of 14% per annum and is secured by
substantially all of the Company's assets. Two officers have pledged shares of
the Company's common stock owned by them as additional collateral to the Lender.
In connection with the financing, the Company issued 500,000 shares of common
stock to the Lender as additional consideration. The Note is payable at the
earlier of 90 days or upon financing of Provo's accounts receivable. >From the
proceeds, the Company used $200,000 to settle a promissory note, issued as a
part of a business acquisition, in the principal amount of $728,600. The balance
of the promissory note was settled through issuance of 375,000 shares of the
Company's common stock to the promissory note holders.


                                     F-23











Report of Independent Auditors

To the Board of Directors and Shareholders of
Proyecciones y Ventas Organizadas, S.A. de C.V.
   and Affiliated Companies

We have audited the accompanying combined balance sheets of Proyecciones y
Ventas Organizadas, S. A. de C. V. and affiliated companies as of December 31,
2002 and 2001 and the related combined statements of operations, shareholders'
equity and comprehensive income and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits. We did not audit the financial statements of one of the
Company's unconsolidated subsidiaries, which statements reflect total assets of
$1,488,000 as of December 31, 2001, and total revenues of $5,921,000 for the
year then ended. Those statements were audited by other auditors whose report
has been furnished to us, and our opinion, insofar as it relates to the amounts
included for such subsidiary, is based solely on the report of the other
auditors.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. These standards require that we plan and
perform the audit to obtain reasonable assurance as to 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.

As described in Note 11, on April 3, 2003, all of the Company's issued and
outstanding common stock was acquired by an unrelated entity in a transaction
treated as a reverse acquisition, pursuant to which the Company will be the
acquiror for financial reporting purposes.


                                     F-24










In our opinion, based on our audits and the report of other auditors, the
combined statements referred to above present fairly, in all material respects,
the combined financial position of Proyecciones y Ventas Organizadas, S. A. de
C. V. and affiliated companies, at December 31, 2002 and 2001, and the results
of their operations and their cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.


/s/ BDO International

Mexico City, Mexico

May 30, 2003,

except for Note 11,
which is dated June 2, 2003.


                                     F-25










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                        Combined and Consolidated Balance Sheets

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




                                                                                        March 31,
                                                                                     --------------
                                                                December 31,              2003
                                                         -------------------------   (consolidated,
                                                             2002          2001        unaudited)
---------------------------------------------------------------------------------------------------
                                                                              
ASSETS

Current assets:

Cash                                                     $   293,594   $   648,334     $   345,137

Accounts receivable:
   Trade, net of allowance for doubtful accounts of
      $252,470, $280,417 and $84,009 (unaudited),
      respectively                                         8,170,269    11,093,610       6,821,623
   Related parties (Note 7)                                1,124,340     1,796,557         507,587
   Other                                                     184,242        76,208         176,464
---------------------------------------------------------------------------------------------------

Total accounts receivable                                  9,478,851    12,966,375       7,505,674

Value-added tax recoverable                                  635,276       429,575         550,464

Inventory                                                  2,273,682     2,642,799       1,720,293

Prepaid expenses                                             636,398       452,914         487,563

Real estate held for sale (Note 2)                         3,724,145            --              --
---------------------------------------------------------------------------------------------------

Total current assets                                      17,041,946    17,139,997      10,609,131

Real estate held for sale (Notes 2 and 5)                    422,566       422,566       1,955,012

Investment in unconsolidated subsidiary (Note 3)                  --       187,203              --

Property and equipment, net (Note 4)                         632,472       632,108         222,962

Deferred income taxes (Note 9)                               260,883       254,507         136,955

Other assets                                                 170,319        28,983         391,069
---------------------------------------------------------------------------------------------------

                                                         $18,528,186   $18,665,364     $13,315,129
===================================================================================================




                                     F-26










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                        Combined and Consolidated Balance Sheets

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




                                                                                        March 31,
                                                                                     --------------
                                                                December 31,              2003
                                                         -------------------------   (consolidated,
                                                             2002          2001        unaudited)
---------------------------------------------------------------------------------------------------
                                                                              
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Current maturities of long-term debt (Note 6)         $   562,424   $ 1,093,817     $   631,554
   Payable under supplier credit facility (Note 5)         9,678,012    10,805,631       4,311,759
   Related parties (Note 7)                                1,114,197       598,083         781,319
   Accounts payable and accrued expenses                     220,219       481,570         322,742
   Income taxes payable                                      165,379       114,330         183,150
   Deferred income taxes (Note 9)                            706,261       781,085         556,337
---------------------------------------------------------------------------------------------------

Total current liabilities                                 12,446,492    13,874,516       6,786,861

Long-term debt:

   Notes payable, less current maturities (Note 6)         1,376,970     1,203,198       1,263,107
   Payable under supplier credit facility,
      less current portion (Note 5)                        2,171,715     1,487,153       3,050,695
---------------------------------------------------------------------------------------------------

Total liabilities                                         15,995,177    16,564,867      11,100,663

Minority interest                                             92,556       (56,493)        107,844
---------------------------------------------------------------------------------------------------

Commitments and contingencies (Note 10 and 11)

Shareholders' equity (Note 8)
   Capital stock                                             770,368       770,368         770,368
   Additional paid-in capital                                246,316       246,316         509,446
   Retained earnings                                       1,568,653     1,155,899       1,006,369
   Accumulated other comprehensive loss, net of taxes       (144,884)      (15,593)       (179,561)
---------------------------------------------------------------------------------------------------
Total shareholders' equity                                 2,440,453     2,156,990       2,106,622
---------------------------------------------------------------------------------------------------

                                                         $18,528,186   $18,665,364     $13,315,129
===================================================================================================



     The accompanying notes are an integral part of these financial statements.


                                     F-27










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                              Combined and Consolidated Statements of Operations

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




                                                                               Quarter ended March 31
                                                 Years ended December 31,            (unaudited)
                                               ---------------------------   --------------------------
                                                                                 2003          2002
                                                   2002           2001       consolidated    combined
-------------------------------------------------------------------------------------------------------
                                                                                
Revenue                                        $101,550,659   $119,766,884    $19,549,290   $21,826,788

Cost of revenue                                  96,866,869    115,100,882     18,891,342    20,540,329
-------------------------------------------------------------------------------------------------------
Gross profit                                      4,683,790      4,666,002        657,948     1,286,459

Operating costs and expenses:
   Selling                                          657,993        884,032         95,777       256,225
   General and administrative                     2,930,585      3,268,131        617,623       671,997
   Depreciation and amortization                     86,425         70,410         30,051        16,099
-------------------------------------------------------------------------------------------------------

Total operating costs and expenses                3,675,003      4,222,573        743,451       944,321
-------------------------------------------------------------------------------------------------------

Operating income (loss)                           1,008,787        443,429        (85,503)      342,138

Interest income                                     (97,256)      (244,549)           (59)      (12,223)

Interest expense                                    419,345        448,584         86,865       108,453

Other (income) expenses, net                        (69,881)      (485,605)       (24,451)      (14,466)

Gain on assets transferred in settlement of
   supplier payables (Note 5)                            --             --       (245,159)         --
-------------------------------------------------------------------------------------------------------

Income before income tax, equity in the net
   earnings of unconsolidated subsidiary and
   minority interest                                756,579        724,999         97,301       260,374

Income taxes expense (Note 9)                       148,395        291,065         34,730        82,700
-------------------------------------------------------------------------------------------------------

Income (loss) before minority interest              608,184        433,934         62,571       177,674

Equity in the net earnings of unconsolidated
   subsidiary                                            --        129,976             --            --

Minority interest                                   149,280        (20,771)        15,278        32,571
-------------------------------------------------------------------------------------------------------

Net income (loss)                              $    458,904   $    584,681    $    47,293   $   145,103
=======================================================================================================



      The accompanying notes are an integral part of these financial statements.


                                     F-28










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                    Combined and Consolidated Statements of Shareholders' Equity

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




                                               Additional                 Cumulative
                                     Common      Paid-in     Retained    Translation
                                      Stock      Capital     Earnings     Adjustment      Total
-------------------------------------------------------------------------------------------------
                                      (restated/Note 8)
                                                                        
Balance, December 31, 2000          $770,368    $ 29,995    $  663,718    $ (61,873)   $1,402,208

Cash contributions to capital
   stock                                  --     123,821            --           --       123,821

Stock dividend                            --     134,125      (134,125)          --            --

Net income                                --          --       584,681           --       584,681

Translation gain, net of tax              --          --            --       46,280        46,280
-------------------------------------------------------------------------------------------------

Balance, December 31, 2001           770,368     287,941     1,114,274      (15,593)    2,156,990

Non-cash distribution to the
   majority shareholder
   (Note 3)                               --          --       (46,150)          --       (46,150)

Net income                                --          --       458,904           --       458,904

Translation loss, net of tax              --          --            --     (129,291)     (129,291)
-------------------------------------------------------------------------------------------------

Balance, December 31, 2002           770,368     287,941     1,527,028     (144,884)    2,440,453

Non-cash distribution to the
   majority shareholder for the
   purchase of affiliated
   companies (Note 8)                     --          --      (609,577)          --      (609,577)

Additional paid-in capital
   (Note 7)                               --     168,461            --           --       168,461




                                     F-29










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                    Combined and Consolidated Statements of Shareholders' Equity

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




                                               Additional                 Cumulative
                                     Common      Paid-in     Retained    Translation
                                      Stock      Capital     Earnings     Adjustment      Total
-------------------------------------------------------------------------------------------------
                                                                        
Non-cash contribution by majority
   shareholder in forgiveness of
   payables (Note 7)                      --      94,669            --           --        94,669

Net income                                --          --        47,293           --        47,293

Translation loss, net of tax              --          --            --      (34,677)      (34,677)
-------------------------------------------------------------------------------------------------
Balance, March 31, 2003
   (consolidated, unaudited)        $770,368    $551,071       964,744    $(179,561)   $2,106,622
=================================================================================================






                                           Combined and Consolidated Statements of Comprehensive Income
-------------------------------------------------------------------------------------------------------
                                                                                Quarters ended March 31
                                                     Years ended December 31,        (unaudited)
                                                     ------------------------   -----------------------
                                                                                    2003         2002
                                                         2002        2001       consolidated   combined
-------------------------------------------------------------------------------------------------------
                                                                                   
Net income                                             $ 458,904   $584,681       $ 47,293     $145,103
Comprehensive income (loss):
   Translation gain (loss), net of taxes                (129,291)    46,280        (34,677)     (40,291)
-------------------------------------------------------------------------------------------------------
Total comprehensive income                             $ 329,613   $630,961       $ 12,616     $104,812
=======================================================================================================



      The accompanying notes are an integral part of these financial statements.


                                     F-30










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                              Combined and Consolidated Statements of Cash Flows

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

                          Increase (Decrease) in Cash




                                                                                    Quarter ended March 31,
                                                        Years Ended December 31,          (unaudited)
                                                       -------------------------   --------------------------
                                                                                      2003           2002
                                                          2002          2001       consolidated     combined
-------------------------------------------------------------------------------------------------------------
                                                                                      
Cash flows from operating activities:
   Net income                                          $   458,904   $   584,681     $  47,293    $   145,103
      Adjustments to reconcile net income to cash
         provided by (used in) operating activities:
         Minority interest                                 149,280       (20,771)       15,288         32,571
         Equity in the net earnings of
            unconsolidated subsidiary                           --      (129,976)           --             --
         Depreciation and amortization                      86,425        70,410        30,051         16,098
         Bad debt expense                                   16,388        72,618            --         16,357
         Deferred income taxes                             (81,200)       50,196       (25,996)        82,700

Changes in operating assets and liabilities:
   Accounts receivable                                   2,083,717    (2,033,552)      460,684      1,047,598
   Value-added tax recoverable                            (205,701)     (144,308)       84,812       (140,688)
   Inventory                                               369,117       492,852       553,389     (1,072,580)
   Prepaid expenses                                       (183,487)      (27,945)      148,835        341,980
   Accounts payable and accrued expenses                (1,894,746)      577,555      (596,755)    (1,513,757)
   Income taxes payable                                     51,049        47,660        17,771         (6,947)
-------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities        849,746      (460,580)      735,372     (1,051,565)
-------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
   Acquisition of property and equipment                   (86,674)      (29,698)           --        (11,576)
   Other assets                                           (141,334)          103      (226,805)       (80,817)
-------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                     (228,008)      (29,595)     (226,805)       (92,393)
-------------------------------------------------------------------------------------------------------------

Cash Flows From Financing Activities:
   Proceeds from note payable, net                              --       682,374            --             --
   Capital contribution                                         --       123,821            --             --
   Net cash distribution to the majority
      shareholder                                          (46,382)           --            --             --
   Payments of long-term debt                             (357,748)           --       (44,733)        30,035
   Supplier credit facility                               (443,057)     (114,229)     (377,614)       999,910
-------------------------------------------------------------------------------------------------------------




                                     F-31










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                              Combined and Consolidated Statements of Cash Flows

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

                          Increase (Decrease) in Cash




                                                                                   Quarter ended March 31,
                                                      Years Ended December 31,          (unaudited)
                                                      ------------------------   -------------------------
                                                                                     2003          2002
                                                          2002         2001      consolidated    combined
----------------------------------------------------------------------------------------------------------
                                                                                    
Net cash (used in) provided by financing activities      (847,187)   691,966        (422,347)    1,029,945
Effects of changes in foreign currency exchange
   rate changes on cash                                  (129,291)    46,510         (34,677)      (40,291)
----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                          (354,740)   248,301          51,543      (154,304)
Cash, beginning of year                                   648,334    400,033         293,594       648,334
----------------------------------------------------------------------------------------------------------
Cash, end of year                                      $  293,594   $648,334      $  345,137    $  494,030
----------------------------------------------------------------------------------------------------------
Supplemental cash flow data:
   Interest paid                                       $  301,194   $361,087      $   86,806    $       --
   Income tax paid                                         29,692    246,101              --            --
----------------------------------------------------------------------------------------------------------
Supplemental disclosures of non-cash investing
    activities -
Assignment of receivable collection rights to
    related party                                      $1,915,300   $     --      $       --    $       --
Acquisition of properties in settlement of trade
    accounts receivable                                 3,724,145         --       1,532,446            --
Note issued in partial consideration of acquisition
    of real state                                              --         --         159,000            --
Assets transferred in settlement of supplier
    payables                                                   --         --       4,332,688            --
Acquisition of subsidiaries for payable to
   shareholder                                                 --         --         584,048            --
Non-cash contribution by majority shareholder in
   forgiveness of payables (Note 7)                            --     94,669              --            --
==========================================================================================================



      The accompanying notes are an integral part of these financial statements.


                                     F-32










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

1.   Summary of Significant    Nature of Operations & Basis of Presentation
     Accounting Policies
                               Proyecciones y Ventas Organizadas, S.A. de C.V.
                               (collectively with its affiliated companies, the
                               "Company" or "Provo") is engaged in the
                               distribution of prepaid public telephone cards in
                               Mexico ("LADATEL", "TELCEL Amigo" and "Multifon")
                               for Telefonos de Mexico, S.A. ("TELMEX") and
                               Radiomovil Dipsa, S.A. de C.V. ("TELCEL"),
                               telephone communications companies operating in
                               Mexico. The combined financial statements include
                               the accounts of the following Mexican companies
                               under common control:

                               Proyecciones y Ventas Organizadas, S.A. de C.V.,
                                  ("Provo")
                               Proyecciones y Ventas Organizadas del DF, S.A. de
                                  C.V., ("ProvoDF")
                               Proyecciones y Ventas Organizadas de Occidente,
                                  S.A. de C.V., ("ProvoC")
                               FS Provo, S.A. de C.V., ("FSProvo")
                               PTL Administradora, S.A. de C.V., ("PTLA")
                               TILGO, S.A. de C.V., ("TILGO")
                               Comercializadora TARNOR, S.A. de C.V. ("TARNOR")

                               The combined financial statements of these
                               commonly and majority-owned entities were
                               prepared on this basis to reflect their combined
                               financial position and results of operations as
                               an integrated in a group, since each entity is
                               engaged in the distribution of prepaid public
                               telephone cards in different regions of Mexico.

                               Intercompany balances and transactions have been
                               eliminated in the combination.

                               In March 2003, the common controlling
                               shareholders sold their shares in ProvoDF,
                               ProvoC, FSProvo, PTLA, TILGO and TARNOR to Provo,
                               formally integrating all operations into a single
                               entity (See Note 8). Accordingly, the
                               accompanying financial statements as of March 31,
                               2003, have been consolidated to include the
                               accounts of Provo and its subsidiaries.
                               Intercompany balances and transactions have been
                               eliminated in the consolidation.


                                     F-33










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               Management's estimates and assumptions

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

                               Allowance for Doubtful Accounts

                               The Company records an allowance for doubtful
                               accounts based on specifically identified amounts
                               that it believes to be uncollectible. If actual
                               collections experience changes, revisions to the
                               allowance may be required.

                               The Company has a limited number of customers
                               with individually large amounts due at any given
                               balance sheet date. Any unanticipated change in
                               one of those customer's credit could have a
                               material effect on the Company's results of
                               operations in the period in which such changes or
                               events occur. After all attempts to collect a
                               receivable have failed, the receivable is written
                               off against the allowance.

                               Inventory

                               Inventory consists of prepaid phone cards
                               purchased for resale. Inventory is valued at the
                               lower of cost ("first-in, first-out") or market.

                               Real estate held for sale

                               These real estate properties represent
                               non-operating assets, purchased or acquired in
                               settlement of trade accounts receivable, and are
                               valued at the lower of cost or market (See Note
                               2).


                                     F-34










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               Property and equipment

                               Property and equipment is stated at cost.
                               Depreciation is computed over the estimated
                               useful lives of the assets by the straight-line
                               method. The Company records impairments to
                               property and equipment when it becomes probable
                               that the carrying values of the assets will not
                               be fully recovered over their estimated lives.
                               Impairments are recorded to reduce the carrying
                               value of the assets to their estimated fair
                               values determined by the Company based on facts
                               and circumstances in existence at the time of the
                               determination, estimates of probable future
                               economic conditions and other information. No
                               impairment adjustments were required for the two
                               years ended December 31, 2002.

                               Foreign currency translation

                               The Company has determined that the Mexican Peso
                               is the functional currency. Assets and
                               liabilities denominated in the Mexican Peso are
                               translated into US. Dollars at the rates in
                               effect at the balance sheet date. Revenues and
                               expenses are translated at average rates for the
                               year. The net exchange differences resulting from
                               these translations are recorded as a separate
                               component of shareholders' equity accumulated
                               other comprehensive income, which is excluded
                               from net income.

                               Fair Market Value of Financial Instruments

                               The Company's financial instruments consist of
                               accounts receivable, notes payable and long-term
                               debt. The carrying value of accounts receivable
                               approximates market value because of their short-
                               term maturity and because the carrying value
                               reflects a reasonable estimate of losses for
                               uncollectible accounts. The carrying value of
                               notes payable and long-term debt approximates
                               market value as the interest rates on
                               substantially all of the Company's borrowings are
                               adjusted regularly to reflect current market
                               rates.

                               Revenue recognition

                               Revenues from the sale of prepaid phone cards are
                               recorded when the phone cards are delivered to
                               the purchaser.


                                     F-35










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               Income taxes

                               Income taxes are accounted for under the asset
                               and liability method. Deferred tax assets and
                               liabilities are recognized for the future tax
                               consequences attributable to differences between
                               the financial statement carrying amounts of
                               existing assets and liabilities and their
                               respective tax bases and operating loss and tax
                               credit carryforwards. Deferred tax assets and
                               liabilities are measured using enacted tax rates
                               expected to apply to taxable income in the years
                               in which those temporary differences are expected
                               to be recovered or settled. The effect on
                               deferred tax assets and liabilities of a change
                               in tax rates is recognized in income in the
                               period that includes the enactment date. A
                               valuation allowance is provided for deferred tax
                               assets to the extent realization is not judged to
                               be more likely than not.

                               New accounting pronouncements

                               In August 2001, the Financial Accounting
                               Standards Board (FASB) issued Statement of
                               Financial Accounting Standards (SFAS) No. 144,
                               "Accounting for the Impairment of Long-Lived
                               Assets." This statement superceded SFAS No. 121,
                               "Accounting for the Impairment of Long-Lived
                               Assets and for Long-Lived Assets to be Disposed
                               Of," and the accounting and reporting provisions
                               of Accounting Principles Board Opinion No. 30,
                               "Reporting the Results of Operations - Reporting
                               the Effects of Disposal of a Segment of a
                               Business, and Extraordinary, Unusual and
                               Infrequently Occurring Events and Transactions",
                               ("APB No. 30") for the disposal of a segment of a
                               business. The Statement was required to be
                               adopted by the Company during 2002. The adoption
                               of SFAS No. 144 did not have a material effect on
                               the Company's financial statements.


                                     F-36










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               In April 2002, the FASB issued Statement of
                               Financial Accounting Standards No. 145,
                               "Rescission of FASB Statements No. 4, 44 and 64,
                               Amendment of FASB Statement No. 13, and Technical
                               Corrections" ("SFAS 145"). SFAS 145 prohibits the
                               classification of gains or losses from debt
                               extinguishments as extraordinary items unless the
                               criteria outlined in APB No. 30, are met. SFAS
                               145 also eliminates an inconsistency between the
                               required accounting for sale-leaseback
                               transactions and the required accounting for
                               certain lease modifications that have economic
                               effects that are similar to sale-leaseback
                               transactions. SFAS 145 is effective for fiscal
                               years beginning after May 15, 2002, with early
                               adoption encouraged. The Company adopted the
                               provisions of SFAS 145 effective January 1, 2003
                               and this pronouncement did not have a material
                               effect on its financial position or results of
                               operations.

                               In June 2002, the FASB issued SFAS No. 146,
                               "Accounting for Costs Associated with Exit or
                               Disposal Activities". SFAS No. 146 replaces
                               Emerging Issues Task Force (EITF) Issue 94-3,
                               "Liability Recognition for Certain Employee
                               Termination Benefits and Other Costs to Exit an
                               Activity". This standard requires recognition of
                               costs associated with exit or disposal activities
                               as they are incurred, rather than at the date of
                               commitment to an exit or disposal plan. This
                               statement is effective for exit or disposal
                               activities that are initiated after December 31,
                               2002. The Company's management believes that the
                               adoption of this standard will not have a
                               material effect on the Company's financial
                               statements.

                               In November 2002, the FASB issued FIN No. 45
                               "Guarantor's Accounting and Disclosure
                               Requirements for Guarantees, Including Indirect
                               Guarantees of Indebtedness of Others". The
                               interpretation requires that a guarantor
                               recognize, at the inception of a guarantee, a
                               liability for the fair value of the obligation
                               undertaken by issuing the guarantee. FIN No. 45
                               also requires additional disclosures to be made
                               by a guarantor in its interim and annual
                               financial statements about its obligations under
                               certain guarantees it has issued. The accounting
                               requirements for the initial recognition of
                               guarantees are applicable on a prospective basis
                               for guarantees issued or modified after December
                               31, 2002. The disclosure requirements are
                               effective for all guarantees outstanding,
                               regardless of when they were issued or modified,
                               during the first quarter of fiscal 2003. The
                               adoption of FIN No. 45 did not have a material
                               effect of the accompanying financial statements.


                                     F-37










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               In January 2003, the FASB issued Interpretation
                               No. 46, "Consolidation of Variable Interest
                               Entities, an interpretation of ARB No. 51". This
                               Interpretation addresses the consolidation by
                               business enterprises of variable interest
                               entities as defined in the Interpretation. The
                               Interpretation applies immediately to variable
                               interests in variable interest entities created
                               after January 31, 2003, and to variable interests
                               in variable interest entities obtained after
                               January 31, 2003. The adoption of this
                               Interpretation did not have a material effect on
                               the Company's financial statements.

                               Interim Financial Statements -

                               The accompanying unaudited consolidated condensed
                               financial statements as of March 31, 2003 and for
                               the three months ended March 31, 2002 and 2003,
                               were prepared in accordance with accounting
                               principles generally accepted in the United
                               States of America and all applicable financial
                               statement rules and regulations of the Securities
                               and Exchange Commission pertaining to interim
                               financial information. The interim financial
                               statements do not include all information or
                               footnote disclosures required by accounting
                               principles generally accepted in the United
                               States of America for complete financial
                               statements. All adjustments which are, in the
                               opinion of management, of a normal recurring
                               nature and are necessary for a fair presentation
                               of the interim financial statements have been
                               included. The results of operations for the three
                               months ended March 31, 2003 are not necessarily
                               indicative of the results to be expected for the
                               full year.

2.   Real Estate Held for      The Company has purchased or obtained real estate
     Sale                      properties as part of settlements reached with
                               some of its customers. These properties have been
                               classified as short-term or long-term assets,
                               depending on the Company's plans for their sale
                               or disposition. As of December 31, 2002 and 2001
                               and March 31, 2003, these investments are as
                               follows:




                                                                 December 31,        March 31,
                               ----------------------------------------------------------------
                                                               2002        2001         2003
                               ----------------------------------------------------------------
                                                                           
                               Short term:                                          (unaudited)
                                  Los Cabos Properties      $  728,521   $     --    $       --
                                  La Providencia Ranch       2,995,624         --            --
                               ----------------------------------------------------------------

                               Total short-term              3,724,145         --            --
                               ----------------------------------------------------------------
                               Long-term
                                  San Gabriel Ranch            422,566    422,566       422,566




                                     F-38










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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



                                                                            
                                  Undeveloped property in
                                  Ocampo County in
                                  Tamaulipas                        --         --     1,532,446
                               ----------------------------------------------------------------

                               Total Long-term                 422,566    422,566     1,955,012
                               ----------------------------------------------------------------

                               Total                        $4,146,711   $422,566    $1,955,012
                               ================================================================



                               A description of each real estate transaction is
                               as follows:

                               o    On September 28, 2000, the Company purchased
                                    from a non-related party the San Gabriel
                                    undeveloped property located in Ciudad del
                                    Maiz county State of San Luis Potosi,
                                    Mexico, for $422,566 (4,000,000 Mexican
                                    Pesos).

                               o    On April 24, 2002, the Company reached an
                                    agreement of receipt for partial payment
                                    with a customer in which Provo received
                                    three condominiums, a residence and 12 land
                                    lots located in a tourist development
                                    section in Los Cabos, State of Baja
                                    California Sur, Mexico, in settlement of
                                    $728,521 (8,700,000 Mexican Pesos) of the
                                    total indebtedness 12,980,000 Mexican Pesos.
                                    The Customer is continuing to pay the
                                    balance of the amount owed.

                               o    On December 12, 2002, the Company reached a
                                    settlement for payment in full with another
                                    customer in which, Provo received real
                                    estate property, "Rancho la Providencia"
                                    located in Coatepec, State of Mexico,
                                    Mexico, as payment of the customer's
                                    indebtedness of $176,689 (1,793,177 Mexican
                                    Pesos) to Provo and $1,125,583 (11,423,321
                                    Mexican Pesos) to Provo DF.

                                    This agreement also involved the settlement
                                    with the customer of other indebtedness to
                                    Mr. Ventura Martinez del Rio, Provo's
                                    majority shareholder for $1,103,578
                                    (11,200,000 Mexican Pesos), and amounts owed
                                    to various other companies owned by Mr.
                                    Martinez del Rio, not part of the combining
                                    companies totaling $589,774 (5,985,607
                                    Mexican pesos. (See Note 7).

                                    The total amount of the transaction with the
                                    customer was $2,995,624 (30,402,000 Mexican
                                    Pesos).


                                     F-39










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               o    As mentioned in Note 7, on March 10, 2003,
                                    the Company acquired an undeveloped property
                                    located in Ocampo County in Tamaulipas State
                                    in Mexico, from Inmobiliaria Nextar, S.A. de
                                    C.V. (related party). This property is
                                    currently securing a line of credit with
                                    Telmex for $3,680,000 (38,500,000 Mexican
                                    Pesos).

3.   Equity in Earnings of     During the year ended December 31, 2001, until
     Unconsolidated            divestiture in January 2002, the Company owned a
     Subsidiary                50% interest in Provoloto, S.A. de C.V., a
                               lottery company controlled by Provo's majority
                               shareholder. The investment was accounted for on
                               the equity method of accounting as Provo's
                               majority shareholder, not Provo, exercised
                               control over the operations of Provoloto. During
                               2001, the Company recorded $129,976 equity in the
                               earnings of Provoloto, representing its
                               percentage interest in the Provoloto's total
                               earnings. As of December 31, 2001, the Company's
                               investment in Provoloto was $187,203,
                               representing its initial investment plus its
                               share of cumulative Provoloto earnings.

                               In January 2002, the Company's investment in
                               Provoloto was transferred to its majority
                               shareholder for cash consideration of $141,053.
                               In connection with this transfer, the difference
                               between the Company's investment and cash
                               consideration received was treated as a
                               distribution to the majority shareholder of
                               $46,150. Subsequent to the divestiture of
                               Provoloto, the Company has no ongoing involvement
                               with Provoloto, its lottery operations or
                               commitments for its future obligations.

                               The financial statements of Provoloto, from which
                               the above amounts were derived, were audited by
                               other auditors whose report has been furnished to
                               us. Our opinion, insofar as it relates to the
                               amounts included for Provoloto, is based solely
                               on the report of the other auditors.


                                     F-40










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

4.   Property and Equipment    Major classes of property and equipment at
                               December 31, 2002 and 2001 and March 31, 2003,
                               together with their estimated useful lives,
                               consisted of the following:




                                                                                                      Useful
                                                                     December 31,        March 31,     Life
                               --------------------------------------------------------------------
                                                                                           2003
                                                                   2002        2001     (unaudited)   (Years)
                               ------------------------------------------------------------------------------
                                                                                             
                               Land (Note 5)                    $ 151,320   $ 151,320    $      --       --
                               Building (Note 5)                  306,102     296,881           --       20
                               Office furniture and equipment     168,538     166,617      168,928       10
                               Transportation equipment           135,016      66,385      134,322        4
                               Computer equipment                 103,158      96,258      106,064        3
                               -------------------------------------------------------------------

                                                                  864,134     777,461      409,314
                               Less accumulated depreciation     (231,662)   (145,353)    (186,352)
                               -------------------------------------------------------------------

                               Net property and equipment       $ 632,472   $ 632,108    $ 222,962
                               ===================================================================



                               On March 10, 2003, as part of the settlement
                               agreement with Telmex (See Note 5), the Company
                               transferred its ownership in its corporate
                               headquarters in Mexico City to Telmex for
                               $667,445 liquidation of amounts owed to Telmex.

5.   Payable Under Supplier    Provo has relied on Telmex to finance its
     Credit Facility           inventory purchases, with a line of credit of
                               approximately $12,315,000 (127,000,000 Mexican
                               Pesos). Various non-operating properties owned by
                               Provo, properties owned by the majority
                               shareholder's family and properties of related
                               parties, have been pledged to guarantee Provo's
                               credit line with Telmex. As of December 31, 2002
                               and 2001 and at March 31, 2003, the outstanding
                               balance with Telmex is as follows:


                                     F-41










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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




                                                                   December 31,          March 31,
                               --------------------------------------------------------------------
                                                                                           2003
                                                               2002           2001      (unaudited)
                               --------------------------------------------------------------------
                                                                                
                               Accounts payable            $  4,061,857   $10,062,054   $        --
                               Short-term financing           3,878,788            --     3,937,268
                               Long-term financing            3,909,082     2,230,730     3,425,186
                               --------------------------------------------------------------------
                                                             11,849,727    12,292,784     7,362,454

                               Less long-term maturities    (2,171,715)    (1,487,153)   (3,050,695)
                               --------------------------------------------------------------------

                               Total short-term            $  9,678,012   $10,805,631   $ 4,311,759
                               ====================================================================



                               On December 7, 2001, Provo reached an agreement
                               with Telmex, to restructure $2,756,921
                               (25,204,600 Mexican Pesos) of its total
                               indebtedness. This agreement included the
                               following terms:

                               1.   Telmex agreed to pay Provo a fee of $526,191
                                    (4,810,600 Mexican Pesos) in consideration
                                    for Provo's assignment of the distribution
                                    rights to certain of its distributors
                                    directly to Telmex, subject to compliance
                                    with the payment terms referred to in this
                                    agreement, as described below. This fee was
                                    used to offset against the payable to
                                    Telmex.

                               2.   The financing of $2,230,730 (20,394,000
                                    Mexican Pesos) is payable in 36 equal
                                    monthly payments, commencing January 7,
                                    2002, with a final due date on December 7,
                                    2004.

                               3.   The abovementioned financing bears interest
                                    at an annual variable rate under the Mexican
                                    Interbank Equilibrium Rate ("TIIE") times
                                    1.3 on the outstanding balance, payable
                                    monthly.

                               4.   This financing is collateralized with the
                                    San Gabriel Ranch property described in Note
                                    2.

                               5.   Should Provo default on payment, the
                                    outstanding balance would bear default
                                    interest at TIIE times 2.5. In the event of
                                    default by Provo, Telmex also has the right
                                    to accelerate full payment of the
                                    outstanding balance.


                                     F-42










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               On March 10, 2003, Provo entered into a new
                               settlement agreement with Telmex, to liquidate
                               its payable to Telmex, the terms of which are
                               described below:

                               (1)  Transfer of Provo's corporate headquarters
                                    in Mexico City where its operating offices
                                    are located, for $642,290 (6,915,600 Mexican
                                    Pesos) consideration applied against the
                                    amounts due Telmex.

                               (2)  Provo relinquished its rights to Telmex of
                                    certain of its non-revenue generating real
                                    estate properties, "La Providencia Ranch",
                                    described in Note 2, in exchange for a
                                    portion of the balance due to Telmex at
                                    December 31, 2002 in the amount of
                                    $2,857,146 (30,763,182 Mexican Pesos) and
                                    "Los Cabos" properties in the amount of
                                    $833,253 (8,971,722 Mexican Pesos).

                                    The above mentioned transactions generated a
                                    gain of $245,159 such assets transferred in
                                    settlement of supplier payables, which was
                                    recorded in the companies results from
                                    operations for the quarter ended March 31,
                                    2003.

                               (3)  The remaining balance of $7,787,870
                                    (80,312,406 Mexican Pesos) was restructured
                                    as follows:

                                    a.   $3,878,788 (40,000,000 Mexican Pesos),
                                         due and payable on or before September
                                         9, 2003; bearing interest at TIIE times
                                         1.3.

                                    b.   $3,909,082 (40,312,406 Mexican Pesos),
                                         is payable in 54 equal monthly
                                         payments, due and payable by Provo to
                                         Telmex commencing on July 10, 2003 with
                                         a final due date on January 10, 2008,
                                         bearing interest at TIIE times 1.3.

                               (4)  Should Provo default on payment, the
                                    outstanding balance would bear default
                                    interest at TIIE multiplied by 1.8. In the
                                    case of default by Provo, Telmex may demand
                                    acceleration of the outstanding balance.

                               At December 31, 2002, the applicable TIIE
                               interest rate, payable by Provo, was 11.09% per
                               annum.


                                     F-43










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

6.   Notes Payable             Notes payable consisted of the following at
                               December 31 2002 and 2001 and at March 31, 2003:




                                                                          December 31,         March 31,
                               -------------------------------------------------------------------------
                                                                                                 2003
 
                                                                     2002          2001      (unaudited)
                               -------------------------------------------------------------------------
                                                                                     
                               Provo
                                  BBVA Bancomer, S.A. (1)          $  387,879   $   437,527   $  557,253
                                  BBVA Bancomer, S.A. (2)             581,818       656,290      501,528
                                  BBVA Bancomer, S.A. (3)             581,818       656,290      371,502
                               ProvoDF
                                   SCOTIABANK Inverlat, S.A. (4)      387,879       546,908      464,378
                               -------------------------------------------------------------------------
                               Total notes payable                  1,939,394     2,297,015    1,894,661
                               Less short-term                       (562,424)   (1,093,817)    (631,554)
                               =========================================================================
                               Long-term bank loans                $1,376,970   $ 1,203,198   $1,263,107
                               =========================================================================



                               (1)  An available revolving line of credit of
                                    $387,879 (4,000,000 Mexican Pesos) from BBVA
                                    Bancomer, S.A. secured by real estate of the
                                    majority shareholder's family. The interest
                                    rate on this line of credit is TIIE plus 4%
                                    (12.53% at December 31, 2002). The line of
                                    credit is available through September 2005
                                    with proceeds due and payable 90 days after
                                    the funds are received.

                               (2)  An available revolving line of credit of
                                    $581,818 (6,000,000 Mexican Pesos) from BBVA
                                    Bancomer, S.A. secured by real estate of the
                                    majority shareholder's family. The interest
                                    rate on this line of credit is TIIE plus 6%
                                    (14.53% at December 31, 2002). The proceeds
                                    are due and payable 60 days after the funds
                                    are received.

                               (3)  A loan from BBVA Bancomer, S.A. for $581,818
                                    (6,000,000 Mexican Pesos) secured by real
                                    estate of the majority shareholder's family.
                                    This loan is payable in 36 monthly
                                    installments, bearing interest at TIIE plus
                                    4% (12.53% at December 31, 2002). The last
                                    payment is due on September 24, 2005.


                                     F-44










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               (4)  An available revolving line of credit of
                                    $387,879 (4,000,000 Mexican Pesos) from
                                    Scotiabank Inverlat, S.A., secured by real
                                    estate of the majority shareholder's family.
                                    The interest rate on this line is TIIE plus
                                    3.5% (12.03% at December 31, 2002). The
                                    proceeds are due and payable 60 days after
                                    the funds are received.

7.   Transactions with         Balances with related parties are as follows:
     Related Parties




                                                                              December 31,         March 31,
                               ------------------------------------------------------------------------------
                                                                                                      2003
                                                                          2002          2001      (unaudited)
                               ------------------------------------------------------------------------------
                                                                                          
                               Accounts receivable:
                                  Desarrollo Arboledas                 $        --   $  891,022    $      --
                                  Comercializadora VGI, S.A. de C.V.       584,048      693,578           --
                                  SAPROV, S.C.                             235,252      106,952      211,749
                                  Mr. Ventura Martinez del Rio Sr. -
                                     Majority shareholder                       --       98,443           --
                                  Other minority shareholders               92,444        6,562       98,093
                                  Tarpa, S.A. de C.V.                      212,596           --      197,745
                               -----------------------------------------------------------------------------
                               Total related party receivables         $ 1,124,340   $1,796,557    $ 507,587
                               =============================================================================
                               Accounts payable:
                                  Mr. Ventura Martinez del Rio Sr. -
                                     Majority shareholder              $  (124,858)  $       --    $      --
                                  ProvoLOTO                               (403,879)     (88,490)    (246,687)
                                  PRODIES                                 (585,460)    (481,660)    (534,632)
                                  Tarpa, S.A. de C.V.                           --      (27,933)          --
                               -----------------------------------------------------------------------------
                               Total related party payables            $(1,114,197)  $ (598,083)   $(781,319)
                               =============================================================================




                                     F-45










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               The Company has entered into certain transactions
                               with related parties as follows:




                                                                                 December 31            March 31
                               ----------------------------------------------------------------------------------
                                                                                                          2003
                                                                              2002          2001      (unaudited)
                               ----------------------------------------------------------------------------------
                                                                                             
                               Purchases of properties and receivables    $(2,774,199)  $        --   $(1,532,446)
                               Acquisition of subsidiaries from
                                  majority shareholder                             --            --      (609,577)
                               Non-cash contribution by majority
                                  shareholder in forgiveness of payables           --            --        94,669
                               Sales of properties and receivables            194,416            --            --
                               Personnel services                          (1,599,702)   (1,745,748)     (211,749)
                               Loans received                                (984,748)     (306,462)     (888,885)
                               Sales of telephone cards                       697,854       604,710       182,050
                               Interest earned                                 49,805        53,745            --
                               Other                                          (72,984)       74,041        88,862
                               ==================================================================================



                               Provo, which has no employees, leases employee
                               personnel from a related party company. Such
                               personnel services are provided by SAPROV, S. C.,
                               a partnership created by the officers of Provo
                               and of other related parties. For the year ended
                               December 31, 2002 and 2001 and quarter ended
                               March 31, 2003, total personnel services expenses
                               of $1,599,702, $1,745,748 and $211,749 paid to
                               SAPROV are included in general and administrative
                               expenses in the accompanying statement of
                               operations.

                               In 1999, the Company loaned Desarrollo Arboledas,
                               a related party $735,146 (7,000,208 Mexican Pesos
                               at the exchange rate prevailing as of December
                               31, 1999 of 9.52/$1.00). This loan accrued
                               interest at 7% per annum, which was paid monthly.
                               In December 2002, this loan was sold to Mr.
                               Ventura Martinez del Rio, Sr., as a payment to
                               Mr. Martinez del Rio for collection rights from
                               Mr. Jose L. Alfaro Manzano.


                                     F-46










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               In December 2002, the Company received real
                               estate properties, valued at approximately $3.0
                               million, from a customer. The properties were
                               received in settlement of trade payables due to
                               the Company of approximately $0.2 million. The
                               receipt of these properties also settled
                               approximately $2.8 million of indebtedness from
                               the same customer to several affiliates,
                               including the Company's majority shareholder and
                               companies owned by that shareholder, for which
                               the collection rights had been assigned to the
                               Company in September 2002. In connection with the
                               receipt of these properties, the Company
                               transferred collection rights to certain of its
                               receivables, principally related party
                               receivables, to the shareholder totaling
                               approximately $1.9 million and settled existing
                               related party receivables of approximately $0.3
                               million. As of December 31, 2002, approximately
                               $0.6 million of related party payables resulting
                               from the September 2002 assignment of collection
                               rights remains unsettled and is reflected in the
                               accompanying balance sheet.

                               The terms of the transactions with affiliates
                               described above are not necessarily indicative of
                               terms that could have been obtained had the
                               transactions been with unrelated parties.

                               In March 2003, the Company transferred the
                               properties described above, and additional
                               properties owned by the Company valued at $0.9
                               million, to settle amounts owed by the Company
                               under the Supplier Credit Facility totaling
                               approximately $3.9 million (see Note 5).

                               On March 10, 2003, the Company acquired an
                               undeveloped property from Inmobiliaria Nextar,
                               S.A. de C.V. (a related party "Nextar"). The
                               price for this transaction was approximately
                               $1,592,000 (16,500,000 Mexican Pesos) of which
                               approximately $1,433,000 was paid with the
                               companies aged accounts receivable from third
                               party trade customers and $159,000 is payable in
                               24 equal monthly installments. Such receivables
                               had an allowance for doubtful accounts of
                               $168,461. When the receivables were sold, such
                               reserve was recognized as additional paid-in
                               capital due to the related party nature of the
                               transaction.

                               Effective March 31, 2003, the majority
                               shareholder forgave $94,669 in amounts due from
                               the Company. This amount was recognized as a
                               capital contribution to the Company.


                                     F-47










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

8.   Shareholders' Equity      Capital Stock:

                               In March 2003, the common controlling
                               shareholders sold their shares in ProvoDF,
                               ProvoC, FSProvo, PTLA, TILGO and TARNOR to Provo
                               for $609,577, formally integrating all operations
                               into a single entity. Accordingly, the financial
                               statements at March, 31 2003 are presented on a
                               consolidated, rather than a combined, basis and
                               the historical equity balances have been restated
                               as if the integration had occurred as of the
                               earliest date presented. The net effect of the
                               transaction is to reduce the value of capital
                               stock by $287,941 to reflect only the issued and
                               outstanding shares of Provo and to increase
                               paid-in capital by a like amount.

                               In connection with the integration, the Company
                               recorded a distribution charged against retained
                               earnings for an amount equal to the purchase
                               price of the acquired shares, payable to its
                               common controlling shareholders.

                               The Companies' common stock is represented by
                               registered shares at December 31, 2002 and 2001
                               and at March 31, 2003, as follows:




                                                                                                                    Total
                                                                                                                   March 31,
                                                                            (Shares as of December 31,)              2003
                                                                      Capital stock (1)     Total      Total    (consolidated,
                               December 31,                            Fixed   Variable     2002       2001       unaudited)
                               -----------------------------------------------------------------------------------------------
                                                                                                    
                               Capital stock shares:
                                  Provo                               20,000    116,200    136,200    136,200       136,200
                               -----------------------------------------------------------------------------------------------
                               Par-value                                                      5.66       5.66          5.66
                               -----------------------------------------------------------------------------------------------

                               Total capital stock                                        $770,368   $770,368      $770,368
                               ===============================================================================================

                               Shares of subsidiaries:
                                  ProvoDF (30% minority interest -
                                     see Note 10)                      2,100      5,600      7,700      7,700            --
                                  FSProvo                              1,000         --      1,000      1,000            --
                                  ProvoC                               1,000         --      1,000      1,000            --
                                  PTLA                                 2,000         --      2,000      2,000            --
                                  TILGO (5% minority interest            950      8,550      9,500      9,500            --
                                     at December 31, 2002 and
                                     2001(2))
                                  TARNOR (34% minority interest in
                                     2002 and 2001)                      660         --        660        660            --
                               -----------------------------------------------------------------------------------------------



----------
(1)  Fixed capital stock represents shares originally authorized in the
     Company's by-laws and are not changed unless formally amended in the
     by-laws through shareholders' approval. The variable capital stock requires
     only shareholder approval for changes in the number of shares authorized.


                                     F-48










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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


                               Retained earnings:

                               The year's net income is subject to the statutory
                               requirement which states that 5% of each year's
                               income must be set aside to increase the legal
                               reserve, until such time as the reserve
                               constitutes 20% of the Company's capital stock.

                               Under Mexico's current Income Tax Law, dividends
                               paid out of the Net Fiscal Profit account,
                               "CUFIN" - previously taxed earnings are
                               tax-free. If any dividends are paid in excess of
                               the balance of CUFIN, the Company must pay 35%
                               tax multiplied by a factor of 1.5385 (34% in
                               2003, 33% in 2004 and 32% in 2005 and subsequent
                               years).

                               In the event of a reduction in capital, the
                               excess of shareholders' equity over the restated
                               contributions will be treated as a taxable
                               dividend, in accordance with Mexico's current
                               Income Tax Law.

9.   Income Taxes              Taxable income differs from accounting income due
                               to permanent differences, principally on items in
                               the income statement to reflect the effects of
                               inflation, and to timing differences affecting
                               accounting and taxable income in different
                               periods.

                               In accordance with Mexico's current Income Tax
                               Law, the income tax rate is 35% for years 2001
                               and 2002, 34% for 2003, 33% for 2004 and 32% for
                               2005 and subsequent years.

                               In accordance with Mexico's Income Tax Law, tax
                               losses are subject to restatement by inflation
                               and may be carried forward against future taxable
                               income over the 10 years following their
                               generation. As of December 31, 2002, the
                               Company's restated cumulative tax loss

----------
(2)  In September 2001, the shareholders of the Company resolved that Mr.
     Ventura Martinez del Rio, Sr., the Company's majority shareholder, to
     increase his equity in Tilgo from 50% to 95% through an increase in capital
     stock, which was paid in cash by Mr. Martinez del Rio, Sr.; the minority
     shareholders did not participate in the capital increase.


                                     F-49










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               carryforwards were as follows:




                                                        Expiration
                               Fiscal year    Amount       Year
                               -----------------------------------
                                                     
                               2001          $277,571      2011
                               2002            77,569      2012
                               -----------------------------------
                                             $355,140
                               ===================================



                               A reconciliation of the statutory rate to the
                               effective income tax rate for the years ending
                               December 31, 2002 and 2001 and for the three
                               months ended March, 31, 2003, 2002 is as follows:




                                                                                      March 31,
                                                                    December 31,     (unaudited)
                               -----------------------------------------------------------------
                                                                    2002    2001    2003    2002
                               -----------------------------------------------------------------
                                                                                  
                               Statutory tax rate                     35%     35%     34%     35%
                               Recognition of the effects of
                                  inflation                            5%     37%    116%     (3%)
                               Non deductible expenses                 2%      2%      2%     --
                               Utilization of tax loss
                                  carryforwards                      (22%)   (34%)  (116%)    --
                               -----------------------------------------------------------------
                               Effective income tax rate              20%     40%     36%     32%
                               =================================================================



                               The provision for income tax for the years ended
                               December 31, 2002 and 2001 and for the three
                               months ended March, 31, 2003, 2002 is as follows:




                                                                    March 31,
                                              December 31,         (unaudited)
                               --------------------------------------------------
                                            2002       2001       2003      2002
                               --------------------------------------------------
                                                               
                               Current    $229,595   $240,869   $ 60,726       --
                               Deferred    (81,200)    50,196    (25,996)  82,700
                               --------------------------------------------------
                               Total      $148,395   $291,065   $ 34,730   82,700
                               ==================================================



                               The determination of deferred income taxes was
                               made through the assets and liabilities method,
                               which recognizes the income tax effects of the
                               differences in bases of assets and liabilities
                               between financial accounting and accounting for
                               tax reporting purposes. The tax rates used to
                               compute deferred taxes on those temporary
                               differences are the rates expected to apply when
                               such differences are recovered or settled. The
                               deferred taxes resulting from such timing
                               differences at December 31, 2002 and 2001 and
                               March 31, 2003, 2002 are as follows:


                                     F-50










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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




                                                                               December 31,        March 31,
                               ------------------------------------------------------------------------------
                                                                                                      2003
                                                                             2002        2001     (unaudited)
                               ------------------------------------------------------------------------------
                                                                                          
                               Deferred income taxes current:
                                  Inventories                             $(825,696)  $(874,772)   $(584,900)
                                  Allowance for bad debts                   119,435      93,687       28,563
                               ------------------------------------------------------------------------------
                                     Net deferred income tax liability
                                        current                            (706,261)   (781,085)    (556,337)
                               ------------------------------------------------------------------------------
                               Long-term deferred income tax liability
                                  Property and equipment                    147,240     135,073      136,955
                                  Tax loss carryforward                     113,643     119,434           --
                               ------------------------------------------------------------------------------
                                     Total long-term deferred tax asset     260,883     254,507      136,955
                               ------------------------------------------------------------------------------
                                                                          $(445,378)  $(526,578)   $(419,382)
                               ==============================================================================



                               In accordance with Mexico's Income Tax Law, if,
                               in any given year, the Company is subject to tax
                               on assets in excess of the amount of income tax
                               payable, this excess may be used to offset income
                               taxes payable in excess of tax on assets payable
                               in any of the ten years following such year. As
                               of December 31, 2002, the Company did not have
                               any excess of tax on assets.

10.  Commitments and           The Company maintains Mexican Peso denominated
     Contingencies             operating leases on buildings and transportation
                               equipment. The Company recorded leasing expenses
                               of $141,038 and $187,001 in 2002 and 2001. The
                               schedule of estimated future minimum lease
                               payments is as follows:




                                                     December 31
                               ---------------------------------
                                                         2002
                               ---------------------------------
                                                    
                               2003                    $148,090
                               2004                     154,014
                               2005                     158,634
                               2006                     163,393
                               2007                     168,295
                               2008 and thereafter           --
                               ---------------------------------
                                                       $792,426
                               =================================



11.  Subsequent Events         On April 3, 2003, all of the Company's common
                               stock was acquired by Frontline Communications
                               Corporation, a U.S. public company, pursuant to
                               the terms of an Amended and Restated Stock
                               Purchase Agreement (the "Agreement"). Under the
                               Agreement, in consideration


                                     F-51










                               Proyecciones y Ventas Organizadas, S. A. de C. V.
                                                        and Affiliated Companies

                                                   Notes to Financial Statements

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

                               for the Company's shares, Provo received 220,000
                               shares of Frontline's Series C Convertible
                               Preferred Stock. The preferred shares are
                               convertible to 33 million shares of Frontline's
                               common stock upon approval of certain actions by
                               Frontline's shareholders. Upon conversion, Provo
                               will own approximately 66% of Frontline's common
                               stock. Accordingly, the transaction will be
                               accounted for as a reverse acquisition in which
                               the Company will be the acquiror for financial
                               reporting purposes.

                               In the event Frontline does not obtain the
                               required shareholder approvals for conversion of
                               the Preferred C shares prior to July 18, 2003,
                               the consideration paid to Provo will be increased
                               by $20 million, in the form of a promissory note
                               from Frontline.

                               On June 2, 2003, Provo purchased the minority
                               interest owners' shares of the Comercializadora
                               Tarnor, S.A. de C.V. and of the Provecciones y
                               Ventas Organizadas del DF, S.A. de C.V. capital
                               stock from the respective minority shareholder.
                               With this purchase, Provo obtained control of
                               100% of the shares of TARNOR and of ProvoDF.


                                     F-52










                 Proyecciones y Ventas Organizadas, S.A. de C.V
                                       and
                      Frontline Communications Corporation

               Unaudited Pro Forma Combined Financial Information

     On April 3, 2003 (the "Closing Date"), the Registrant ("Frontline")
completed the acquisition (the "Acquisition") of all of the issued and
outstanding stock of Proyecciones y Ventas Organizadas, S.A. de C.V., a
corporation organized under the laws of the Republic of Mexico ("Provo"). The
acquisition was consummated pursuant to the terms and provisions of an Amended
and Restated Stock Purchase Agreement dated April 3, 2003 (the "Agreement")
among Frontline, Provo and Ventura Martinez del Rio Requejo ("Requejo") and
Ventura Martinez del Rio Arrangoiz ("Arrangoiz") ( Requejo and Arrangoiz are
collectively referred to as the "Sellers").

     As a consideration for the stock in Provo, Frontline issued to the Sellers
a total of 220,000 shares of Frontline's Series C Convertible Preferred Stock
(the "Series C Preferred"). Each share of Series C Preferred automatically
converts to 150 shares of common stock of Frontline upon receipt of the approval
of Frontline's stockholders (the "Requisite Approvals") of (i) the issuance of
shares of common stock upon the conversion of the Series C Preferred; (ii) an
increase in Frontline's authorized common stock to 75 million; and (iii) a 1 for
1.5 share reverse split of Frontline's common stock. If the Requisite Approvals
are obtained, Frontline will issue 33 million shares of common stock (before
giving effect to the proposed reverse split) (the "Conversion Shares") to the
Sellers and a change of control of Frontline will occur. Upon conversion of the
Series C Preferred, the Sellers will own approximately 66% of the common stock
of Frontline. In the event Frontline shareholders do not approve the conversion
of Series C Preferred into Frontline's common stock, Frontline will be obligated
to pay a promissory note in the principal amount of $20,000,000 to the Series C
Preferred Stockholders.

     In connection with the Acquisition, Frontline issued to 18 individuals an
aggregate of 35,500 shares of Series D Convertible Preferred Stock (the "Series
D Preferred"), including 27,500 shares to officers and employees and 8,000
shares to brokers and finders. Each share of Series D Preferred is convertible
into 150 shares of common stock upon receipt of the Requisite Approvals.

     Frontline is requesting the holders of its Series B Convertible preferred
stock to convert their shares into shares of Frontline common stock; currently
the preferred stock can be converted into common stock at the rate of 3.4 shares
of common stock for each share of preferred stock. In connection with the
conversion, Frontline has offered to pay the holders of the preferred stock
accrued and unpaid dividends on the preferred stock in shares of its common
stock. Including accrued dividends and deemed dividends (see Note 7), the
proposed conversion ratio is 6 shares of common for each share of preferred
stock.


                                     F-53










     The following unaudited pro forma combined condensed financial information
sets forth certain historical financial information of Frontline and Provo on an
unaudited pro forma basis after giving effect to the Acquisition as a "reverse
acquisition" with Provo as the acquirer of Frontline for accounting purposes
(see Note 1 to the unaudited pro forma combined condensed financial
information). The acquisition will be accounted for using the purchase method of
accounting, and accordingly, the purchase price will be allocated to tangible
and intangible assets of Frontline acquired, and the liabilities of Frontline
assumed, on the basis of their fair market values as of the acquisition date.

     The balance sheets of Provo and Frontline at March 31, 2003 have been
combined as if the Acquisition had occurred on March 31, 2003. For purposes of
pro forma information, the Provo and the Frontline statements of operations for
the year ended December 31, 2002 and the three months ended March 31, 2003 have
been combined as if the Acquisition had occurred on January 1, 2002.

     The unaudited pro forma combined condensed financial information has been
included as required and allowed by the rules of the Commission and is presented
for illustrative purposes only and is not necessarily indicative of the
financial position or operating results that would have actually occurred had
the Acquisition been completed at the beginning of the periods or on the dates
indicated, nor is it necessarily indicative of future financial position or
operating results.

     The allocation of the purchase price reflected in the unaudited pro forma
combined condensed financial information is preliminary. The actual purchase
price allocation, to reflect the fair values of assets acquired and liabilities
assumed, will be based upon the combined organization's management evaluation of
such assets and liabilities upon completion of the Acquisition. Accordingly, the
adjustments included herein may change based upon the final allocation of the
purchase price, as adjusted to reflect the actual assets and liabilities at the
date upon which the Acquisition is completed and transaction costs incurred.
That allocation may differ significantly from the preliminary allocation
included herein.


                                     F-54










UNAUDITED PRO FORMA COMBINED BALANCE SHEET




March 31, 2003                                        
                                                             Historical            Pro forma            Pro forma
                                                         Provo       Frontline     Adjustments   Note   Combined
                                                      -----------   -----------   ------------   ----   -----------
                                                                                         
ASSETS
Current:
   Cash and cash equivalents                          $   345,137   $   214,909                         $   560,046
   Accounts receivable:
      Trade, net of allowance for doubtful accounts     6,821,623       165,992                           6,987,615
      Related parties                                     507,587                                           507,587
      Other                                               176,464                                           176,464

                                                      -----------   -----------                         -----------
         Total accounts receivable                      7,505,674       165,992                           7,671,666

   Value-added tax recoverable                            550,464                                           550,464
   Inventory                                            1,720,293                                         1,720,293
   Prepaid expenses                                       487,563        61,245                             548,808

                                                      -----------   -----------                         -----------
         Total current assets                          10,609,131       442,146                          11,051,277

Real estate held for sale                               1,955,012                                         1,955,012
Property and equipment, net                               222,962       528,055                             751,017
Deferred income taxes                                     136,955                                           136,955
Costs in excess on net assets acquired, goodwill                                  $  5,010,118     2      5,010,118
Other assets                                              391,069       150,323       (176,388)    1        365,004

                                                      -----------   -----------   ------------          -----------
                                                      $13,315,129   $ 1,120,524   $  4,833,730          $19,269,383
                                                      ===========   ===========   ============          ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current maturities of long-term debt                  $   631,554   $   919,083                          $1,550,637
Payable under supplier credit facility                  4,311,759                                         4,311,759
Related parties                                           781,319                                           781,319
Accounts payable and accrued expenses                     322,742     1,788,113   $   (250,000)    2      1,812,133
                                                                                       323,612     1
                                                                                      (372,334)    3
Income taxes payable                                      183,150                                           183,150
Deferred taxes                                            556,337                                           556,337
Deferred revenue                                                        561,960                             561,960
                                                      -----------   -----------   ------------          -----------
         Total current liabilities                      6,786,861     3,269,156       (298,722)           9,757,295

Long-term debt, less current maturities                 1,263,107       152,614                           1,415,721
Payable under supplier credit facility, less
   current maturities                                   3,050,695                                         3,050,695
                                                      -----------   -----------   ------------          -----------
         Total long-term debt                           4,313,802       152,614              0            4,466,416

                                                      -----------   -----------   ------------          -----------
         Total liabilities                             11,100,663     3,421,770       (298,722)          14,223,711

Minority Interest                                         107,844                                           107,844

Stockholder's Equity (deficiency)
Preferred stock                                                           4,964         (4,964)    4
Common stock                                                             99,404        242,223     4        341,627
Additional paid in capital                              1,279,814    36,204,292    (31,997,358)    4      5,486,748
Retained earning (accumulated deficit)                  1,006,369   (37,738,490)    37,738,490     4        160,430
                                                                                      (750,622)    5
                                                                                       (95,317)    7
Accumulated other comprehensive loss                     (179,561)                                         (179,561)
Treasury stock, at cost                                                (871,416)                           (871,416)

                                                      -----------   -----------   ------------          -----------
Total stockholders' equity                              2,106,622    (2,301,246)     5,132,452            4,937,828
                                                      -----------   -----------   ------------          -----------
                                                      $13,315,129   $ 1,120,524   $  4,833,730          $19,269,383
                                                      ===========   ===========   ============          ===========




                                     F-55










PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the year ended December 31, 2002
(Unaudited)





                                                                   (Historical)             Pro Forma            Pro Forma
                                                                Provo       Frontline      Adjustments   Note     Combined
                                                            ------------   ------------   ------------   ----   ------------
                                                                                                 
Revenues                                                    $101,550,659   $  5,047,098                         $106,597,757

Costs and expenses:
      Cost of revenues                                        96,866,869      2,493,337                           99,360,206
      Selling, general and administrative                      3,588,578      2,446,816                            6,035,394
      Depreciation and amortization                               86,425        745,135                              831,560
      Non-cash compensation charge                                               58,500       $750,622     5         809,122
                                                            ------------   ------------   ------------          ------------
                                                             100,541,872      5,743,788        750,622           107,036,282
                                                            ------------   ------------   ------------          ------------
Income (loss) from operations                                  1,008,787       (696,690)      (750,622)             (438,525)

Other income (expense):
   Interest expense                                             (419,345)       (95,417)                            (514,762)
   Interest income                                                97,256          7,796                              105,052
   Other income (expense)                                         69,881         (3,214)                              66,667

                                                            ------------   ------------   ------------          ------------
Net income (loss) before income tax and minority interest        756,579       (787,525)      (750,622)             (781,568)
                                                            ------------   ------------   ------------          ------------

Income tax                                                       148,395                                             148,395

                                                            ------------   ------------   ------------          ------------
Income (loss) before minority interest                           608,184       (787,525)      (750,622)             (929,963)

Minority interest                                                149,280                                             149,280

                                                            ------------   ------------   ------------          ------------
Net income (loss)                                                458,904       (787,525)      (750,622)           (1,079,243)
                                                            ------------   ------------   ------------          ------------

Preferred dividends                                                             297,867       (297,867)    6               0

Deemed dividends                                                                                95,317     7          95,317

                                                            ------------   ------------   ------------          ------------
Net loss applicable to common shareholders                  $    458,904    ($1,085,392)     ($548,072)          ($1,174,560)
                                                            ============   ============   ============          ============

Loss per common share-basic and diluted                                          ($0.12)                              ($0.03)
                                                                           ============                         ============

Weighted average number of  common shares
   outstanding- basic and diluted                                             9,119,533                     8     33,615,469
                                                                           ============                         ============




                                     F-56










PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the three months ended March 31, 2003
(Unaudited)





                                                                    (Historical)           Pro Forma            Pro Forma
                                                                Provo       Frontline     Adjustments   Note    Combined
                                                            ------------   -----------   ------------   ----   -----------
                                                                                                
Revenues                                                    $ 19,549,290    $1,066,127                         $20,615,417

Costs and expenses:
      Cost of revenues                                        18,891,342       495,721                          19,387,063
      Selling, general and administrative                        713,400       603,279                           1,316,679
      Depreciation and amortization                               30,051       143,373                             173,424
                                                            ------------   -----------   ------------          -----------
                                                              19,634,793     1,242,373                          20,877,166
                                                            ------------   -----------   ------------          -----------
Loss from operations                                             (85,503)     (176,246)                           (261,749)

Other income (expense):
   Interest expense                                              (86,865)      (21,888)                           (108,753)
   Interest income                                                    59           307                                 366
   Other income (expense)                                        269,610                                           269,610

                                                            ------------   -----------   ------------          -----------
Net income (loss) before income tax and minority interest         97,301      (197,827)                           (100,526)
                                                            ------------   -----------   ------------          -----------

Income tax expense                                                34,730                                            34,730

                                                            ------------   -----------   ------------          -----------
Income (loss) before minority interest                            62,571      (197,827)                           (135,256)

Minority interest                                                 15,278                                            15,278

                                                            ------------   -----------   ------------          -----------
Net income (loss)                                                 47,293      (197,827)                           (150,534)
                                                            ------------   -----------   ------------          -----------

Preferred dividends                                                             74,467       ($74,467)    5


                                                            ------------   -----------   ------------          -----------
Net loss applicable to common shareholders                  $     47,293     ($272,294)       $74,467            ($150,534)
                                                            ============   ===========   ============          ===========

Loss per common share-basic and diluted                                         ($0.03)                              $0.00
                                                                           ===========                         ===========

Weighted average number of  common shares
   outstanding- basic and diluted                                            9,294,972                    6     33,732,428
                                                                           ===========                         ===========




                                     F-57










NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

1.   The Acquisition

     The Acquisition will be treated as a reverse acquisition, pursuant to
     which, Provo is treated as the acquirer of Frontline for financial
     reporting purposes. Under this method, the purchase price for accounting
     purposes is established using the fair market value of 10,982,885 shares of
     outstanding (as of March 31, 2003) Frontline's common stock valued at
     $0.204, which represents the average quoted market price of Frontline's
     stock during the time the Acquisition was signed and announced. Outstanding
     shares of Frontline include assumed conversion of 496,445 shares of series
     B Convertible Redeemable preferred stock into 1,687,913 shares of common
     stock.



                                                                   
     Fair value of Frontline common stock, including assumed
        Conversion of Series B Convertible preferred stock            $2,240,509

     Acquisition related costs.
        Fair value of 1,200,000 shares of Frontline common stock to
           be issued upon conversion 8,000 shares of Series D
           Preferred issued to brokers and finders                       218,363
           Other estimated transaction costs. Incurred and deferred
           $176,388 and accrued $323,612                                 500,000

                                                                      ----------
        Total purchase price                                          $2,958,872
                                                                      ==========



2.   The fair values of Frontline's assets and liabilities have been estimated
     for the purpose of allocating the purchase price of the acquisition. The
     significant adjustments comprising the purchase price allocation are as
     follows:



                                                               
        Book value of Frontline's assets at March 31, 2003        $ 1,120,524
        Book value of Frontline's liabilities at March 31, 2003    (3,421,770)
        Fair value adjustments to accounts payable                    250,000
        Goodwill, costs in excess of net assets acquired            5,010,118
                                                                  -----------
        Total purchase price                                      $ 2,958,872
                                                                  ===========



     The allocation of the purchase price is preliminary. The actual purchase
     price allocation to reflect the fair values of assets acquired and
     liabilities assumed will be based upon the combined organization's
     management evaluation of such assets and liabilities upon completion of the
     Acquisition. Accordingly, the adjustments included herein will change based
     upon the final allocation of the purchase price, as adjusted to reflect the
     actual assets and liabilities at the date upon which the Acquisition is
     completed, stock values and transaction costs incurred. That allocation may
     differ significantly from preliminary allocation included herein.


                                     F-58










     Provo has adopted the Statement of Financial Accounting Standard No. 142, 
     "Goodwill and Other Intangible Assets" ("SFAS No. 142"). In accordance with
     the statement, goodwill associated with this transaction will not be
     amortized, but will be periodically assessed for impairment. Such an
     assessment will be at least on an annual basis.

3.   To adjust accrued expenses of $372,334 for dividends on Series B
     Convertible proposed to be paid in shares of common stock.

4.   Reflects the par value of the issued stock of Frontline after giving effect
     to 33,000,000 shares of common stock to be issued upon conversion of
     220,000 shares of Series C Preferred issued to the Sellers in the reverse
     acquisition; 1,200,000 shares of common stock to be issued upon conversion
     of 8,000 shares of Series D Preferred issued to brokers and finders;
     4,125,000 shares of common stock to be issued upon conversion of 27,500
     shares of Series D Preferred issued to certain officers and employees and
     2,978,670 shares of common stock issued upon the assumed conversion of
     496,445 shares of Series B Convertible preferred stock. As a result, issued
     shares of 9,940,424 (9,294,972 outstanding) at March 31, 2003 results in
     post acquisition issued shares of 51,244,094 (50,598,642 outstanding) on a
     pre-split basis. Adjusting for a proposed 1 for 1.5 share reverse split of
     Frontline's common stock results in issued shares of 34,162,729 (33,732,428
     outstanding) on a post-split basis. In addition, this pro forma adjustment
     records the effect of noncash compensation (see Note 4), the proposed
     payment of accrued dividends on Series B Convertible preferred stock and
     eliminates the applicable Frontline equity accounts and reflects the
     retained earning of Provo, the accounting acquirer.

5.   To record noncash compensation of $750,622 based on the fair value of
     4,125,000 shares of common stock to be issued upon conversion of 27,500
     shares of Series D Preferred issued to certain officers and employees.

6.   To eliminate the dividends of $297,867 for 2002 and $74,467 for 2003 on
     series B Convertible Redeemable preferred stock pursuant to the assumed
     conversion of them into shares of common stock on January 1, 2002.

7.   The fair value of the dividends proposed to be paid on Series B Convertible
     preferred stock through issuance of common stock exceeds accrued dividends.
     Accordingly, the excess of $95,317 is treated as deemed dividends and
     charged to retained earnings.

8.   The weighted average number of shares have been adjusted for; 33,000,000
     shares of common stock to be issued upon conversion of 220,000 shares of
     Series C Preferred issued to the Sellers in the reverse acquisition;
     1,200,000 shares common stock to be issued upon conversion of 8,000 shares
     of Series D Preferred issued to brokers and finders; 2,978,670 shares of
     common stock issued upon the assumed conversion of 496,445 shares of series
     B Convertible preferred stock and 4,125,000 shares of common stock to be
     issued upon the conversion of 27,500 shares of Series D Preferred issued to
     certain officers and employees. In addition, this pro forma adjustment
     records the effect of a proposed 1 for 1.5 share reverse split of
     Frontline's common stock.


                                     F-59








                                                                    ANNEX A





                           CERTIFICATE OF DESIGNATION

                                       of

                      SERIES C CONVERTIBLE PREFERRED STOCK

                                       of

                      FRONTLINE COMMUNICATIONS CORPORATION

                           Pursuant to Section 151 of
                           the General Corporation Law
                            of the State of Delaware


         Frontline Communications Corporation, a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority conferred upon the
Board of Directors of the Corporation (the "Board") by the Amended Certificate
of Incorporation of the Corporation (the "Certificate of Incorporation") and
Section 151 of the General Corporation Law of the State of Delaware (the
"DGCL"), the Board, at a special meeting held on March 13, 2003, duly adopted
the following resolution creating a series of Preferred Stock, par value $.01
per share, designated as Series C Convertible Preferred Stock:


         RESOLVED, that Series C Convertible Preferred Stock, par value $.01 per
share, of the Corporation be, and hereby is, created and that the designation
and amount of, and the rights, powers, preferences, privileges, qualifications,
limitations and restrictions of the shares of this series are as follows:


         Section 1. Designation, Number of Shares and Rank.

           (a)   There will be one series of Preferred Stock designated as
                 "Series C Convertible Preferred Stock" (the "Series C Preferred
                 Stock") and the number of shares constituting such series will
                 be 220,000 shares.

           (b)   With respect to dividend rights and rights on liquidation,
                 winding-up and dissolution, the Series C Preferred Stock will
                 rank: (i) senior to: (A) the common stock, par value $1.00 per
                 share (the "Common Stock") of the Corporation; (B) all other
                 classes of common stock, (C) the Series D Convertible Preferred
                 Stock, par value $.01 per share (the "Series D Preferred
                 Stock") of the Corporation, and (D) each other class or series
                 of preferred stock of the Corporation now or hereafter
                 established by the Board of Directors (the "Board of Directors"
                 or the "Board") of the Corporation, the terms of which do not
                 expressly provide that it ranks senior to, or on a parity with,
                 the Series C Preferred Stock as to dividend and redemption
                 rights and rights on liquidation, winding-up and dissolution of
                 the Corporation; (ii) on a parity with each other class or
                 series of preferred stock of the Corporation established
                 hereafter by the Board of Directors, the terms of which
                 expressly provide that such class or series will rank on a
                 parity with the Series C Preferred Stock as to dividend and
                 redemption rights and rights on liquidation, winding-up and
                 dissolution; and (iii) junior to (x) the Series B Convertible
                 Preferred Stock, par value $.01 per share of the Corporation
                 and (y) each class or series of preferred stock of the
                 Corporation established hereafter by the Board, the terms of
                 which class or series expressly provide that such class or
                 series will rank senior to the Series C Preferred


 









                 Stock as to dividend and redemption rights or rights on 
                 liquidation, winding-up and dissolution of the Corporation.

         Section 2. Conversion

           (a)   Upon (i) receipt of the approval of the Corporation's
                 stockholders (the "Requisite Approvals") for the Corporation to
                 (x) issue shares of Common Stock upon the conversion of the
                 Series C Preferred Stock (y) effect a 1- for -1.5 share reverse
                 split of the Common Stock (the "Reverse Split") and (z)
                 increase the number of authorized shares of Common Stock to at
                 least 75,000,000 shares (the matters referred to in clauses
                 (x), (y) and (z) of this subsection 2(a)(1) are collectively
                 referred to as the "Actions") and (ii) the filing of an
                 amendment to the Certificate of Incorporation of the
                 Corporation to effect the Actions (the "Amendment") with the
                 Secretary of State of the State of Delaware, each share of
                 Series C Preferred Stock will automatically convert into that
                 number of fully paid and nonassessable shares of Common Stock
                 (calculated as to each conversion to the nearest 1/100th of a
                 share) as shall be equal to the Conversion Rate (as hereinafter
                 defined), in effect at the time of conversion. The "Conversion
                 Rate" shall initially be 150 shares of Common Stock per each
                 share of Series C Preferred Stock. For the avoidance of doubt,
                 it is intended that after giving effect to the Actions, upon
                 conversion of the Series C Preferred Stock, the holders of the
                 Series C Preferred Stock shall be entitled to receive
                 22,000,000 shares of Common Stock after giving effect to the
                 Reverse Split (and after appropriate adjustments in the event
                 of further stock splits, stock dividends or similar capital
                 adjustments). Notwithstanding the foregoing, this Series C
                 Preferred Stock shall not convert into Common Stock if the
                 Requisite Approvals are not obtained by the Conversion Date (as
                 defined in the Amended and Restated Stock Purchase Agreement
                 dated April 3, 2003 between the Corporation and Proyecciones y
                 Ventas Organizadas, S.S. de C.V., Ventura Martinez del Rio
                 Requejo and Ventura Martinez del Rio Arrangoiz). 

           (b)   The Corporation shall not be required to pay any tax which may
                 be payable in respect of any transfer involved in the issue and
                 delivery upon conversion of shares of Common Stock or other
                 securities or property in a name other than that of the holder
                 of the shares of the Series C Preferred Stock being converted,
                 and the Corporation shall not be required to issue or deliver
                 any such shares or other securities or property unless and
                 until the person or persons requesting the issuance thereof
                 shall have paid to the Corporation the amount of any such tax
                 or shall have established to the satisfaction of the
                 Corporation that such tax has been paid.

           (c)   The Corporation (and any successor corporation) shall take all
                 action necessary so that a number of shares of the authorized
                 but unissued Common Stock (or common stock in the case of any
                 successor corporation) sufficient to provide for the conversion
                 of the Series C Preferred Stock outstanding upon the basis
                 hereinbefore provided are at all times reserved by the
                 Corporation (or any successor corporation), free from
                 preemptive rights, for such conversion, subject to the
                 provisions of Section 2(d). If the Corporation shall issue any
                 securities or make any change in its capital structure which
                 would change the number of shares of Common Stock into which
                 each share of the Series C Preferred Stock shall be convertible
                 as herein provided, the Corporation shall at the same time also
                 make proper provision so that thereafter there shall be a
                 sufficient number of shares of Common Stock authorized and
                 reserved, free from preemptive rights, for conversion of the
                 outstanding Series C Preferred Stock on the new basis.

           (d)   In case of any consolidation or merger of the Corporation with
                 any other corporation or in case of any sale or transfer of
                 more than 50% of the assets of the Corporation, or in the case
                 of any share exchange, in each case pursuant to which more than
                 50% of the outstanding shares of Common Stock are converted
                 into other securities, cash or other property, the Corporation



                                       -2-











                 shall make appropriate provision or cause appropriate provision
                 to be made so that each holder of shares of Series C Preferred
                 Stock then outstanding shall have the right thereafter (in lieu
                 of the right to convert into Common Stock, which right shall
                 cease) to convert such shares of Series C Preferred Stock into
                 the kind and amount of securities, cash or other property
                 receivable upon such consolidation, merger, sale, transfer or
                 share exchange by a holder of the number of shares of Common
                 Stock into which such shares of Series C Preferred Stock could
                 have been converted immediately prior to the effective date of
                 such consolidation, merger, sale, transfer or share exchange.
                 If, in connection with any such consolidation, merger, sale,
                 transfer or share exchange, each holder of shares of Common
                 Stock is entitled to elect to receive either securities, cash
                 or other property upon completion of such transaction, the
                 Corporation shall provide or cause to be provided each holder
                 of Series C Preferred Stock the right to elect the securities,
                 cash (other than by the exercise of appraisal rights) or other
                 property into which the Series C Preferred Stock held by such
                 holder shall be convertible after completion of any such
                 transaction on the same terms and subject to the same
                 conditions applicable to holders of the Common Stock
                 (including, without limitation, notice of the right to elect,
                 limitations on the period in which such election shall be made
                 and the effect of failing to exercise the election). The above
                 provisions shall similarly apply to successive consolidations,
                 mergers, sales, transfers or share exchanges. 

           (e)   No fractional shares of Common Stock shall be issued upon
                 conversion of Series C Preferred Stock but, in lieu of any
                 fraction of a share of Common Stock which would otherwise be
                 issuable in respect of the aggregate number of such shares
                 surrendered for conversion at one time by the same holder, the
                 aggregate number of shares of Common Stock shall be rounded to
                 the nearest whole number of shares.

           (f)   The Conversion Rate shall be adjusted from time to time under
                 certain circumstances in case the Corporation shall (i) pay a
                 dividend or make a distribution on its Common Stock in shares
                 of its capital stock, (ii) subdivide its outstanding Common
                 Stock into a greater number of shares, (iii) combine the shares
                 of its outstanding Common Stock into a smaller number of shares
                 (including as a result of the Reverse Split), or (iv) issue by
                 reclassification of its Common Stock any shares of its capital
                 stock, then in each such case the Conversion Rate in effect
                 immediately prior thereto shall be proportionately adjusted so
                 that the holder of any Series C Preferred Stock thereafter
                 surrendered for conversion shall be entitled to receive, to the
                 extent permitted by applicable law, the number and kind of
                 shares of capital stock of the Corporation which it would have
                 owned or have been entitled to receive after the happening of
                 such event had such Series C Preferred Stock been converted
                 immediately prior to the record date for such event (or if no
                 record date has been established in connection with such event,
                 the effective date for such action). An adjustment pursuant to
                 this Section 2(f) shall become effective immediately after the
                 record date in the case of a stock dividend or distribution and
                 shall become effective immediately after the effective date in
                 the case of a subdivision, combination, or reclassification.

           (g)   Except as otherwise provided above in this Section 2, no
                 adjustment in the Conversion Rate shall be made in respect of
                 any conversion for share distributions or dividends theretofore
                 declared and paid or payable on the Common Stock.

         Section 3. Voting Rights. The holders of the Series C Preferred Stock
will not have any voting rights except as set forth in this Section 3 or as
otherwise from time to time required by law.


           (a)   The affirmative vote or consent of the holders of at least a
                 majority of the outstanding shares of the Series C Preferred
                 Stock, voting separately as a class, will be required for (i)
                 any amendment, alteration or repeal of this Certificate of
                 Designation, if such amendment, 


                                       -3-











                 alteration or repeal affects the rights, preferences or
                 privileges of the Series C Preferred Stock or (ii) the
                 creation, authorization or issuance, by reclassification or
                 otherwise, of any class or series of any stock of the
                 Corporation having preference equivalent to or senior to the
                 Series C Preferred Stock as to dividends, liquidation,
                 redemption, conversion, voting or assets (the "Senior Stock")
                 or the increase in the amount of authorized shares of any such
                 Senior Stock. Such right of the holders of Series C Preferred
                 Stock to vote as hereinabove provided may be exercised at any
                 annual meeting or at any special meeting called for such
                 purpose as hereinafter provided or at any adjournment thereof.

           (b)   In any case in which the holders of Series C Preferred
                 Stock shall be entitled to vote pursuant to this Section 3 or
                 pursuant to law, each holder of Series C Preferred Stock
                 entitled to vote with respect to such matters shall be entitled
                 to one vote for each share of Series C Preferred Stock held.

         Section 4. Covenants. Prior to the Conversion Date, the Corporation
shall not, unless specifically contemplated by this Certificate of Designation,
directly or indirectly, do or propose or commit to do, any of the following:

           (a)   authorize any merger of the Corporation with another person or
                 entity which would result in any transaction of series of
                 related transactions constituting the sale, transfer, lease
                 conveyance, exchange or other disposition of more than 50% of
                 the consolidated assets , business or earning power of the
                 Corporation or its subsidiaries;

           (b)   take any action which would result in the voluntary or
                 involuntary liquidation, dissolution or winding-up of the
                 Corporation or its business;

           (c)   amend, repeal or add any provision to the Corporation's
                 Certificate of Incorporation or By-laws if the effect thereof
                 would be materially adverse to the holders of the Series C
                 Preferred Stock, provided, however, that it is specifically
                 agreed that the transactions provided for in Section 2(a)
                 hereof shall not be prohibited by this Section 4;

           (d)   issue any options, warrants or other securities convertible
                 into or exchangeable for shares of Senior Stock;

           (e)   incur, refinance or amend the terms of any indebtedness or any
                 other obligation for the payment of money in an aggregate
                 amount of $1,000,000; or

           (f)   enter into any agreement for the public or private sale of any
                 of the Corporation's securities or engaging in any capital
                 financing transaction in which the Company issues any shares of
                 capital stock (including any options, warrants or other
                 obligations or securities convertible or exchangeable for
                 shares of the Corporation's capital stock) at a price per share
                 lower than $1.50.

         Section 5. Preemptive Rights. The holders of the Series C Preferred
Stock are not entitled to any preemptive rights.

         Section 6. Dividends and Distributions. The holders of shares of Series
C Preferred Stock shall not be entitled to receive dividends.

         Section 7. Liquidation Preference. In the event of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of Series C Preferred Stock shall be entitled to receive out of the
assets of the Corporation, whether such assets constitute stated capital or
surplus of any nature, a sum in cash equal to $.01 per share (as appropriately
adjusted in the event of stock splits, stock dividends or similar capital
adjustments or recapitalization) (the "Liquidation Preference"), and no more;
provided, however, that such rights 






                                       -4-











shall accrue to the holders of Series C Preferred Stock only if the
Corporation's payments with respect to the liquidation preference of the holders
of Senior Stock are fully met. After the liquidation preferences of the Senior
Stock are fully met, the entire assets of the Corporation available, for
distribution shall be distributed ratably among the holders of the Series C
Preferred Stock and any Parity Stock in proportion to the respective
preferential amounts to which each is entitled (but only to the extent of such
preferential amounts). After payment in full of the accrued and unpaid dividends
and the Liquidation Preference of the shares of Series C Preferred Stock as
provided in this Section 6, the holders of such shares shall not be entitled to
any further participation in any distribution of assets by the Corporation.
Neither a consolidation or merger of the Corporation with another corporation
nor a sale or transfer of all or part of the Corporation's assets for cash,
securities or other property will be considered a liquidation, dissolution or
winding up of the Corporation.

         Section 8. No Sinking Fund. The shares of Series C Preferred Stock
shall not be subject to the operation of a purchase, retirement or sinking fund.


         Section 9. Residual Rights. All rights accruing to the outstanding
shares of the Corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock.


         Section 10. No Reissuance of Series C Preferred Stock. No share or
shares of Series C Preferred Stock acquired by the Corporation by reason of
purchase, conversion, redemption or otherwise will be sold or reissued, and,
upon such event, all such shares will resume the status of authorized but
unissued shares of Series C Preferred Stock.


                            [SIGNATURE PAGE FOLLOWS]





                                       -5-













         IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under penalty of perjury this
3rd day of April 2003.



                                  FRONTLINE COMMUNICATIONS CORPORATION


                                   By:  /s/  Stephen  J. Cole-Hatchard  
                                        -------------------------------------
                                        Name: Stephen J. Cole-Hatchard
                                        Title: Chief Executive Officer



ATTEST:

By:  /s/ Amy Wagner-Mele 
     --------------------------
     Name: Amy Wagner-Mele
     Title: Secretary












                                                              ANNEX B

                           CERTIFICATE OF DESIGNATION

                                       of

                      SERIES D CONVERTIBLE PREFERRED STOCK

                                       of

                      FRONTLINE COMMUNICATIONS CORPORATION



                           Pursuant to Section 151 of
                           the General Corporation Law
                            of the State of Delaware


         Frontline Communications Corporation, a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority conferred upon the
Board of Directors of the Corporation (the "Board") by the Amended Certificate
of Incorporation of the Corporation (the "Certificate of Incorporation") and
Section 151 of the General Corporation Law of the State of Delaware (the
"DGCL"), the Board, at a special meeting held on March 13, 2003, duly adopted
the following resolution creating a series of Preferred Stock, par value $.01
per share, designated as Series D Convertible Preferred Stock:


         RESOLVED, that Series D Convertible Preferred Stock, par value $.01 per
share, of the Corporation be, and hereby is, created and that the designation
and amount of, and the rights, powers, preferences, privileges, qualifications,
limitations and restrictions of the shares of this series are as follows:


         Section 1. Designation, Number of Shares and Rank.

           (a)   There will be one series of Preferred Stock designated as
                 "Series D Convertible Preferred Stock" (the "Series D Preferred
                 Stock") and the number of shares constituting such series will
                 be 35,500 shares.

           (b)   With respect to dividend rights and rights on liquidation,
                 winding-up and dissolution, the Series D Preferred Stock will
                 rank: (i) senior to: (A) the common stock, par value $1.00 per
                 share (the "Common Stock") of the Corporation; (B) all other
                 classes of common stock; and (ii) junior to (A) the Series B
                 Convertible Preferred Stock, par value $.01 per share of the
                 Corporation; (B) the Series C Convertible Preferred Stock, par
                 value $.01 per share of the Corporation and (C) each other
                 class or series of preferred stock of the Corporation now or
                 hereafter established by the Board of Directors (the "Board of
                 Directors" or the "Board") of the Corporation, the terms of
                 which do not expressly provide that it ranks senior to, or on a
                 parity with, the Series D Preferred Stock as to dividend and
                 redemption rights and rights on liquidation, winding-up and
                 dissolution of the Corporation; and (D) each class or series of
                 preferred stock of the Corporation established hereafter by the
                 Board, the terms of which class or series expressly provide
                 that such class or series will rank senior to the Series D
                 Preferred Stock as to dividend and redemption rights or rights
                 on liquidation, winding-up and dissolution of the Corporation
                 (iii) on a parity with each other class or series of preferred
                 stock of the Corporation established hereafter by the Board of
                 Directors, the terms of which expressly provide that such class
                 or series will rank on a parity with the Series C Preferred












                 Stock as to dividend and redemption rights and rights on
                 liquidation, winding-up and dissolution..

         Section 2. Conversion

           (a)   Upon (i) receipt of the approval of the Corporation's
                 stockholders (the "Requisite Approvals") for the Corporation to
                 (x) issue shares of Common Stock upon the conversion of the
                 Series D Preferred Stock (y) effect a 1- for -1.5 share reverse
                 split of the Common Stock (the "Reverse Split") and (z)
                 increase the number of authorized shares of Common Stock to at
                 least 75,000,000 shares (the matters referred to in clauses
                 (i), (ii) and (iii) of this Section 2(a) are collectively
                 referred to as the "Actions") and (ii) the filing of an
                 amendment to the Certificate of Incorporation of the
                 Corporation to effect the Actions (the "Amendment") with the
                 Secretary of State of the State of Delaware, each share of
                 Series D Preferred Stock will automatically convert into that
                 number of fully paid and nonassessable shares of Common Stock
                 (calculated as to each conversion to the nearest 1/100th of a
                 share) as shall be equal to the Conversion Rate (as hereinafter
                 defined), in effect at the time of conversion. The "Conversion
                 Rate" shall initially be 150 shares of Common Stock per each
                 share of Series D Preferred Stock.

           (b)   The Corporation shall not be required to pay any tax which may
                 be payable in respect of any transfer involved in the issue and
                 delivery upon conversion of shares of Common Stock or other
                 securities or property in a name other than that of the holder
                 of the shares of the Series D Preferred Stock being converted,
                 and the Corporation shall not be required to issue or deliver
                 any such shares or other securities or property unless and
                 until the person or persons requesting the issuance thereof
                 shall have paid to the Corporation the amount of any such tax
                 or shall have established to the satisfaction of the
                 Corporation that such tax has been paid.

           (c)   The Corporation (and any successor corporation) shall take all
                 action necessary so that a number of shares of the authorized
                 but unissued Common Stock (or common stock in the case of any
                 successor corporation) sufficient to provide for the conversion
                 of the Series D Preferred Stock outstanding upon the basis
                 hereinbefore provided are at all times reserved by the
                 Corporation (or any successor corporation), free from
                 preemptive rights, for such conversion, subject to the
                 provisions of Section 2(d). If the Corporation shall issue any
                 securities or make any change in its capital structure which
                 would change the number of shares of Common Stock into which
                 each share of the Series D Preferred Stock shall be convertible
                 as herein provided, the Corporation shall at the same time also
                 make proper provision so that thereafter there shall be a
                 sufficient number of shares of Common Stock authorized and
                 reserved, free from preemptive rights, for conversion of the
                 outstanding Series D Preferred Stock on the new basis.

           (d)   In case of any consolidation or merger of the Corporation with
                 any other corporation or in case of any sale or transfer of all
                 or substantially all of the assets of the Corporation, or in
                 the case of any share exchange, in each case pursuant to which
                 all of the outstanding shares of Common Stock are converted
                 into other securities, cash or other property, the Corporation
                 shall make appropriate provision or cause appropriate provision
                 to be made so that each holder of shares of Series D Preferred
                 Stock then outstanding shall have the right thereafter (in lieu
                 of the right to convert into Common Stock, which right shall
                 cease) to convert such shares of Series D Preferred Stock into
                 the kind and amount of securities, cash or other property
                 receivable upon such consolidation, merger, sale, transfer or
                 share exchange by a holder of the number of shares of Common
                 Stock into which such shares of Series D Preferred Stock could
                 have been converted immediately prior to the effective date of
                 such consolidation, merger, sale, transfer or share exchange.
                 If, in connection with any such




                                       2











                 consolidation, merger, sale, transfer or share exchange, each
                 holder of shares of Common Stock is entitled to elect to
                 receive either securities, cash or other property upon
                 completion of such transaction, the Corporation shall provide
                 or cause to be provided each holder of Series D Preferred Stock
                 the right to elect the securities, cash (other than by the
                 exercise of appraisal rights) or other property into which the
                 Series D Preferred Stock held by such holder shall be
                 convertible after completion of any such transaction on the
                 same terms and subject to the same conditions applicable to
                 holders of the Common Stock (including, without limitation,
                 notice of the right to elect, limitations on the period in
                 which such election shall be made and the effect of failing to
                 exercise the election). The above provisions shall similarly
                 apply to successive consolidations, mergers, sales, transfers
                 or share exchanges.

           (e)   No fractional shares of Common Stock shall be issued upon
                 conversion of Series D Preferred Stock but, in lieu of any
                 fraction of a share of Common Stock which would otherwise be
                 issuable in respect of the aggregate number of such shares
                 surrendered for conversion at one time by the same holder, the
                 aggregate number of shares of Common Stock shall be rounded to
                 the nearest whole number of shares.

           (f)   The Conversion Rate shall be adjusted from time to time under
                 certain circumstances in case the Corporation shall (i) pay a
                 dividend or make a distribution on its Common Stock in shares
                 of its capital stock, (ii) subdivide its outstanding Common
                 Stock into a greater number of shares, (iii) combine the shares
                 of its outstanding Common Stock into a smaller number of shares
                 (including as a result of the Reverse Split), or (iv) issue by
                 reclassification of its Common Stock any shares of its capital
                 stock, then in each such case the Conversion Rate in effect
                 immediately prior thereto shall be proportionately adjusted so
                 that the holder of any Series D Preferred Stock thereafter
                 surrendered for conversion shall be entitled to receive, to the
                 extent permitted by applicable law, the number and kind of
                 shares of capital stock of the Corporation which it would have
                 owned or have been entitled to receive after the happening of
                 such event had such Series D Preferred Stock been converted
                 immediately prior to the record date for such event (or if no
                 record date has been established in connection with such event,
                 the effective date for such action). An adjustment pursuant to
                 this Section 2(f) shall become effective immediately after the
                 record date in the case of a stock dividend or distribution and
                 shall become effective immediately after the effective date in
                 the case of a subdivision, combination, or reclassification.
                 
           (g)   Except as otherwise provided above in this Section 2, no
                 adjustment in the Conversion Rate shall be made in respect of
                 any conversion for share distributions or dividends theretofore
                 declared and paid or payable on the Common Stock.

         Section 3.  Voting Rights.

           (a)   The holders of the Series D Preferred Stock will not have any
                 voting rights except as set forth in this Section 3 or as
                 otherwise from time to time required by law.

           (b)   The affirmative vote or consent of the holders of at least a
                 majority of the outstanding shares of the Series D Preferred
                 Stock, voting separately as a class, will be required for any
                 amendment, alteration or repeal of this Certificate of
                 Designation, if such amendment, alteration or repeal materially
                 and adversely affects the rights, preferences or privileges of
                 the Series D Preferred Stock. The creation, authorization or
                 issuance of any class or series or shares of any class or
                 series of senior, parity or junior stock, or the increase or
                 decrease in the amount of authorized capital stock of any such
                 class shall not require the consent of holders of the Series D
                 Preferred Stock and shall not be deemed to affect adversely the
                 rights, preference or privileges of shares of Series D
                 Preferred Stock. Such right of the holders of Series D


                                       3











                 Preferred Stock to vote as hereinabove provided may be
                 exercised at any annual meeting or at any special meeting
                 called for such purpose as hereinafter provided or at any
                 adjournment thereof. 

           (c)   In any case in which the holders of Series D Preferred Stock
                 shall be entitled to vote pursuant to this Section 3 or
                 pursuant to law, each holder of Series D Preferred Stock
                 entitled to vote with respect to such matters shall be entitled
                 to one vote for each share of Series D Preferred Stock held.

         Section 4. Preemptive Rights. The holders of the Series D Preferred
Stock are not entitled to any preemptive rights.

         Section 5. Dividends and Distributions. The holders of shares of Series
D Preferred Stock shall not be entitled to receive dividends.

         Section 6. Liquidation Preference. In the event of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of Series D Preferred Stock shall be entitled to receive out of the
assets of the Corporation, whether such assets constitute stated capital or
surplus of any nature, a sum in cash equal to $.01 per share (the "Liquidation
Preference"), and no more; provided, however, that such rights shall accrue to
the holders of Series D Preferred Stock only if the Corporation's payments with
respect to the liquidation preference of the holders of Senior Stock are fully
met. After the liquidation preferences of the Senior Stock are fully met, the
entire assets of the Corporation available, for distribution shall be
distributed ratably among the holders of the Series D Preferred Stock and any
Parity Stock in proportion to the respective preferential amounts to which each
is entitled (but only to the extent of such preferential amounts). After payment
in full of the accrued and unpaid dividends and the Liquidation Preference of
the shares of Series D Preferred Stock as provided in this Section 6, the
holders of such shares shall not be entitled to any further participation in any
distribution of assets by the Corporation. Neither a consolidation or merger of
the Corporation with another corporation nor a sale or transfer of all or part
of the Corporation's assets for cash, securities or other property will be
considered a liquidation, dissolution or winding up of the Corporation.

         Section 7. No Sinking Fund. The shares of Series D Preferred Stock
shall not be subject to the operation of a purchase, retirement or sinking fund.


         Section 8. Residual Rights. All rights accruing to the outstanding
shares of the Corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock.


         Section 9. No Reissuance of Series D Preferred Stock. No share or
shares of Series D Preferred Stock acquired by the Corporation by reason of
purchase, conversion, redemption or otherwise will be sold or reissued, and,
upon such event, all such shares will resume the status of authorized but
unissued shares of Series D Preferred Stock.


                            [SIGNATURE PAGE FOLLOWS]





                                       4














         IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under penalty of perjury this
3rd day of April 2003.




                                      FRONTLINE COMMUNICATIONS CORPORATION


                                      By: /s/     Stephen J. Cole-Hatchard 
                                          --------------------------------------
                                          Name: Stephen J. Cole-Hatchard
                                          Title: Chief Executive Officer



ATTEST:

By: /s/  Amy Wagner-Mele
    -----------------------         
     Name: Amy Wagner-Mele
     Title: Secretary











                                                                   ANNEX C

                                  SECURED NOTE
                              ISSUED TO HOLDERS OF
                      SERIES C CONVERTIBLE PREFERRED STOCK
                                       of
                      FRONTLINE COMMUNICATIONS CORPORATION


      The obligations under this Secured Promissory Note shall arise on the
     Conversion Date (as defined in the Amended and Restated Stock Purchase
    Agreement dated April 3, 2003 between the Corporation and Proyecciones y
 Ventas Organizadas, S.S. de C.V., Ventura Martinez del Rio Requejo and Ventura
      Martinez del Rio Arrangoiz (the "Agreement") and only if the Series C
    Preferred Stock (as defined in the Certificate of Designation of Series C
         convertible preferred stock of the Company (the "Designation"))
        is not converted into Common Stock of the Company in accordance
                              with the Designation.

                             SECURED PROMISSORY NOTE


$20,000,000                                                   New York, NY
                                                              April 3, 2003




         FOR VALUE RECEIVED, Frontline Communications, Corp., a Delaware
corporation (the "Borrower") promises to pay to Ventura Martinez del Rio
Arrangoiz ("Arrangoiz" or the "Lender"), as agent for the Sellers under that
certain Amended and Restated Stock Purchase Agreement, dated as of April 3, 2003
(the "Stock Purchase Agreement"), among Borrower, Proyecciones y Ventas
Organizadas, S.A. de C.V. ("Provo"), Arrangoiz and Ventura Martinez del Rio
Requejo ("Requejo" and together with Arrangoiz, the "Sellers"), or ORDER, the
principal sum of Twenty Million and 00/100 Dollars ($20,000,000), in lawful
money of the United States of America, with interest thereon, to be computed on
each advance from the date of its disbursement, at the rate of 8% per annum.

         IT IS HEREBY EXPRESSLY AGREED that the entire principal sum from time
to time outstanding hereunder and all accrued and unpaid interest thereon shall
become due and payable, within fifteen (15) days of the Conversion Date and only
if the Series C Preferred Stock is not converted into Common Stock of the
Company in accordance with the Designation. (the "Due Date").

         If any amount payable by the Borrower hereunder is not paid on the date
when due (whether at maturity, by acceleration or otherwise) interest shall
accrue on such amount ("Late Payment"), to the extent permitted by applicable
law, during the period from and including the Due Date thereof to but excluding
the date such amount is paid at the rate of 12 % per annum. Interest accruing on
Late Payments shall be payable from time to time on demand by the holder of this
Note. Principal and interest shall be payable at the office of Arrangoiz in
Mexico City, Mexico, or at such other place as the holder may from time to time
designate in writing.

         This Note is being issued pursuant to the Stock Purchase Agreement and
the Certificate of Designation and is secured by the Security Agreement referred
to therein.

         This Note may be prepaid at any time, and from time to time, in whole
or in part, without any premium or penalty therefor; provided, however, that all
such prepayments shall be applied first toward interest accrued on this Note and
then toward the outstanding principal balance.

         The Borrower (i) waives diligence, demand, presentment, protest and
notice of any kind, (ii) agrees that it will not be necessary for the holder to
first institute suit in order to enforce payment of this 













Note (iii) consents to any one or more extensions or postponements of time of
payment, forbearance, forgiveness or other indulgence, without notice or consent
and (iv) consents that the Lender may release or surrender, exchange or
substitute any collateral security now held or which may hereafter be held as
security for the payment of this Note. The pleading of any statute of
limitations as a defense to any demand against the undersigned is expressly
hereby waived by the undersigned. The holder shall have the right, but not the
obligation, to set off against this Note any and all amounts owing at any time
by the undersigned to the holder.

         The holder shall not be required to resort to any means of collection
for payment of any amounts evidenced by this Note, but may proceed directly
against the Borrower in such manner as the holder may choose. None of the rights
of the holder shall be waived or diminished by any failure or delay in the
exercise thereof.

         This Note shall have the effect of an instrument executed under seal
and shall be governed by and construed in accordance with the laws of the State
of New York, without giving effect to the choice or conflict of laws provisions
thereof that would give rise to the application of the domestic substantive law
of any other jurisdiction.

         The Borrower irrevocably consents and submits to the non-exclusive
jurisdiction of the courts of the State of New York, and waives any objection
based on venue or forum non conveniens with respect to any action instituted
therein arising under this Note or in any way connected with or related or
incidental to the dealings of the Borrower, Provo and Sellers in respect of this
Note or the transactions related hereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and
agrees that any dispute arising out of the relationship among the Borrower,
Provo and Sellers or the conduct of such persons in connection with this Note
shall be heard only in the courts described above (except that the holder shall
have the right to bring any action or proceeding against the Borrower or its
property in the courts of any jurisdiction which the holder deems necessary to
appropriate in order to enforce its rights against the Borrower or its
property).

         The Borrower hereby waives personal service of any and all process on
it and consents that all such service of process may be made by registered or
certified mail (return receipt requested and postage prepaid) directed to it,
and service so made shall be deemed to be completed five (5) calendar days after
the same shall have been deposited in the U.S. mails, or, at the holder's
option, by service upon the undersigned in any other manner provided under
applicable law.

         All notices, request, demands and other communications that are
required or may be given hereunder (collectively, "Notices") shall be in writing
and shall be sent by registered or certified mail (return receipt requested and
postage prepaid) to the Borrower and Arrangoiz at the following respective
addresses or at such other address as shall be specified by like Notice: (i) if
to the Borrower, to Frontline Communications Corp., One Blue Hill Plaza, 7th
Floor, Pearl River, New York 10965, Attention: Stephen Cole-Hatchard; and (ii)
if to the Lender, to Quintana Roo No. 28, Col. Roma Sur, 06760 Mexico, D.F.,
Mexico, Attention: Ventura Martinez del Rio Arrangoiz. Notices shall be deemed
given on the third business day following the day sent, whether or not such
Notice was actually received on such day.

         All agreements between the Borrower and the Lender are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness or otherwise, shall the amount paid
or agreed to be paid for the use or forbearance of the indebtedness evidenced
hereby exceed the maximum amount which is permitted to receive under applicable
law. If, from any circumstances whatsoever, fulfillment of any provision hereof
or of the Stock Purchase Agreement, at the time performance of such provision
shall be due, shall involve exceeding such amount, then the obligation to be
fulfilled shall automatically be reduced to the limit of such validity and if,
from any circumstances the Lender should ever receive as interest an amount
which would exceed such maximum amount, such amount which is excessive interest
shall be applied to the reduction of the principal balance evidenced hereby and
not to the payment of interest. As used herein, the term "applicable law" shall
mean the law which results in a higher permissible rate of interest, then this
Note 




                                       2











shall be governed by such new law as of its effective date. This provision
shall control every other provision of all agreements between the Borrower and
the Lender.

         If this Note shall not be paid when due and shall be placed by the
holder hereof in the hands of an attorney for collection, through legal
proceedings or otherwise, the Borrower will pay reasonable attorneys' fees to
the holder hereof; together with reasonable costs and expenses of collection,
including, without limitation, any such attorneys' fees, costs and expenses
relating to any proceedings with respect to the bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation of the Borrower or
any party to any instrument or agreement securing this Note, all is provided in
the Stock Purchase Agreement.

         THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED ON THIS NOTE OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR OUT OF ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY
PERSON. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE LENDER TO ACCEPT
THIS NOTE AND TO MAKE LOANS AS CONTEMPLATED HEREBY.

         This Note shall be binding on the successors and assigns of the
Borrower and inure to the benefit of the Lender and any other holder of this
Note. Whenever used herein, the term the Borrower shall be deemed to include its
successors and assigns and the term "Arrangoiz" shall be deemed to include the
Sellers and their respective successors and assigns. If any term or provision of
this Note shall be held invalid, illegal or unenforceable, the validity of all
other terms and provisions hereof shall be in no way affected thereby.

                                            Frontline Communications Corp.




                                            By:  /s/ Stephen J. Cole-Hatchard
                                                 -------------------------------
                                                 Stephen J. Cole-Hatchard
                                                 Chief Executive Officer

                                        3







                                                                      ANNEX D


                           CERTIFICATE OF DESIGNATION
                                       of
                 SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
                                       of
                      FRONTLINE COMMUNICATIONS CORPORATION


                (Pursuant to Section 151 of the Delaware General
                                Corporation Law)

                  The undersigned, the authorized officer of Frontline
Communications Corporation, a Delaware corporation (the "Corporation"), in
accordance with the provisions of Section 103 of the Delaware General
Corporation Law (the "DGCL") does hereby certify that, in accordance with
Section 141 of the DGCL, the following resolution was duly adopted by the Board
of Directors of the Corporation on February 7, 2000:

                  RESOLVED, that a series of Preferred Stock of the Corporation
is hereby created and the designation, number of shares, powers, preferences,
rights, qualifications, limitations and restrictions thereof (in addition to any
provisions set forth in the Certificate of Incorporation of the Corporation
which are applicable to the preferred stock of all classes and series) are as
follows:

                         SERIES B CUMULATIVE CONVERTIBLE
                           REDEEMABLE PREFERRED STOCK

                  Section 1. Designation and Amount; Stated Capital. The shares
of such series shall be designated as "Series B Cumulative Convertible
Redeemable Preferred Stock" (the "Series B Convertible Preferred Stock"), the
par value thereof shall be $.01 per share and the number of shares constituting
the Series B Convertible Preferred Stock shall be 1,250,000. The amount to be
represented in stated capital at all times for each share of Series B
Convertible Preferred Stock shall be $.01.

                  Section 2. Rank. With respect to dividend rights and rights on
liquidation, winding-up and dissolution, the Series B Convertible Preferred
Stock will rank: (i) senior to: (A) the common stock, par value $.01 per share
(the "Common Stock"); (B) all other classes of common stock and (C) each other
class or series of preferred stock of the Corporation now or hereafter
established by the Board of












Directors (the "Board of Directors" or the "Board") of the Corporation, the
terms of which do not expressly provide that it ranks senior to, or on a parity
with, the Series B Convertible Preferred Stock as to dividend and redemption
rights and rights on liquidation, winding-up and dissolution of the Corporation
(collectively referred to as "Junior Stock"); (ii) on a parity with each other
class or series of preferred stock of the Corporation established hereafter by
the Board of Directors, the terms of which expressly provide that such class or
series will rank on a parity with the Series B Convertible Preferred Stock as to
dividend and redemption rights and rights on liquidation, winding-up and
dissolution (collectively referred to as "Parity Stock"); and (iii) junior to
each class or series of preferred stock of the Corporation established hereafter
by the Board, the terms of which class or series expressly provide that such
class or series will rank senior to the Series B Convertible Preferred Stock as
to dividend and redemption rights or rights on liquidation, winding-up and
dissolution of the Corporation (collectively referred to as "Senior Stock").

                  Section 3.  Dividends and Distributions.
                              
                  (a) The holders of shares of Series B Convertible Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for such purpose, cumulative dividends
at the rate of $.60 per share of the Series B Convertible Preferred Stock per
annum, and no more. The dividend on each share of Series B Convertible Preferred
Stock shall accrue from the date of its original issuance. The dividend shall be
payable on the last business day of June and December of each year, commencing
on June 30, 2000, to the holders of record as they appear on the stock books of
the Corporation on such record dates, not more than 60 nor less than 10 days
preceding the payment dates for such dividends, as shall be fixed by the Board.
The amount of dividends payable per share of Series B Convertible Preferred
Stock for each semi-annual dividend period shall be computed by dividing the
annual dividend amount by two. The amount of dividends payable for the initial
dividend period and any period shorter than a full semi-annual dividend period
shall be computed on the basis of a 365-day year and the actual days elapsed.


                  (b) Any dividends on the Series B Convertible Preferred Stock
payable pursuant to this Section 3 may be paid, at the Corporation's option,
either in cash or by the issuance of shares of Common Stock having an average
daily Closing Price (as hereinafter defined), on the five consecutive trading
days immediately preceding the day prior to the record date for the
determination of stockholders entitled to receive such dividend, equal to the
amount of such dividends; provided, however, that cash will be paid in lieu of
the issuance of fractional shares of Common Stock; and provided, further, that
accrued and unpaid dividends payable pursuant to Section 4 or 5 will be paid in
cash.



                                       2











                  (c) As used herein, the "Closing Price" for each day for any
security shall be the last reported sales price regular way or, in case no sale
takes place on such day, the average of the closing bid and asked prices regular
way on such day, in either case as reported on the principal national securities
exchange on which such security is listed or quoted (including, for this
purpose, the Nasdaq Stock Market), or, if not so listed or quoted, the average
of the high bid and low asked prices on such day as recorded by the Nasdaq Stock
Market, or, if the Nasdaq Stock Market shall not have reported any bid and asked
prices for such security on such day, the average of the bid and asked prices
for such day as furnished by any New York Stock Exchange member firm selected
from time to time by the Corporation for such purpose, or, if no such bid and
asked prices can be obtained from any such firm, the fair market value of such
security on such day as determined in good faith by the Board of Directors. Such
determination by the Board of Directors shall be conclusive.

                  (d) No dividends or other distributions, other than dividends
payable solely in shares of Junior Stock, shall be paid or set apart for payment
on, and no purchase, redemption or other acquisition shall be made by the
Corporation of, any shares of Junior Stock unless and until all accrued and
unpaid dividends due on the Series B Convertible Preferred Stock (whether or not
declared) shall have been paid or declared and set apart for payment; provided,
however, that the conversion, exercise or exchange of a security for Junior
Stock shall not be deemed a purchase, redemption or acquisition of the security
so converted or exercised for purposes of this Section 3(d).

                  (e) If at any time any dividend on any Senior Stock shall be
in default, in whole or in part, no dividend shall be paid or declared and set
apart for payment on the Series B Convertible Preferred Stock unless and until
all accrued and unpaid dividends with respect to the Senior Stock shall have
been paid or declared and set apart for payment, without interest.




                                       3













                  (f) No full dividends shall be paid or declared and set apart
for payment on any Parity Stock for any period unless all accrued but unpaid
dividends (whether or not declared) have been, or contemporaneously are, paid or
declared and set apart for such payment on the Series B Convertible Preferred
Stock. No full dividends shall be paid or declared and set apart for payment on
the Series B Convertible Preferred Stock for any period unless all accrued but
unpaid dividends (whether or not declared) have been, or contemporaneously are,
paid or declared and set apart for payment on the Parity Stock for all dividend
periods terminating on or prior to the date of payment of such full dividends.
When dividends are not paid in full upon the Series B Convertible Preferred
Stock and the Parity Stock, all dividends paid or declared and set apart for
payment upon shares of Series B Convertible Preferred Stock and the Parity Stock
shall be paid or declared and set apart for payment pro rata, so that the amount
of dividends paid or declared and set apart for payment per share on the Series
B Convertible Preferred Stock and the Parity Stock shall in all cases bear to
each other the same ratio that accrued and unpaid dividends per share on the
shares of Series B Convertible Preferred Stock and the Parity Stock bear to each
other. Any reference to "distribution" contained in this Section 3 shall not be
deemed to include any distribution made in connection with any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.

                  Section 4. Liquidation Preference. In the event of a
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of Series B Convertible Preferred Stock shall be
entitled to receive out of the assets of the Corporation, whether such assets
constitute stated capital or surplus of any nature, a sum in cash equal to
$15.00 per share (the "Liquidation Preference"), together with an amount equal
to the dividends accrued and unpaid thereon (whether or not declared) to the
date of final distribution to such holders, without interest, and no more,
before any payment shall be made or any assets distributed to the holders of any
Junior Stock; provided, however, that such rights shall accrue to the holders of
Series B Convertible Preferred Stock only if the Corporation's payments with
respect to the liquidation preference of the holders of Senior Stock are fully
met. After the liquidation preferences of the Senior Stock are fully met, the
entire assets of the Corporation available for distribution shall be distributed
ratably among the holders of the Series B Convertible Preferred Stock and any
Parity Stock in proportion to the respective preferential amounts to which each
is entitled (but only to the extent of such preferential amounts). After payment
in full of the accrued and unpaid dividends and the Liquidation Preference of
the shares of the Series B Convertible Preferred Stock as provided in this
Section 4, the holders of such shares shall not be entitled to any further
participation in any distribution of assets by the Corporation. Neither a
consolidation or merger of the Corporation with another corporation nor a sale
or transfer of all or part of the Corporation's assets for cash, securities or
other 




                                       4












property will be considered a liquidation, dissolution or winding up of
the Corporation.

                  Section 5.  Optional Redemption.
                              
                  (a) If at any time after February 11, 2000 (the "Issue Date"),
the Closing Price of the Common Stock shall be $8.80 or more per share for any
15 consecutive trading days, the Corporation, at its option, may at any time
(until the date that is five days after the last trading day used in determining
the Closing Price for such 15 consecutive trading day period) give notice in
accordance with Section 5(c) that it will redeem all, but not less than all, of
the Series B Convertible Preferred Stock (an "Optional Price-Based Redemption")
at a sum in cash equal to the Liquidation Preference per share, together with an
amount equal to the dividends accrued and unpaid thereon (whether or not
declared), pro rata to the date fixed for redemption.

                  (b) At any time after the date that is 180 days after the
Issue Date, the Corporation, at its option, may redeem (an "Optional Time-Based
Redemption") all, but not less than all, of the Series B Convertible Preferred
Stock on any date set by the Board of Directors, at the price per share set
forth below (the "Principal Price"), plus, in each case, an amount in cash per
share equal to the dividends accrued and unpaid thereon (whether or not
declared), pro rata to the date fixed for redemption. The Principal Price for an
Optional Time-Based Redemption shall be as follows:




                                                                                 

If the date of the Optional Time-Based
Redemption is:                                                                   The Principal Price Shall Be:

more than 180 days after the Issue
Date and less than 12 months after
the Issue Date...................................................................150% of the Liquidation Preference

12 months or more after the Issue
Date and less than 24 months after
the Issue Date...................................................................125% of the Liquidation Preference

24 months or more after the Issue
Date and less than 36 months after
the Issue Date...................................................................115% of the Liquidation Preference

36 months or more after the Issue
Date and at any time thereafter..................................................110% of the Liquidation Preference





                                       5













                  (c) Not more than 60 nor less than 15 days prior to any
redemption date, notice by first class mail, postage prepaid, shall be given to
the holders of record of the Series B Convertible Preferred Stock, addressed to
such stockholders at their last addresses as shown on the books of the
Corporation. Each such notice of redemption shall specify the date fixed for
redemption, the redemption price, the place or places of payment, the then
effective Conversion Rate (as hereinafter defined), that the right of holders of
shares of Series B Convertible Preferred Stock being redeemed to exercise their
conversion right shall terminate as to such shares at the close of business on
the day that immediately precedes the date that is fixed for redemption
(provided that no default by the Corporation in the payment of the applicable
redemption price shall have occurred and be continuing), that payment will be
made upon presentation and surrender of the shares of Series B Convertible
Preferred Stock, that accrued but unpaid dividends to the date fixed for
redemption (whether or not declared) will be paid on the date fixed for
redemption, and that on and after the redemption date, dividends will cease to
accrue on such shares.

                  (d) Any notice which is mailed as herein provided shall be
conclusively presumed to have been duly given, whether or not the holder of the
Series B Convertible Preferred Stock receives such notice; and failure to give
such notice by mail, or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Series B Convertible Preferred Stock. On
or after the date fixed for redemption as stated in such notice, each holder of
the shares shall surrender the certificate (or certificates) evidencing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the applicable redemption price. If,
on the date fixed for redemption, funds necessary for the redemption shall be
available therefor and shall have been irrevocably deposited or set aside, then,
notwithstanding that the certificates evidencing any shares so called for
redemption shall not have been surrendered, the dividends with respect to the
shares so called shall cease to accrue after the date fixed for redemption, the
shares shall no longer be deemed outstanding, the holders thereof shall cease to
be stockholders, and all rights whatsoever with respect to the shares so called
for redemption (except the right of the holders to receive the applicable
redemption price, without interest, upon surrender of their certificates
therefor) shall terminate. Any monies deposited by the Corporation pursuant to
the foregoing provision and unclaimed at the end of one year from the date fixed
for redemption shall, to the extent permitted by law, be returned to the
Corporation, after which the holders of shares of Series B Convertible Preferred
Stock so called for redemption shall look only to the Corporation for the
payment thereof.


                                       6












                  Section 6.  No Sinking Fund.
                              
                  The shares of Series B Convertible Preferred Stock shall not
be subject to the operation of a purchase, retirement or sinking fund.

                  Section 7.  Conversion.
                            
                  (a) At any time after the Issue Date but not later than the
close of business on the day preceding the date fixed for the redemption of the
Series B Convertible Preferred Stock in any notice of redemption given pursuant
to the provisions of Section 5 hereof if there is no default in payment of the
applicable redemption price, the holders of the Series B Convertible Preferred
Stock may, upon surrender of the certificates therefor, convert any or all of
their shares of Series B Convertible Preferred Stock into fully paid and
nonassessable shares of Common Stock and such other securities and property as
hereinafter provided. Each share of Series B Convertible Preferred Stock shall
be convertible at the office of any transfer agent for the Series B Convertible
Preferred Stock, and at such other office or offices, if any, as the Board of
Directors may designate, into that number of fully paid and nonassessable shares
of Common Stock (calculated as to each conversion to the nearest 1/100th of a
share) as shall be equal to the Conversion Rate, determined as hereinafter
provided, in effect at the time of conversion. Shares of Series B Convertible
Preferred Stock may initially be converted into full shares of Common Stock at
the rate of 3.4 shares of Common Stock for each share of Series B Convertible
Preferred Stock subject to adjustment as hereinafter provided (the "Conversion
Rate"). Notwithstanding anything in this Section 7 to the contrary, no change in
the Conversion Rate shall actually be made until the cumulative effect of the
adjustments called for by this Section 7 since the date of the last change in
the Conversion Rate would change the Conversion Rate by more than 1%. However,
once the cumulative effect would result in such a change, the Conversion Rate
shall actually be changed to reflect all adjustments called for by this Section
7 and not previously made.

                  (b) The right of the holders of Series B Convertible Preferred
Stock to convert their shares shall be exercised by surrendering for such
purpose to the Corporation or its agent, as provided above, certificates
representing shares to be converted, duly endorsed in blank or accompanied by
proper instruments of transfer and a notice of conversion. The Corporation shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery upon conversion of shares of Common
Stock or other securities or property in a name other than that of the holder of
the shares of the Series B Convertible Preferred Stock being converted, and the
Corporation shall not be required to issue or deliver any such shares or other
securities or property unless and until the person or persons requesting the
issuance thereof shall have paid to the Corporation the




                                       7











amount of any such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid.

                  (c) The Corporation (and any successor corporation) shall take
all action necessary so that a number of shares of the authorized but unissued
Common Stock (or common stock in the case of any successor corporation)
sufficient to provide for the conversion of the Series B Convertible Preferred
Stock outstanding upon the basis hereinbefore provided are at all times reserved
by the Corporation (or any successor corporation), free from preemptive rights,
for such conversion, subject to the provisions of Section 7(d). If the
Corporation shall issue any securities or make any change in its capital
structure which would change the number of shares of Common Stock into which
each share of the Series B Convertible Preferred Stock shall be convertible as
herein provided, the Corporation shall at the same time also make proper
provision so that thereafter there shall be a sufficient number of shares of
Common Stock authorized and reserved, free from preemptive rights, for
conversion of the outstanding Series B Convertible Preferred Stock on the new
basis.

                  (d) In case of any consolidation or merger of the Corporation
with any other corporation or in case of any sale or transfer of all or
substantially all of the assets of the Corporation, or in the case of any share
exchange, in each case pursuant to which all of the outstanding shares of Common
Stock are converted into other securities, cash or other property, the
Corporation shall make appropriate provision or cause appropriate provision to
be made so that each holder of shares of Series B Convertible Preferred Stock
then outstanding shall have the right thereafter (in lieu of the right to
convert into Common Stock, which right shall cease) to convert such shares of
Series B Convertible Preferred Stock into the kind and amount of securities,
cash or other property receivable upon such consolidation, merger, sale,
transfer or share exchange by a holder of the number of shares of Common Stock
into which such shares of Series B Convertible Preferred Stock could have been
converted immediately prior to the effective date of such consolidation, merger,
sale, transfer or share exchange. If, in connection with any such consolidation,
merger, sale, transfer or share exchange, each holder of shares of Common Stock
is entitled to elect to receive either securities, cash or other property upon
completion of such transaction, the Corporation shall provide or cause to be
provided to each holder of Series B Convertible Preferred Stock the right to
elect the securities, cash (other than by the exercise of appraisal rights) or
other property into which the Series B Convertible Preferred Stock held by such
holder shall be convertible after completion of any such transaction on the same
terms and subject to the same conditions applicable to holders of the Common
Stock (including, without limitation, notice of the right to elect, limitations
on the period in which such election shall be made and the effect of failing to
exercise the election). The Corporation shall not effect any such transaction
unless the 




                                       8











provisions of this Section 7(d) have been complied with. The above
provisions shall similarly apply to successive consolidations, mergers, sales,
transfers or share exchanges.

         (e) Upon the surrender of certificates representing shares of Series
B Convertible Preferred Stock, the person converting shall be deemed to be the
holder of record of the Common Stock issuable upon such conversion, and all
rights with respect to the shares surrendered shall forthwith terminate except
the right to receive the Common Stock or other securities, cash or other
property as herein provided.

         (f) No fractional shares of Common Stock shall be issued upon
conversion of Series B Convertible Preferred Stock but, in lieu of any
fraction of a share of Common Stock which would otherwise be issuable in
respect of the aggregate number of such shares surrendered for conversion at
one time by the same holder, the Corporation shall pay in cash an amount equal
to the product of (i) the Closing Price of a share of Common Stock on the last
trading day before the conversion date and (ii) such fraction of a share.

         (g) The Conversion Rate shall be adjusted from time to time under
certain circumstances, subject to the provisions of the last two sentences of
Section 7(a), as follows:

                  (i) In case the Corporation shall (A) pay a dividend or make a
         distribution on its Common Stock in shares of its capital stock, (B)
         subdivide its outstanding Common Stock into a greater number of shares,
         (C) combine the shares of its outstanding Common Stock into a smaller
         number of shares, or (D) issue by reclassification of its Common Stock
         any shares of its capital stock, then in each such case the Conversion
         Rate in effect immediately prior thereto shall be proportionately
         adjusted so that the holder of any Series B Convertible Preferred Stock
         thereafter surrendered for conversion shall be entitled to receive, to
         the extent permitted by applicable law, the number and kind of shares
         of capital stock of the Corporation which it would have owned or have
         been entitled to receive after the happening of such event had such
         Series B Convertible Preferred Stock been converted immediately prior
         to the record date for such event (or if no record date has been
         established in connection with such event, the effective date for such
         action). An adjustment pursuant to this Section 7(g)(i) shall become
         effective immediately after the record date in the case of a stock
         dividend or distribution and shall become effective immediately after
         the effective date in the case of a subdivision, combination, or
         reclassification.



                                       9












                  (ii) In case the Corporation shall issue rights or warrants to
         all holders of the Common Stock entitling such holders to subscribe for
         or purchase Common Stock on the record date referred to below at a
         price per share less than the average daily Closing Prices of the
         Common Stock on the 30 consecutive trading days commencing 45 business
         days before such record date (the "Current Market Price"), then in each
         such case the Conversion Rate in effect on such record date shall be
         adjusted in accordance with the formula


                  c1 = C x          O + N

                                    O + N x P
                                        -----
                                          M

where

         c1 =     the adjusted Conversion Rate.

         C  =     the current Conversion Rate (immediately preceding the 
                  issuance of such rights or warrrants).

         O  =     the number of shares of Common Stock outstanding on the record
                  date.

         N  =     the number of additional shares of Common Stock issuable
                  pursuant to the exercise of such rights or warrants.

         P  =     the exercise price per share of such rights or warrants.

         M  =     the Current Market Price per share of Common Stock on such 
                  record date.

Such adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights or warrants. If
any or all of such rights or warrants are not so issued or expire or terminate
before being exercised, the Conversion Rate then in effect shall be readjusted
appropriately.

                  (iii) In case the Corporation shall, by dividend or otherwise,
         distribute to all holders of its Junior Stock or Parity Stock evidences
         of its indebtedness or assets (including cash or securities, but
         excluding any warrants or subscription rights referred to in Section
         7(g)(ii) above, any ordinary dividend paid in cash out of the retained
         earnings of the Corporation and any dividend



                                       10












or distribution referred to in Section 7(g)(i) above), then in each such case
the Conversion Rate then in affect shall be adjusted in accordance with the
formula

                  c1 = C x           M

                                     M-F

where

         c1 =     the adjusted Conversion Rate.

         C  =     the current Conversion Rate (immediately preceding such
                  distribution).

         M  =     the Current Market Price per share of Common Stock with
                  respect to the record date mentioned below.

         F  =     the aggregate amount of such cash dividend and/or the fair
                  market value on such record date of the assets or securities
                  to be distributed, divided by the number of shares of Common
                  Stock outstanding on the record date. In the case of
                  securities, the fair market value shall be the average of the
                  daily Closing Price for the 30 trading days preceding such
                  record date (or such fewer number of days for which there
                  shall be a recognized trading market); provided, however, that
                  if there shall not be any recognized trading market for such
                  securities until after such record date, the fair market value
                  shall be the average of the daily Closing Price for the 10
                  trading days following such record date. In all other cases,
                  the Board of Directors shall determine such fair market value,
                  which determination shall be conclusive.

Such adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution.

                  (iv) All calculations hereunder shall be made to the nearest
         cent or to the nearest 1/100 of a share, as the case may be.

                  (v) If at any time as a result of an adjustment made pursuant
         to Section 7(g)(i), the holder of any Series B Convertible Preferred
         Stock thereafter surrendered for conversion shall become entitled to
         receive securities, cash, or assets other than Common Stock, the number
         or amount of such securities or property so receivable upon conversion
         shall be subject to adjustment from time to time in a manner and on
         terms as nearly equivalent as practicable to the provisions with
         respect to the Common Stock contained in Section 7(g)(i) to (iv),
         inclusive, above.



                                       11













                  (h) Except as otherwise provided above in this Section 7, no
adjustment in the Conversion Rate shall be made in respect of any conversion for
share distributions or dividends theretofore declared and paid or payable on the
Common Stock.

                  (i) Whenever the Conversion Rate is adjusted as herein
provided, the Corporation shall send to each transfer agent for the Series B
Convertible Preferred Stock and the Common Stock, and to the principal
securities exchange, if any, on which the Series B Convertible Preferred Stock
and the Common Stock is traded, or the Nasdaq Stock Market if the Series B
Convertible Preferred Stock or Common Stock is admitted for quotation thereon, a
statement signed by the Chairman of the Board, the President, or any Vice
President of the Corporation and by its Treasurer or its Secretary or Assistant
Secretary stating the adjusted Conversion Rate determined as provided in this
Section 7, and any adjustment so evidenced, given in good faith, shall be
binding upon all stockholders and upon the Corporation. Whenever the Conversion
Rate is adjusted, the Corporation will give notice by mail to the holders of
record of Series B Convertible Preferred Stock, which notice shall be made
within 45 days after the effective date of such adjustment and shall state the
adjustment and the Conversion Rate. Notwithstanding the foregoing notice
provisions, failure by the Corporation to give such notice or a defect in such
notice shall not affect the binding nature of such corporate action of the
Corporation.

                  (j) Whenever the Corporation shall propose to take any of the
actions specified in Section 7(d) or in Section 7(g)(i), (ii) or (iii) which
would result in any adjustment in the Conversion Rate under this Section 7, the
Corporation shall use its best efforts to cause a notice to be mailed at least
20 days prior to the date on which the books of the Corporation will close or on
which a record will be taken for such action, to the holders of record of the
outstanding Series B Convertible Preferred Stock on the date of such notice.
Such notice shall specify the action proposed to be taken by the Corporation and
the date as of which holders of record of the Common Stock shall participate in
any such actions or be entitled to exchange their Common Stock for securities or
other property, as the case may be. Failure by the Corporation to mail the
notice or any defect in such notice shall not affect the validity of the
transaction.

                  (k) Notwithstanding any other provision of this Section 7, no
adjustment in the Conversion Rate need be made (i) for a transaction referred to
in Section 7(g)(i), (ii) or (iii) if holders of Series B Convertible Preferred
Stock are to participate in the transaction or distribution on a basis and with
notice that the Board of Directors reasonably determines such transaction to be
fair to the holders of the Series B Convertible Preferred Stock and appropriate
in light of the basis on 




                                       12











which holders of Common Stock or, in the case of a transaction referred to in
Section 7(g)(iii), holders of Junior Stock participate in the transaction; (ii)
for sales of Common Stock pursuant to a plan for reinvestment of dividends and
interest, provided that the purchase price in any such sale is at least equal to
90% of the fair market value of the Common Stock at the time of such purchase,
or pursuant to any plan adopted by the Corporation for the benefit of its
employees, directors or consultants; (iii) for a change in par value of the
Common Stock not involving a subdivision or combination described in Section
7(g)(i)(B) or 7(g)(i)(C); or (iv) after the Series B Convertible Preferred Stock
becomes convertible solely into cash by reason of an adjustment pursuant to
Section 7(d) hereof.

                  Section 8.  Voting Rights.
                              
                  (a) The holders of Series B Convertible Preferred Stock will
not have any voting rights except as set forth in this Section 8 or as otherwise
from time to time required by law.

                  (b) The affirmative vote or consent of the holders of at least
a majority of the outstanding shares of the Series B Convertible Preferred
Stock, voting separately as a class, will be required for (i) the issuance of
any Senior Stock or Parity Stock or (ii) any amendment, alteration or repeal of
this Certificate of Designation if such amendment, alteration or repeal
materially and adversely affects the powers, preferences or special rights of
the Series B Convertible Preferred Stock. The creation, authorization or
issuance of any shares of any Junior Stock or the increase or decrease in the
amount of authorized capital stock of any class, including preferred stock,
shall not require the consent of holders of the Series B Convertible Preferred
Stock and shall not be deemed to affect adversely the rights, preferences,
privileges or voting rights of shares of Series B Convertible Preferred Stock.
Such right of the holders of Series B Convertible Preferred Stock to vote as
hereinabove provided may be exercised at any annual meeting or at any special
meeting called for such purpose as hereinafter provided or at any adjournment
thereof.

                  (c) If dividends on the Series B Convertible Preferred Stock
are in arrears and unpaid for six or more dividend periods (whether or not
consecutive) (a "Dividend Default"), then the number of directors constituting
the Board of Directors of the Corporation will be increased by two and the
holders of the then outstanding shares of Series B Convertible Preferred Stock
(together with the holders of Parity Stock upon which like rights have been
conferred and are exercisable), voting separately and as a class, shall have the
right and power to elect such two additional directors. The occurrence of a
Dividend Default is a "Voting Rights Triggering Event." A Voting Rights
Triggering Event shall not be


                                       13












deemed to have occurred if at the time of such
event there are less than 25,000 shares of Series B Convertible Preferred Stock
then outstanding.

                  (d) The voting rights set forth in Section 8(c) will continue
until such time as (x) in the case of a default in the payment of dividends, all
dividends in arrears on the Series B Convertible Preferred Stock are paid in
full or (y) there are fewer than 25,000 shares of Series B Convertible Preferred
Stock outstanding, at which time the term of any directors elected pursuant to
the provisions of Section 8(c) shall terminate and the number of directors
constituting the Board of Directors shall be decreased by two (until the
occurrence of any subsequent Voting Rights Triggering Event). At any time after
voting power to elect directors shall have become vested and be continuing in
the holders of Series B Convertible Preferred Stock pursuant to Section 8(c), or
if vacancies shall exist in the offices of directors elected by such holders, a
proper officer of the Corporation may, and upon the written request of the
holders of record of at least 25% of the shares of Series B Convertible
Preferred Stock then outstanding addressed to the Secretary of the Corporation
shall, call a special meeting of the holders of Series B Convertible Preferred
Stock; provided, however, that no such special meeting shall be called if the
next annual meeting of stockholders of the Corporation is to be held within 60
days after the voting power to elect directors shall have become vested, in
which case such meeting shall be deemed to have been called for such next annual
meeting. If such meeting shall not be called by a proper officer of the
Corporation within 20 days after personal service to the Secretary of the
Corporation at its principal executive offices, then the holders of record of at
least 25% of the outstanding shares of Series B Convertible Preferred Stock may
designate in writing one of their members to call such meeting at the expense of
the Corporation, and such meeting may be called by the person so designated upon
the notice required for the annual meetings of stockholders of the Corporation
and shall be held at the place for holding the annual meetings of stockholders.
Any holder of Series B Convertible Preferred Stock so designated shall have, and
the Corporation shall provide, access to the lists of holders of Series B
Convertible Preferred Stock to be called pursuant to the provisions hereof. If
no special meeting of the holders of Series B Convertible Preferred Stock is
called as provided in this Section 8(d), then such meeting shall be deemed to
have been called for the next annual meeting of stockholders of the Corporation
or special meeting of the holders of any other capital stock of the Corporation.

                  (e) At any meeting held for the purposes of electing directors
at which the holders of Series B Convertible Preferred Stock (together with the
holders of Parity Stock upon which like rights have been conferred and are
exercisable) shall have the right, voting together as a separate class, to elect
directors as aforesaid, the presence in person or by proxy of the holders of at
least a majority in voting power of the outstanding shares of Series B
Convertible Preferred Stock (and such Parity stock) shall be required to
constitute a quorum thereof.



                                       14












                  (f) Any vacancy occurring in the office of a director elected
by the holders of Series B Convertible Preferred Stock (and such Parity Stock)
may be filled by the remaining director elected by the holders of Series B
Convertible Preferred Stock (and such Parity Stock) unless and until such
vacancy shall be filled by the holders of Series B Convertible Preferred Stock
(and such Parity Stock).

                  (g) In any case in which the holders of Series B Convertible
Preferred Stock shall be entitled to vote pursuant to this Section 8 or pursuant
to Delaware law, each holder of Series B Convertible Preferred Stock entitled to
vote with respect to such matters shall be entitled to one vote for each share
of Series B Convertible Preferred Stock held.

                  Section 9. Outstanding Shares. All shares of Series B
Convertible Preferred Stock shall be deemed outstanding except: (i) from the
date fixed for redemption pursuant to Section 5 hereof, all shares of Series B
Convertible Preferred Stock which have been so called for redemption under
Section 5, if funds necessary for such redemption of such shares are available;
(ii) from the date of surrender of certificates representing shares of Series B
Convertible Preferred Stock for conversion into Common Stock, all shares of
Series B Convertible Preferred Stock converted into Common Stock; and (iii) from
the date of registration of transfer, all shares of Series B Convertible
Preferred Stock held of record by the Corporation or any subsidiary of the
Corporation.

         IN WITNESS WHEREOF, Frontline Communications Corporation has caused
this certificate to be signed by Stephen J. Cole-Hatchard, its Chief Executive
Officer this 10th day of February, 2000.

                                    FRONTLINE COMMUNICATIONS CORPORATION


                                    By /s/ Stephen J. Cole-Hatchard
                                       --------------------------------------
                                       Stephen J. Cole-Hatchard
                                       Chief Executive Officer






                                       15











                                                                         ANNEX E

                       OPINION OF GUNALLEN FINANCIAL, INC.

March 13, 2003

The Special Committee of the Board of Directors
Frontline Communications Corporation
One Blue Hill Plaza
Pearl River, New York 10965

Members of the Board:

     You have asked GunnAllen Financial, Incorporated ("GunnAllen") to render a
written opinion ("Opinion") to the Special Committee of the Board of Directors
as to the fairness, from a financial point of view, to Frontline Communications
Corporation frontline") of the Transaction (defined below) provided for in the
stock Purchase Agreement, dated as of January 24, 2003 (the "Stock Purchase
Agreement"), among Frontline Communications Corporation, a Delaware Corporation
and Proyecciones y Ventas Organizadas, S.A. de C.V., a corporation organized
under the laws of the Republic of Mexico, Ventura Martinez del Rio Requejo, and
Ventura Martinez del Rio Arrangoiz, ("collectively referred to as "Provo"). The
Stock Purchase Agreement provides for, among things, the acquisition by
Frontline of all outstanding shares of the common stack, par value peso $50 per
share, of Provo and its subsidiaries ( as outlined in the Stock Purchase
Agreement) in exchange for an aggregate of 22,000,000 shares of the common
stock, per value $0.01 per share, of Frontline ("the Transaction"), subject to
certain adjustments as more fully described In the Stock Purchase Agreement and
as a result of the acceptance and conversion of Provo's Series C Preferred
Stock, Our opinion does not address the fairness of the Transaction if Frontline
issues Provo a note in the amount of $20 million as provided for in the Stock
Purchase Agreement.

     You also have asked GunnAllen to render an Opinion to the Special Committee
of the Board of Directors as to the fairness, from a financial point of view, to
the holders of Frontline, other than Provo than the consideration to be received
by stockholders of Provo pursuant to the Stock Purchase Agreement.

     In arriving at our Opinion, we:

     (a) reviewed the Stock Purchase Agreement and certain related documents,
including forms of exhibits attached as exhibits to the Stock Purchase Agreement
(including the Certificate of Designation and "Registration Rights Agreement");

     (b) reviewed audited financial statements of Frontline and for the fiscal
years ended December 31, December 31, 2000 and December 31, 2001 and the
unaudited financial statements of Provo for the fiscal years ending December 31,
2004-December 31, 2001 and December 31, 2002 and assumed that there would be no
material differences in the unaudited financial statements after they were
audited.

     (c) reviewed unaudited financial statements of Frontline for the nine
months ended September 30, 2002;

     (d) reviewed financial forecasts and other information relating to
Frontline and Provo provided to or discussed with us by the managements of
Frontline and Provo.

     (e) reviewed historical market prig and trading volumes for Frontline
Common Stock

     (f) held discussions with the senior managements and other representatives
of Frontline with reaped to the businesses and prospects for future growth of
Frontline and Provo;

     (g) reviewed and analyzed certain publicly available financial date for
certain companies we deemed comparable to Frontline and Provo;

     (h) performed discounted cash flow analyses of Frontline and Provo using
assumptions of future performance prepared or discussed with us by the
managements of Frontline and Provo;

     (i) reviewed public information concerning Frontline, and


                                      E-1










     (j) performed such other analyses and reviewed and considered such other
information and factors as we deemed appropriate.

     In rendering our Opinion, we relied upon and assumed, without independent
verification or investigation, the accuracy and completeness of all of the
financial and other information provided to or discussed with us by Frontline
and Provo and their respective employees, representatives and affiliates. With
respect to the financial forecasts and other information relating to Frontline
and provided to or discussed with us by the managements of Frontline and Provo,
we assumed, at the direction of the managements of Frontline and Prow, without
independent verification or investigation, that such forecasts and information
were reasonably prepared on bases reflecting the best available information,
estimates and judgements of the managements of Frontline and Provo as to the
existing and future financial condition end operating results of Frontline and
Provo . We have relied, at the direction of the managements of Frontline and
Provo, without independent verification or investigation, upon the assessments
of the managements of Frontline and Provo as to the existing and future
technology and products of and the risks associated with such technology and
products. We have assumed, with the consent of Frontline, that in the course of
obtaining the necessary regulatory or third party approvals and consents for the
Transaction, no delay, limitation, restriction or conditions will be imposed
that would have a material adverse effect on Frontline or the contemplated
benefits to Frontline of the Transaction. We also have assumed, with to consent
of Frontline, that the Transaction and the other transactions contemplated by
tire Agreements will be consummated, in all material respects in accordance with
their terms, without waiver, modification or amendment of any material
conditions or agreements. We have neither made nor obtained any independent
evaluations or appraisals of the assets or liabilities (contingent or otherwise)
of Frontline, Provo, or affiliated entities. We are not expressing any opinion
as to the underlying valuation, future performance or long-term viability of
Frontline, Provo or the prices at which the Frontline Common Stock will trade
upon or subsequent to announcement or consummation of the Transaction. We
express no view as to, end our Opinion does not address, the underlying business
decision of Frontline to effect the Transaction nor were we requested to
consider the relative merits of the Transaction as compared to any alternative
business strategies that might exist for Frontline or the effect of any other
transaction in which Frontline might engage. In connection with our engagement,
we were not requested to, and we did not, participate in the negotiation or
structuring of the Transaction. Our Opinion is necessarily based on the
Information available to us and general economic, financial and stock market
conditions and circumstances as they exist and can be evaluated by us on the
date hereof. It should be understood that, although subsequent developments may
affect this Opinion, we do not have any obligation to update, revise or reaffirm
the Opinion.

     As part of our investment banking business, we are regularly engaged in
valuations of businesses end securities in connection with acquisitions and
mergers, underwritings, secondary distributions of securities, private
placements and valuations for other purposes.

     We have been engaged solely to render an Opinion to the Special Committee
of the Board of Directors in connection with the Transaction, for which we tire
received and will receive compensation, the balance of which was paid upon
delivery of this Opinion. GunnAllen Financial and its affiliates has not in the
past but may in the future provide services to Frontline unrelated to the
proposed Transaction, for which services GunnAllen Financial and its affiliates
may receive compensation. In he ordinary course of business, GunnAllen Financial
and its affiliates may actively trade securities of Frontline for their own
account and for the accounts of customers and, accordingly, may at arty time
hold a long or short position in such securities.

     Based upon and subject to the foregoing, and such other factors as we
deemed relevant, It is our opinion that, as of the date hereof, the Transaction
is fair, from a financial point of view, to Frontline and the holders of
Frontline Common Stock, other than Provo and its affiliates. This Opinion is for
the use of the Special Committee of the Board of Directors of Frontline in Its
evaluation of the Transaction and does riot constitute a recommendation to any
stockholder of Frontline or how such stockholder should vote with respect to any
matters relating to the Transaction.

                                                     Very truly yours,


                                                     /s/ GunAllen Financial
                                                         GunAllen Financial


                                      E-2










                                                                         ANNEX F

                            CERTIFICATE OF AMENDMENT
                                       to
                           CERTIFICATE OF DESIGNATION
                                       of
                         SERIES B CUMULATIVE CONVERTIBLE
                           REDEEMABLE PREFERRED STOCK
                                       of
                      FRONTLINE COMMUNICATIONS CORPORATION

     Frontline Communications Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:

     FIRST: The Certificate of Designation of Series B Cumulative Convertible
Redeemable Preferred Stock of the Corporation (the "Certificate of Designation")
is hereby amended by adding a new Section 10 to such Certificate of Designation,
which new Section 10 shall read in its entirety as follows:

          "Section 10. Mandatory Conversion. Notwithstanding anything to the
     contrary contained in this Section 7:

               (a) Each share of Series B Convertible Preferred Stock that is
     issued and outstanding on the date and time at which this Certificate of
     Amendment of the Certificate of Designation (this "Certificate of
     Amendment") becomes effective shall be and is, by means of this Certificate
     of Amendment, automatically and without any further action on the part of
     the stockholders of the Corporation, converted into six shares of the
     Common Stock of the Corporation. The time and the date on which such
     conversion occurs and becomes effective shall be hereinafter referred to as
     the "Mandatory Conversion Date".

               (b) Holders of shares of Series B Convertible Preferred Stock
     immediately prior to conversion pursuant to Section 10(a) shall, from and
     after the Mandatory Conversion Date, cease to own, be holders of or have
     any rights to or arising out of any shares of Series B Convertible
     Preferred Stock and, in lieu thereof, shall automatically and without any
     further action become owners or holders of and have rights to and arising
     out of the number of shares of Common Stock into which such shares of
     Series B Convertible Preferred Stock converted pursuant to Section 10.
     Until such time as each holder of shares of Series B Convertible Preferred
     Stock receives the stock certificate or stock certificates representing
     shares of Common Stock pursuant to Section 10(d) below, all stock
     certificates that, immediately prior to the Mandatory Conversion Date,
     represented shares of Series B Convertible Preferred Stock held by such
     holder of Series B Convertible Preferred Stock, shall, from and after the
     Mandatory Conversion Date, cease to represent shares of Series B
     Convertible Preferred Stock and shall be deemed to represent the number of
     shares of Common Stock into which the shares of Series B Convertible
     Preferred Stock previously represented by such stock certificate or
     certificates were converted on the Mandatory Conversion Date pursuant to
     Section 10(a) above.

               (c) Within ten (10) days after the Mandatory Conversion Date, the
     Corporation shall give written notice to all holders of record of shares of
     Series B Convertible Preferred Stock that a conversion pursuant to this
     Section 10(a) has occurred and become effective. Such written notice shall
     be sent by first class mail, postage prepaid to the last address of each
     record stockholder as shown on the books of the Corporation, and such
     notice shall set forth the number of shares of Common Stock issued to such
     record holder on account of the conversion of such record holder's shares
     of Series B Convertible Preferred Stock in accordance with the provisions
     of Section 10(a).

               (d) The Corporation shall cause its transfer agent to deliver as
     promptly as practicable but in no event later than three (3) trading days
     after delivery of written notice from the Corporation pursuant to Section
     10(c) above a stock certificate or stock certificates representing the
     number of shares of Common Stock into which all of such holder's shares of
     Series B Convertible Preferred Stock converted pursuant to Section 10(a),
     and thereafter each holder of a stock certificate or stock certificates
     that, prior to the Mandatory Conversion Date, represented shares of Series
     B Convertible Preferred Stock shall surrender such stock certificate or
     certificates to the Corporation's transfer agent at the place


                                      F-1










     designated in such written notice. If so required by the Corporation or
     such transfer agent, stock certificates surrendered pursuant to this
     Section 10(d) shall be endorsed or accompanied by written instrument or
     instruments of transfer, in form satisfactory to the Corporation or such
     transfer agent, duly executed by the registered holder or by his or its
     attorney duly authorized in writing. The Corporation shall pay all expenses
     related to such issuances (including any stamp taxes or issue taxes);
     provided that the Corporation shall not be required to pay any tax which
     may be payable in respect of any transfer involved in the issuance and
     delivery of shares of Common Stock or other securities or property on
     conversion of shares of Series B Convertible Preferred Stock in a name
     other than that of such holder, and the Corporation shall not be required
     to issue or deliver any such shares or other securities or property unless
     and until the person or persons requesting the issuance thereof shall have
     paid to the Corporation the amount of any such tax or shall have
     established to the satisfaction of the Corporation that such tax has been
     paid. The converting holder shall be responsible for the amount of any
     withholding tax payable in connection with any conversion of shares of
     Series B Convertible Preferred Stock."

     SECOND: The amendments to the Certificate of Designation herein certified
has been duly adopted by the Board of Directors of the Corporation in accordance
with the provisions of Section 141of the General Corporation Law of the State of
Delaware.

     THIRD: The amendments to the Certificate of Designation herein certified
have been duly adopted by (i) a majority of the holders of the Series B
Convertible Preferred Stock of the Corporation and (ii) a majority of the
holders of the Common Stock of the Corporation, at a meeting convened on August
13, 2003, in accordance with the provisions of Sections 211 et. seq. of the
General Corporation Law of the State of Delaware.

     FOURTH: The capital of said Corporation shall not be reduced under or by
reason of said amendment.

     IN WITNESS WHEREOF, Frontline Communications Corporation has caused this
Certificate to be signed by its Chief Executive Officer this ___ day of August,
2003.

                                   Frontline Communications Corporation


                                   By:
                                      ------------------------------------------
                                      Stephen Cole-Hatchard
                                      Chief Executive Officer


                                      F-2










                                                                         ANNEX G

                         FOURTH CERTIFICATE OF AMENDMENT

                                       to
                          CERTIFICATE OF INCORPORATION
                                       of
                      FRONTLINE COMMUNICATIONS CORPORATION

     The undersigned, the Chief Executive Office of Frontline Communications
Corporation, a Delaware corporation (the "Corporation"), does hereby certify as
follows:

     1. That the name of the Corporation is Frontline Communications
Corporation.

     2. That the Certificate of Incorporation of the Corporation was filed with
the Delaware Secretary of State on February 18, 1997.

     3. That a first Certificate of Amendment to the Certificate of
Incorporation of the Corporation was filed with the Delaware Secretary of State
on July 24, 1997.

     4. That a second Certificate of Amendment to the Certificate of
Incorporation of the Corporation was filed with the Delaware Secretary of State
on June 28, 1998.

     5. That a third Certificate of Amendment to the Certificate of
Incorporation of the Corporation was filed with the Delaware Secretary of State
on January 6, 2000.

     6. That Article First of said Certificate of Incorporation, as amended, is
hereby further amended by striking it out in its entirety and inserting in lieu
and instead thereof a new Article First as follows:

               "FIRST: The name of the Corporation is Provo International, Inc."

     7. That the first paragraph of Article Fourth of said Certificate of
Incorporation, as amended, is hereby further amended by striking out the first
paragraph of Article Fourth thereof as it now exists and inserting in lieu and
instead thereof a new first paragraph of Article Fourth as follows:

               "FOURTH: The total number of shares of capital stock which the
          Corporation shall have authority to issue is One Hundred Two Million
          (102,000,000) shares, of which One Hundred Million (100,000,000)
          shares shall be Common Stock, par value $0.01per share, and Two
          Million (2,000,000) shares shall be Preferred Stock, par value per 
          $0.01 per share.

     8. That Article Fourth of said Certificate of Incorporation, as amended, is
hereby further amended by adding to the end of the thirteenth paragraph thereof,
the following:

          "Each three shares of Common Stock of the Corporation, par value
     $0.01, that are issued and outstanding on the date and at the time at which
     this Fourth Certificate of Amendment of the Certificate of Incorporation
     (the "Fourth Certificate of Amendment") becomes effective shall be and are,
     by means of this Fourth Certificate of Amendment, automatically and without
     any further action on the part of the stockholders of the Corporation
     converted into and reconstituted as two fully-paid and non-assessable
     shares of Common Stock of the Corporation, par value $0.01, subject to the
     treatment of fractional interests as described below, with a resultant
     simultaneous change in the amount of stated capital and additional paid-in
     capital of the Corporation. Each holder of a certificate or certificates
     which, immediately prior to the effective date of this Fourth Certificate
     of Amendment pursuant to and in accordance with the General Corporation Law
     of the State of Delaware (the "Effective Date"), representing outstanding
     shares of Common Stock prior to the Effective Date shall be entitled to
     receive a certificate representing the number of new shares of Common Stock
     to which such holder shall be entitled as a result of this Fourth
     Certificate of Amendment upon presentation of the certificate representing
     the outstanding shares prior to the Effective Date to the Corporation's
     transfer agent for cancellation and exchange.










          No scrip or fractional certificates will be issued upon such
     conversion and reconstitution. The number of shares of Common Stock shown
     on any certificate issuable upon the effectiveness of this Fourth
     Certificate of Amendment shall be rounded down to the nearest whole share
     if a fractional share interest in a share of Common Stock would, except for
     the provisions of the preceding sentence, be deliverable upon such
     conversion and reconstitution. The Corporation shall pay an amount in cash
     equal to the fair market value of such fractional interest to each holder
     of shares of Common Stock to whom such fractional interest would have been
     deliverable. Such fair market value will be determined by multiplying the
     fractional interest by the closing sale price per share of the Common Stock
     on the American Stock Exchange (or such other quotation or listing system
     on which the Common Stock may then be listed or quoted) on the business day
     immediately preceding the Effective Date. Such cash payment would be made
     upon the surrender to the Corporation's transfer agent of stock
     certificates representing a fractional share interest. The ownership of a
     fractional share interest in a share of Common Stock will not give the
     holder thereof any voting, dividend or other rights except the right to
     receive payment therefor as described herein.

          Except as required by law, all shares of Common Stock shall be
     identical in all respects and shall entitle the holders thereof to the same
     rights and privileges, subject to the same qualifications, limitations and
     restrictions. Except as required by law, the holders of shares of Common
     Stock shall be entitled to one vote per share of Common Stock on all
     matters on which stockholders of the Corporation have the right to vote."

     9. The foregoing amendment was duly approved and adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware and the Corporation's By-Laws at a meeting of the Board of Directors of
the Corporation.

     10. At the Annual Meeting of the Stockholders of the Corporation held on
August 13, 2003, duly called and held in accordance with the provisions of
Section 222 of the General Corporation Law of the State of Delaware, a majority
of the shares of the outstanding Common Stock entitled to vote thereon were
voted in favor of the amendment in accordance with Section 242 of the General
Corporation Law of the State of Delaware.

     11. This amendment shall be effective on the date this Fourth Certificate
of Amendment is filed and accepted by the Secretary of State of the State of
Delaware.

     The undersigned, being the Chief Executive Office of the Corporation, for
purposes of amending its Certificate of Incorporation pursuant to the General
Corporation Law of the State of Delaware, acknowledges that it is his act and
deed and that the facts stated herein are true, and has signed this instrument
on August __, 2003

                                   FRONTLINE COMMUNICATIONS CORPORATION


                                   By:
                                       -----------------------------------------
                                       Stephen Cole-Hatchard
                                       Chief Executive Officer


 





                                                                  EXECUTION COPY

                         COMMON STOCK PURCHASE AGREEMENT

         COMMON STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of July 7,
2003 by and between FRONTLINE COMMUNICATIONS CORPORATION, a Delaware corporation
(the "Company"), and FUSION CAPITAL FUND II, LLC, an Illinois limited liability
company (the "Buyer"). Capitalized terms used herein and not otherwise defined
herein are defined in Section 10 hereof.

                                    WHEREAS:

         Subject to the terms and conditions set forth in this Agreement, the
Company wishes to sell to the Buyer, and the Buyer wishes to buy from the
Company, up to Thirteen Million Dollars ($13,000,000) of the Company's common
stock, par value $0.01 per share (the "Common Stock"). The shares of Common
Stock to be purchased hereunder are referred to herein as the "Purchase Shares."
In addition, as set forth in Section 1 (h) hereof, the Company may, in its sole
discretion, at any time after the date hereof and until 30 days after such date
as the Available Amount is equal to $0, deliver an irrevocable written notice to
the Buyer stating that the Company elects to enter into a second Common Stock
Purchase Agreement with the Buyer for the purchase of an additional Thirteen
Million Dollars ($13,000,000) of Common Stock.


         NOW THEREFORE, the Company and the Buyer hereby agree as follows:

         1. PURCHASE OF COMMON STOCK.

         Subject to the terms and conditions set forth in Sections 6, 7 and 9
below, the Company hereby agrees to sell to the Buyer, and the Buyer hereby
agrees to purchase from the Company, shares of Common Stock as follows:

         (a) Commencement of Purchases of Common Stock. The purchase and sale of
Common Stock hereunder shall commence (the "Commencement") within five (5)
Trading Days following the date of satisfaction (or waiver) of the conditions to
the Commencement set forth in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and Buyer) (the date of such Commencement, the
"Commencement Date").

         (b) Buyer's Purchase Rights and Obligations. Subject to the Company's
right to suspend purchases under Section 1(d)(ii) hereof, the Buyer shall
purchase shares of Common Stock on each Trading Day during each Monthly Period
equal to the Daily Purchase Amount (as defined in Section 1(c)(i)) at the
Purchase Price. Within one (1) Trading Day of receipt of Purchase Shares, the
Buyer shall pay to the Company an amount equal to the Purchase Amount with
respect to such Purchase Shares as full payment for the purchase of the Purchase
Shares so received. The Company shall not issue any fraction of a share of
Common Stock upon any purchase. All shares of Common Stock (including fractions
thereof) issuable upon a purchase under this Agreement shall be aggregated for
purposes of determining whether the purchase would result in the issuance of a
fraction of a share of Common Stock. If, after the aforementioned aggregation,
the issuance would result in the issuance of a fraction of a share of Common
Stock, the Company shall round such fraction of a share of Common Stock up or
down to the nearest whole share. All payments made under this Agreement shall be
made in lawful money of the United States of America by check or wire transfer
of immediately available funds to such account as the Company or Buyer may from
time to time designate by written notice in




 







accordance with the provisions of this Agreement. Whenever any amount expressed
to be due by the terms of this Agreement is due on any day that is not a Trading
Day, the same shall instead be due on the next succeeding day which is a Trading
Day.

         (c) The Daily Purchase Amount; Company's Right to Decrease or Increase
the Daily Purchase Amount.

                  (i) The Daily Purchase Amount. As used herein the term
         "Original Daily Purchase Amount" shall mean Sixteen Thousand Two
         Hundred Fifty Dollars ($16,250) per Trading Day. As used herein, the
         term "Daily Purchase Amount" shall mean initially Sixteen Thousand Two
         Hundred Fifty Dollars ($16,250) per Trading Day, which amount may be
         increased or decreased from time to time pursuant to this Section 1(c).

                  (ii) Company's Right to Decrease the Daily Purchase Amount.
         The Company shall always have the right at any time to decrease the
         amount of the Daily Purchase Amount by delivering written notice (a
         "Daily Purchase Amount Decrease Notice") to the Buyer which notice
         shall specify the new Daily Purchase Amount. The decrease in the Daily
         Purchase Amount shall become effective one Trading Day after receipt by
         the Buyer of the Daily Purchase Amount Decrease Notice. Any purchases
         by the Buyer which have a Purchase Date on or prior to the first (1st)
         Trading Day after receipt by the Buyer of a Daily Purchase Amount
         Decrease Notice must be honored by the Company as otherwise provided
         herein. The decrease in the Daily Purchase Amount shall remain in
         effect until the Company delivers to the Buyer a Daily Purchase Amount
         Increase Notice (as defined below).

                   (iii) Company's Right to Increase the Daily Purchase Amount.
         The Company shall have the right (but not the obligation) to increase
         the amount of the Daily Purchase Amount in accordance with the terms
         and conditions set forth in this Section 1(c)(iii) by delivering
         written notice to the Buyer stating the new amount of the Daily
         Purchase Amount (a "Daily Purchase Amount Increase Notice"). A Daily
         Purchase Amount Increase Notice shall be effective five (5) Trading
         Days after receipt by the Buyer. The Company shall always have the
         right at any time to increase the amount of the Daily Purchase Amount
         up to the Original Daily Purchase Amount. With respect to increases in
         the Daily Purchase Amount above the Original Daily Purchase Amount, as
         the market price for the Common Stock increases the Company shall have
         the right from time to time to increase the Daily Purchase Amount as
         follows. For every $0.50 increase in Threshold Price above $1.00
         (subject to equitable adjustment for any reorganization,
         recapitalization, non-cash dividend, stock split or other similar
         transaction), the Company shall have the right to increase the Daily
         Purchase Amount by up to an additional $3,250 in excess of the Original
         Daily Purchase Amount. "Threshold Price" for purposes hereof means the
         lowest Sale Price of the Common Stock during the five (5) consecutive
         Trading Days immediately prior to the submission to the Buyer of a
         Daily Purchase Amount Increase Notice (subject to equitable adjustment
         for any reorganization, recapitalization, non-cash dividend, stock
         split or other similar transaction). For example, if the Threshold
         Price is $1.50, the Company shall have the right to increase the Daily
         Purchase Amount to up to $19,500 in the aggregate. If the Threshold
         Price is $2.50, the Company shall have the right to increase the Daily


 




         Purchase Amount to up to $26,000 in the aggregate. Any increase in the
         amount of the Daily Purchase Amount shall continue in effect until the
         delivery to the Buyer of a Daily Purchase Amount Decrease Notice.
         However, if at any time during any Trading Day the Sale Price of the
         Common Stock is below the applicable Threshold Price, such increase in
         the Daily Purchase Amount shall be void and the Buyer's obligations to
         buy Purchase Shares hereunder in excess of the applicable maximum Daily
         Purchase Amount shall be terminated. Thereafter, the Company shall
         again have the right to increase the amount of the Daily Purchase
         Amount as set forth herein by delivery of a new Daily Purchase Amount
         Increase Notice only if the Sale Price of the Common Stock is above the
         applicable Threshold Price on each of five (5) consecutive Trading Days
         immediately prior to such new Daily Purchase Amount Increase Notice.

         (d) Limitations on Purchases.

                  (i) Limitation on Beneficial Ownership. The Company shall not
         effect any sale under this Agreement and the Buyer shall not have the
         right to purchase shares of Common Stock under this Agreement to the
         extent that after giving effect to such purchase the Buyer together
         with its affiliates would beneficially own in excess of 4.9% of the
         outstanding shares of the Common Stock following such purchase. For
         purposes hereof, the number of shares of Common Stock beneficially
         owned by the Buyer and its affiliates or acquired by the Buyer and its
         affiliates, as the case may be, shall include the number of shares of
         Common Stock issuable in connection with a purchase under this
         Agreement with respect to which the determination is being made, but
         shall exclude the number of shares of Common Stock which would be
         issuable upon (1) a purchase of the remaining Available Amount which
         has not been submitted for purchase, and (2) exercise or conversion of
         the unexercised or unconverted portion of any other securities of the
         Company (including, without limitation, any warrants) subject to a
         limitation on conversion or exercise analogous to the limitation
         contained herein beneficially owned by the Buyer and its affiliates. If
         the 4.9% limitation is ever reached the Company shall have the option
         to increase such limitation to 9.9% by delivery of written notice to
         the Buyer. Thereafter, if the 9.9% limitation is ever reached this
         shall not affect or limit the Buyer's obligation to purchase the Daily
         Purchase Amount as otherwise provided in this Agreement. Specifically,
         even though the Buyer may not receive additional shares of Common Stock
         in the event that the 9.9% limitation is ever reached, the Buyer is
         still obligated to pay to the Company the Daily Purchase Amount on each
         Trading Day as otherwise obligated under this Agreement, e.g. no Event
         of Default (as defined in Section 9 hereof) has occurred, nor any event
         which, after notice and/or lapse of time, would become an Event of
         Default. Under such circumstances, the Buyer would have the right to
         acquire additional shares of Common Stock in the future only at such
         time as its ownership subsequently become less than the 9.9%
         limitation. For purposes of this Section, in determining the number of
         outstanding shares of Common Stock the Buyer may rely on the number of
         outstanding shares of Common Stock as reflected in (1) the Company's
         most recent Form 10-Q or Form 10-K, as the case may be, (2) a more
         recent public announcement by the Company or (3) any other written
         communication by the Company or its Transfer Agent setting forth the
         number of shares of Common Stock outstanding. Upon the reasonable
         written or oral request of the Buyer, the Company shall promptly
         confirm orally and in writing to the Buyer the number of shares of
         Common Stock then outstanding. In any case, the number of outstanding
         shares of Common Stock shall be determined after giving effect to any
         purchases under this Agreement by the Buyer since the date as of which
         such number of outstanding shares of Common Stock was reported. Except
         as otherwise set forth herein, for purposes of this Section 1(d)(i),
         beneficial ownership shall be determined in accordance with Section
         13(d) of the Securities Exchange Act of 1934, as amended.



 




                  (ii) Company's Right to Suspend Purchases. The Company may, at
         any time, give written notice (a "Purchase Suspension Notice") to the
         Buyer suspending purchases of Purchase Shares by the Buyer under this
         Agreement. The Purchase Suspension Notice shall be effective only for
         purchases that have a Purchase Date later than one (1) Trading Day
         after receipt of the Purchase Suspension Notice by the Buyer. Any
         purchase by the Buyer that has a Purchase Date on or prior to the first
         (1st) Trading Day after receipt by the Buyer of a Purchase Suspension
         Notice from the Company must be honored by the Company as otherwise
         provided herein. Such purchase suspension shall continue in effect
         until a revocation in writing by the Company, at its sole discretion.
         So long as a Purchase Suspension Notice is in effect, the Buyer shall
         not be obligated to purchase any Purchase Shares from the Company under
         Section 1 of this Agreement.

                  (iii) Purchase Price Floor. The Company shall not affect any
         sales under this Agreement and the Buyer shall not have the right nor
         the obligation to purchase any Purchase Shares under this Agreement on
         any Trading Day where the Purchase Price for any purchases of Purchase
         Shares would be less than the Floor Price.

         (e) Records of Purchases. The Buyer and the Company shall each maintain
records showing the remaining Available Amount at any given time and the dates
and Purchase Amounts for each purchase or shall use such other method,
reasonably satisfactory to the Buyer and the Company.

         (f) Taxes. The Company shall pay any and all transfer, stamp or similar
taxes that may be payable with respect to the issuance and delivery of any
shares of Common Stock to the Buyer made under this Agreement.

         (g) Compliance with Principal Market Rules. The Company shall not
effect any sale under this Agreement and the Buyer shall not have the right to
purchase shares of Common Stock under this Agreement to the extent that after
giving effect to such purchase the "Exchange Cap" shall be deemed to be reached.
The "Exchange Cap" shall be deemed to have been reached if, at any time prior to
the shareholders of the Company approving the transaction contemplated by this
Agreement, upon a purchase under this Agreement, the Purchase Shares issuable
pursuant to such purchase would, together with all Purchase Shares previously
issued under this Agreement, exceed 2,032,977 shares of Common Stock (19.99% of
the 10,169,972 outstanding shares of Common Stock as of the date of this
Agreement). The Company may, but shall be under no obligation to, request its
shareholders to approve the transaction contemplated by this Agreement. The
Company shall not be required or permitted to issue any shares of Common Stock
under this Agreement if such issuance would breach the Company's obligations
under the rules or regulations of the Principal Market.

          (h) Option for Second Tranche; Second Common Stock Purchase Agreement.
The Company may, in its sole discretion, at any time after the date hereof and
until 30 days after such date as the Available Amount is equal to $0 (the
"Second Tranche Expiration Date"), deliver an irrevocable written notice (the
"Second Tranche Notice") to the Buyer stating that the Company elects to enter
into an additional Common Stock Purchase Agreement (the "Second Common Stock
Purchase Agreement") with the Buyer for the purchase of Thirteen Million Dollars
($13,000,000) of additional Common Stock. It is agreed and acknowledged by the
parties hereto that entering into the Second Common Stock Purchase Agreement
shall be at the option of the Company in its sole discretion until such time as
the Company shall have delivered the Second Tranche Notice to the Buyer. The
Buyer shall not be obligated to enter into the Second Common 


 





Stock Purchase Agreement unless the Company has delivered the Second Tranche
Notice prior to the Second Tranche Expiration Date. The Second Common Stock
Purchase Agreement may not be entered into until the aggregate Available Amount
under this Agreement is fully used to buy Purchase Shares hereunder. Upon
delivery of the Second Tranche Notice to the Buyer prior to the Second Tranche
Expiration Date, the Buyer and the Company shall be obligated to enter into the
Second Common Stock Purchase Agreement no later than the date that is 10 Trading
Days after the Second Tranche Expiration Date. If the Buyer and the Company have
not entered into the Second Common Stock Purchase Agreement by the date that is
10 Trading Days after the Second Tranche Expiration Date, the Buyer shall not be
obligated to enter into such additional Common Stock Purchase Agreement. The
terms and conditions of the Second Common Stock Purchase Agreement shall be in
form and substance identical in all respects to this Agreement, provided,
however, that for purposes of the Second Common Stock Purchase Agreement, this
Section 1(h) shall be omitted.


         2. BUYER'S REPRESENTATIONS AND WARRANTIES.

         The Buyer represents and warrants to the Company that as of the date
hereof and as of the Commencement Date:

         (a) Investment Purpose. The Buyer is entering into this Agreement and
acquiring the Commitment Shares, (as defined in Section 4(f) hereof) (this
Agreement and the Commitment Shares are collectively referred to herein as the
"Securities"), for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof; provided however, by making the representations herein, the Buyer does
not agree to hold any of the Securities for any minimum or other specific term.

         (b) Accredited Investor Status. The Buyer is an "accredited investor"
as that term is defined in Rule 501(a)(3) of Regulation D.

         (c) Reliance on Exemptions. The Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.

         (d) Information. The Buyer has been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities that have been reasonably
requested by the Buyer, including, without limitation, the SEC Documents (as
defined in Section 3(f) hereof). The Buyer understands that its investment in
the Securities involves a high degree of risk. The Buyer (i) is able to bear the
economic risk of an investment in the Securities including a total loss, (ii)
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the proposed investment in the
Securities and (iii) has had an opportunity to ask questions of and receive
answers from the officers of the Company concerning the financial condition and
business of the Company and others matters related to an investment in the
Securities. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its representatives shall modify, amend or affect the
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. The Buyer has sought such accounting, legal and tax advice
as it


 





has considered necessary to make an informed investment decision with respect to
its acquisition of the Securities.

         (e) No Governmental Review. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

         (f) Transfer or Resale. The Buyer understands that except as provided
in the Registration Rights Agreement (as defined in Section 4(a) hereof): (i)
the Securities have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder or (B) an exemption
exists permitting such Securities to be sold, assigned or transferred without
such registration; (ii) any sale of the Securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of the Securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.

         (g) Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable against the Buyer in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.

         (h) Residency. The Buyer is a resident of the State of Illinois.

         (i) No Prior Short Selling. The Buyer represents and warrants to the
Company that at no time prior to the date of this Agreement has any of the
Buyer, its agents, representatives or affiliates engaged in or effected, in any
manner whatsoever, directly or indirectly, any (i) "short sale" (as such term is
defined in Rule 3b-3 of the 1934 Act) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock.

         3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to the Buyer that as of the date
hereof and as of the Commencement Date:

         (a) Organization and Qualification. The Company and its "Subsidiaries"
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns 50% or more of the voting stock or capital stock or
other similar equity interests) are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power and authority to own their
properties and to carry on their business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in 


 





every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing could not
reasonably be expected to have a Material Adverse Effect. As used in this
Agreement, "Material Adverse Effect" means any material adverse effect on any
of: (i) the business, properties, assets, operations, results of operations or
financial condition of the Company and its Subsidiaries, if any, taken as a
whole, or (ii) the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined in Section 3(b) hereof).
The Company has no Subsidiaries except as set forth on Schedule 3(a).

         (b) Authorization; Enforcement; Validity. Except as disclosed in
Schedule 3(b): (i) the Company has the requisite corporate power and authority
to enter into and perform its obligations under this Agreement, the Registration
Rights Agreement and each of the other agreements entered into by the parties on
the Commencement Date and attached hereto as exhibits to this Agreement
(collectively, the "Transaction Documents"), and to issue the Securities in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including without limitation, the
issuance of the Commitment Shares and the reservation for issuance and the
issuance of the Purchase Shares issuable under this Agreement, have been duly
authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
shareholders, (iii) this Agreement has been, and each other Transaction Document
shall be on the Commencement Date, duly executed and delivered by the Company
and (iv) this Agreement constitutes, and each other Transaction Document upon
its execution on behalf of the Company, shall constitute, the valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies. The Board of Directors of the Company has
approved the resolutions (the "Signing Resolutions") substantially in the form
as set forth as Exhibit C-1 attached hereto to authorize this Agreement and the
transactions contemplated hereby. The Signing Resolutions are valid, in full
forth and effect and have not been modified or supplemented in any respect other
than by the resolutions set forth in Exhibit C-2 attached hereto regarding the
registration statement referred to in Section 4 hereof. The Company has
delivered to the Buyer a true and correct copy of a unanimous written consent
adopting the Signing Resolutions executed by all of the members of the Board of
Directors of the Company. Except as disclosed in Schedule 3(b), no other
approvals or consents of the Company's Board of Directors and/or shareholders is
necessary under applicable laws and the Company's Certificate of Incorporation
and/or Bylaws to authorize the execution and delivery of this Agreement or any
of the transactions contemplated hereby, including, but not limited to, the
issuance of the Commitment Shares and the issuance of the Purchase Shares.

         (c) Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of the following: (i) 25,000,000 shares of Common Stock,
of which as of the date hereof, 10,169,162 shares are issued and outstanding,
3,800,000 shares are reserved for issuance pursuant to the Company's stock
option plans of which only approximately 1,283,200 shares remain available for
future grants and 1,687,913 shares are issuable and reserved for issuance
pursuant to securities (other than stock options issued pursuant to the
Company's stock option plans) exercisable or exchangeable for, or convertible
into, shares of Common Stock, and 35,000,000 shares are issuable and reserved
for issuance pursuant to other securities or convertible into shares of Common
Stock, subject to the prior approval of the stockholders of the Company; and
(ii) 2,000,000 shares of Preferred Stock, $0.01 par value, of which 1,250,000


 




shares are designated as Series B Cumulative Convertible Redeemable Preferred
Stock with a $15.00 per share liquidation preference, of which as of the date
hereof 496,445 shares are issued and outstanding, 220,000 shares are designated
as Series C Convertible Preferred Stock with a $0.01 per share liquidation
preference, of which as of the date hereof 220,000 shares are issued and
outstanding, and 33,500 shares are designated as Series D Convertible Preferred
Stock with a $0.01 per share liquidation preference, of which as of the date
hereof 33,500 shares are issued and outstanding. All of such outstanding shares
have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(c), (i) no shares of the
Company's capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company, (ii)
there are no outstanding debt securities, (iii) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (iv) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the
sale of any of their securities under the 1933 Act (except the Registration
Rights Agreement), (v) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities as described in this
Agreement and (vii) the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement. The
Company has furnished to the Buyer true and correct copies of the Company's
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "Certificate of Incorporation"), and the Company's By-laws, as amended and
as in effect on the date hereof (the "By-laws"), and summaries of the terms of
all securities convertible into or exercisable for Common Stock, if any, and
copies of any documents containing the material rights of the holders thereof in
respect thereto.

         (d) Issuance of Securities. The Commitment Shares have been duly
authorized and, upon issuance in accordance with the terms hereof, the
Commitment Shares shall be (i) validly issued, fully paid and non-assessable and
(ii) free from all taxes, liens and charges with respect to the issue thereof.
10,000,000 shares of Common Stock have been duly authorized and reserved for
issuance upon purchase under this Agreement, subject to the prior approval of
the stockholders of the Company. 700,000 shares of Common Stock (subject to
equitable adjustment for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction) have been duly authorized
and reserved for issuance as Additional Commitment Shares in accordance with
Section 4(f) this Agreement. Upon issuance and payment therefor in accordance
with the terms and conditions of this Agreement, the Purchase Shares shall be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock.

         (e) No Conflicts. Except as disclosed in Schedule 3(e), the execution,
delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the reservation for issuance and issuance of the
Purchase Shares) will not (i) result in a violation of 


 





the Certificate of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock of the Company or the
By-laws or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market applicable to
the Company or any of its Subsidiaries) or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected, except in the case of
conflicts, defaults and violations under clause (ii), which could not reasonably
be expected to result in a Material Adverse Effect. Except as disclosed in
Schedule 3(e), neither the Company nor its Subsidiaries is in violation of any
term of or in default under its Certificate of Incorporation, any Certificate of
Designation, Preferences and Rights of any outstanding series of preferred stock
of the Company or By-laws or their organizational charter or by-laws,
respectively. Except as disclosed in Schedule 3(e), neither the Company nor any
of its Subsidiaries is in violation of any term of or is in default under any
material contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable to the
Company or its Subsidiaries, except for possible conflicts, defaults,
terminations or amendments which could not reasonably be expected to have a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law, ordinance,
regulation of any governmental entity, except for possible violations, the
sanctions for which either individually or in the aggregate could not reasonably
be expected to have a Material Adverse Effect. Except as specifically
contemplated by this Agreement and as required under the 1933 Act or applicable
state securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under or contemplated by
the Transaction Documents in accordance with the terms hereof or thereof. Except
as disclosed in Schedule 3(e), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence shall be obtained or effected on or prior to the Commencement Date.
Except as listed in Schedule 3(e), since March 31, 2002 the Company has not
received nor delivered any notices or correspondence from or to the Principal
Market. The Principal Market has not commenced any delisting proceedings against
the Company.

         (f) SEC Documents; Financial Statements. Except as disclosed in
Schedule 3(f), since January 1, 2002, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC Documents"). As of their respective dates (except as
they have been correctly amended), the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC (except as they may have
been properly amended), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates (except as they
have been properly amended), the financial statements of the Company included in
the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting 


 





principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as listed in Schedule 3(f), the Company has received no
notices or correspondence from the SEC since January 1, 2002. The SEC has not
commenced any enforcement proceedings against the Company or any of its
subsidiaries.

         (g) Absence of Certain Changes. Except as disclosed in Schedule 3(g),
since March 31, 2003, there has been no material adverse change in the business,
properties, operations, financial condition or results of operations of the
Company or its Subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.

         (h) Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company,
the Common Stock or any of the Company's Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors in their capacities as such,
which could reasonably be expected to have a Material Adverse Effect. A
description of each action, suit, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or
body which, as of the date of this Agreement, is pending or threatened in
writing against or affecting the Company, the Common Stock or any of the
Company's Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such, is set forth in Schedule
3(h).

         (i) Acknowledgment Regarding Buyer's Status. The Company acknowledges
and agrees that the Buyer is acting solely in the capacity of arm's length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that the Buyer
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by the Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to the Buyer's
purchase of the Securities. The Company further represents to the Buyer that the
Company's decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives and
advisors.

         (j) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

          (k) Dilutive Effect. The Company understands and acknowledges that the
number of Purchase Shares purchasable under this Agreement is not fixed and will
vary depending on the Purchase Price at which such shares are purchased. The
Company further acknowledges that its 


 





obligation to issue Purchase Shares under this Agreement in accordance with the
terms and conditions hereof is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other
shareholders of the Company.

         (l) Intellectual Property Rights. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(l), none of the
Company's material trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or, by the terms and
conditions thereof, could expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of any material trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and, except as set forth on
Schedule 3(l), there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the Company or
its Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service mark
registrations, trade secret or other infringement, which could reasonably be
expected to have a Material Adverse Effect.

         (m) Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where, in each of the
three foregoing clauses, the failure to so comply could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

         (n) Title. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in Schedule 3(n) or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.

         (o) Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance


 





coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not materially and adversely affect the condition, financial or otherwise,
or the earnings, business or operations of the Company and its Subsidiaries,
taken as a whole.

         (p) Regulatory Permits. The Company and its Subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

         (q) Tax Status. The Company and each of its Subsidiaries has made or
filed all federal and state income and all other material tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

         (r) Transactions With Affiliates. Except as set forth on Schedule 3(r)
and other than the grant or exercise of stock options disclosed on Schedule
3(c), none of the officers, directors, or employees of the Company is presently
a party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has an interest or is an
officer, director, trustee or partner, which transaction would be required to be
disclosed in a proxy statement on Schedule 14A pertaining to the solicitation by
the board of directors of proxies for the election of directors of the Company
at an annual meeting of stockholders called for such purpose.

         (s) Application of Takeover Protections. The Company and its board of
directors have taken or will take prior to the Commencement Date all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Certificate of
Incorporation or the laws of the state of its incorporation which is or could
become applicable to the Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyer's ownership of the Securities.

         (t) Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any 


 





provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made
any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.

         4. COVENANTS.

         (a) Filing of Registration Statement. Within ten (10) Trading Days from
the date on which its stockholders approve the matters described in the proxy
statement referred to in the Disclosure Schedule file a new registration
statement covering the sale of the Commitment Shares and at least 10,000,000
Purchase Shares in accordance with the terms of the Registration Rights
Agreement between the Company and the Buyer, dated as of the date hereof (the
"Registration Rights Agreement").

         (b) Blue Sky. The Company shall take such action, if any, as is
reasonably necessary in order to obtain an exemption for or to qualify (i) the
initial sale of the Commitment Shares and any Purchase Shares to the Buyer under
this Agreement and (ii) any subsequent resale of the Commitment Shares and any
Purchase Shares by the Buyer, in each case, under applicable securities or "Blue
Sky" laws of the states of the United States in such states as is reasonably
requested by the Buyer from time to time, and shall provide evidence of any such
action so taken to the Buyer.

         (c) No Variable Priced Financing. Other than pursuant to this
Agreement, the Company agrees that beginning on the date of this Agreement and
ending on the date of termination of this Agreement (as provided in Section
11(k) hereof), neither the Company nor any of its Subsidiaries shall, without
the prior written consent of the Buyer, contract for any equity financing
(including any debt financing with an equity component) or issue any equity
securities of the Company or any Subsidiary or securities convertible or
exchangeable into or for equity securities of the Company or any Subsidiary
(including debt securities with an equity component) which, in any case (i) are
convertible into or exchangeable for an indeterminate number of shares of common
stock, (ii) are convertible into or exchangeable for Common Stock at a price
which varies with the market price of the Common Stock, (iii) directly or
indirectly provide for any "re-set" or adjustment of the purchase price,
conversion rate or exercise price after the issuance of the security, or (iv)
contain any "make-whole" provision based upon, directly or indirectly, the
market price of the Common Stock after the issuance of the security, in each
case, other than reasonable and customary anti-dilution adjustments for issuance
of shares of Common Stock at a price which is below the market price of the
Common Stock.

         (d) Listing. The Company shall promptly secure the listing of all of
the Purchase Shares and Commitment Shares upon each national securities exchange
and automated quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and shall maintain, so long
as any other shares of Common Stock shall be so listed, such listing of all such
securities from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock's authorization for
quotation on the Principal Market. Neither the Company nor any of its
Subsidiaries shall take any action that would be reasonably expected to result
in the delisting or suspension of the Common Stock on the Principal Market. The
Company shall promptly, and in no event later than the following Trading Day,
provide to the Buyer copies of any notices it receives from the Principal Market
regarding the continued eligibility of the Common Stock for listing on such
automated quotation system or securities exchange. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section.



 




         (e) Limitation on Short Sales and Hedging Transactions. The Buyer
agrees that beginning on the date of this Agreement and ending on the date of
termination of this Agreement as provided in Section 11(k), the Buyer and its
agents, representatives and affiliates shall not in any manner whatsoever enter
into or effect, directly or indirectly, any (i) "short sale" (as such term is
defined in Rule 3b-3 of the 1934 Act) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock.

         (f) Issuance of Commitment Shares; Limitation on Sales of Commitment
Shares. Immediately upon the execution of this Agreement, the Company shall
issue to the Buyer 500,000 shares of Common Stock (the "Initial Commitment
Shares"). Immediately at such time as the Available Amount is $8,671,000, the
Company shall issue the Buyer 400,000 shares of Common Stock (the "First
Additional Commitment Shares") and immediately at such time as the Available
Amount is $4,329,000, the Company shall issue the Buyer 300,000 shares of Common
Stock (the "Second Additional Commitment Shares" and together with the First
Additional Commitment Shares, the "Additional Commitment Shares."). The Initial
Commitment Shares and Additional Commitment Shares are collectively referred to
herein as the "Commitment Shares." The Additional Commitment Shares shall be
equitably adjusted for any reorganization, recapitalization, non-cash dividend,
stock split or other similar transaction. The Initial Commitment Shares shall be
issued in certificated form and (subject to Section 5 hereof) shall bear the
following restrictive legend:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
         SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
         MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
         ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
         LAWS, OR AN OPINION OF BUYER'S COUNSEL, IN A CUSTOMARY FORM, THAT
         REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
         SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

The Buyer agrees that the Buyer shall not transfer or sell the Commitment Shares
until the earlier of 800 Trading Days (40 Monthly Periods) from the date hereof
or the date on which this Agreement has been terminated, provided, however, that
such restrictions shall not apply: (i) in connection with any transfers to or
among affiliates (as defined in the 1934 Act), (ii) in connection with any
pledge in connection with a bona fide loan or margin account, (iii) in the event
that the Commencement does not occur on or before October 31, 2003, due to the
failure of the Company to satisfy the conditions set forth in Section 7 or (iv)
if an Event of Default has occurred, or any event which, after notice and/or
lapse of time, would become an Event of Default, including any failure by the
Company to timely issue Purchase Shares under this Agreement. Notwithstanding
the forgoing, the Buyer may transfer Commitment Shares to a third party in order
to settle a sale made by the Buyer where the Buyer reasonably expects the
Company to deliver Purchase Shares to the Buyer under this Agreement so long as
the Buyer maintains ownership of the same overall number of shares of Common
Stock by "replacing" the Commitment Shares so transferred with Purchase Shares
when the Purchase Shares are actually issued by the Company to the Buyer.






 




         (g) Due Diligence. The Buyer shall have the right, from time to time as
the Buyer may reasonably deem appropriate, to perform reasonable due diligence
on the Company during normal business hours and upon not less than 24 hours'
prior notice. The Company and its officers and employees shall provide
information and reasonably cooperate with the Buyer in connection with any
reasonable request by the Buyer related to the Buyer's due diligence of the
Company, including, but not limited to, any such request made by the Buyer in
connection with (i) the filing of the registration statement described in
Section 4(a) hereof and (ii) the Commencement. Each party hereto agrees not to
disclose any Confidential Information of the other party to any third party and
shall not use the Confidential Information for any purpose other than in
connection with, or in furtherance of, the transactions contemplated hereby.
Each party hereto acknowledges that the Confidential Information shall remain
the property of the disclosing party and agrees that it shall take all
reasonable measures to protect the secrecy of any Confidential Information
disclosed by the other party.

         (h) Expense Reimbursement. As reimbursement of Buyer's expenses in
connection with entering into the transactions contemplated hereby, the Company
agrees to pay to the Buyer $15,000 on or before the earlier to occur of (1) the
Commencement Date, or (2) within 5 Trading Days of the date that this Agreement
is terminated if the Commencement does not occur.

         5. TRANSFER AGENT INSTRUCTIONS.

         Immediately upon the execution of this Agreement, the Company shall
deliver to the Transfer Agent a letter in the form as set forth as Exhibit E
attached hereto with respect to the issuance of the Initial Commitment Shares.
Immediately at such time as the Available Amount is $8,671,000, the Company
shall deliver to the Transfer Agent a letter in the form as set forth as Exhibit
F attached hereto with respect to the issuance of the First Additional
Commitment Shares. Immediately at such time as the Available Amount is
$4,329,000, the Company shall deliver to the Transfer Agent a letter in the form
as set forth as Exhibit G attached hereto with respect to the issuance of the
Second Additional Commitment Shares. On the Commencement Date, the Company shall
cause any restrictive legend on the Initial Commitment Shares to be removed and
all of the Purchase Shares and Additional Commitment Shares to be issued under
this Agreement shall be issued without any restrictive legend. The Company shall
issue irrevocable instructions to the Transfer Agent, and any subsequent
transfer agent, to issue Purchase Shares in the name of the Buyer for the
Purchase Shares (the "Irrevocable Transfer Agent Instructions"). The Company
warrants to the Buyer that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5, will be given by the Company
to the Transfer Agent with respect to the Purchase Shares and that the
Commitment Shares and the Purchase Shares shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this
Agreement and the Registration Rights Agreement subject to the provisions of
Section 4(f) in the case of the Commitment Shares.

         6. CONDITIONS TO THE COMPANY'S OBLIGATION TO COMMENCE
            SALES OF SHARES OF COMMON STOCK.

         The obligation of the Company hereunder to commence sales of the
Purchase Shares is subject to the satisfaction of each of the following
conditions on or before the Commencement Date (the date that sales begin) and
once such conditions have been initially satisfied, there shall not be any
ongoing obligation to satisfy such conditions after the Commencement has
occurred; provided that these conditions are for the Company's sole benefit and
may be waived by the







 




Company at any time in its sole discretion by providing the Buyer with prior
written notice thereof:

         (a) The Buyer shall have executed each of the Transaction Documents and
delivered the same to the Company.

         (b) Subject to the Company's compliance with Section 4(a), a
registration statement covering the sale of all of the Commitment Shares and at
least 10,000,000 Purchase Shares shall have been declared effective under the
1933 Act by the SEC and no stop order with respect to the Registration Statement
shall be pending or threatened by the SEC.

         (c) The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Commencement Date.


         7. CONDITIONS TO THE BUYER'S OBLIGATION TO COMMENCE PURCHASES OF SHARES
            OF COMMON STOCK.

         The obligation of the Buyer to commence purchases of Purchase Shares
under this Agreement is subject to the satisfaction of each of the following
conditions on or before the Commencement Date (the date that sales begin) and
once such conditions have been initially satisfied, there shall not be any
ongoing obligation to satisfy such conditions after the Commencement has
occurred; provided that these conditions are for the Buyer's sole benefit and
may be waived by the Buyer at any time in its sole discretion by providing the
Company with prior written notice thereof:

         (a) The Company shall have executed each of the Transaction Documents
and delivered the same to the Buyer.

         (b) The Company shall have issued to the Buyer the Initial Commitment
Shares and shall have removed the restrictive transfer legend from the
certificate representing the Initial Commitment Shares.

         (c) The Common Stock shall be authorized for quotation on the Principal
Market, trading in the Common Stock shall not have been within the last 365 days
suspended by the SEC or the Principal Market and the Purchase Shares and the
Commitment Shares shall be approved for listing upon the Principal Market.

         (d) The Buyer shall have received the opinions of the Company's legal
counsel dated as of the Commencement Date substantially in the form of Exhibit A
attached hereto.

         (e) The representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and 







 




complied with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Commencement Date, including, but not limited to such
covenants set forth in Section 4(h) hereof. The Buyer shall have received a
certificate, executed by the CEO, President or CFO of the Company, dated as of
the Commencement Date, to the foregoing effect in the form attached hereto as

Exhibit B.

         (f) The Board of Directors of the Company shall have adopted
resolutions in the form attached hereto as Exhibit C which shall be in full
force and effect without any amendment or supplement thereto as of the
Commencement Date.

         (g) As of the Commencement Date, the Company shall have reserved out of
its authorized and unissued Common Stock, (A) solely for the purpose of
effecting purchases of Purchase Shares hereunder, at least 10,000,000 shares of
Common Stock and (B) as Additional Commitment Shares in accordance with Section
4(f) hereof, 700,000 shares of Common Stock.

         (h) The Irrevocable Transfer Agent Instructions, in form acceptable to
the Buyer shall have been delivered to and acknowledged in writing by the
Company and the Company's Transfer Agent.

         (i) The Company shall have delivered to the Buyer a certificate
evidencing the incorporation and good standing of the Company in the State of
Delaware issued by the Secretary of State of the State of Delaware as of a date
within ten (10) Trading Days of the Commencement Date.

         (j) The Company shall have delivered to the Buyer a certified copy of
the Certificate of Incorporation as certified by the Secretary of State of the
State of Delaware within ten (10) Trading Days of the Commencement Date.

         (k) The Company shall have delivered to the Buyer a secretary's
certificate executed by the Secretary of the Company, dated as of the
Commencement Date, in the form attached hereto as Exhibit D.

         (l) A registration statement covering the sale of all of the Commitment
Shares and at least 10,000,000 Purchase Shares shall have been declared
effective under the 1933 Act by the SEC and no stop order with respect to the
registration statement shall be pending or threatened by the SEC. The Company
shall have prepared and delivered to the Buyer a final form of prospectus to be
used by the Buyer in connection with any sales of any Commitment Shares or any
Purchase Shares. The Company shall have made all filings under all applicable
federal and state securities laws necessary to consummate the issuance of the
Commitment Shares and the Purchase Shares pursuant to this Agreement in
compliance with such laws.

         (m) No Event of Default has occurred, or any event which, after notice
and/or lapse of time, would become an Event of Default has occurred.

         (n) On or prior to the Commencement Date, the Company shall take all
necessary action, if any, and such actions as reasonably requested by the Buyer,
in order to render inapplicable any control share acquisition, business
combination, shareholder rights plan or poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyer as a result of the transactions
contemplated by this







 




Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyer's ownership of the Securities.

         (o) The Company shall have provided the Buyer with the information
requested by the Buyer in connection with its due diligence requests made prior
to, or in connection with, the Commencement, in accordance with the terms of
Section 4(g) hereof.

         8. INDEMNIFICATION.

         In consideration of the Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities hereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless the Buyer and all of
its affiliates, shareholders, officers, directors, employees and direct or
indirect investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, other than with respect to Indemnified
Liabilities which directly and primarily result from the gross negligence or
willful misconduct of the Indemnitee. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.

         9.       EVENTS OF DEFAULT.

         An "Event of Default" shall be deemed to have occurred at any time as
any of the following events occurs:

         (a) while any registration statement is required to be maintained
effective pursuant to the terms of the Registration Rights Agreement, the
effectiveness of such registration statement lapses for any reason (including,
without limitation, the issuance of a stop order) or is unavailable to the Buyer
for sale of all of the Registrable Securities (as defined in the Registration
Rights Agreement) in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period of ten (10)
consecutive Trading Days or for more than an aggregate of thirty (30) Trading
Days in any 365-day period;

         (b) the suspension from trading or failure of the Common Stock to be
listed on the Principal Market for a period of three (3) consecutive Trading
Days;







 





         (c) the delisting of the Company's Common Stock from the Principal
Market, provided, however, that the Common Stock is not immediately thereafter
trading on the New York Stock Exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market or the Nasdaq Over-the-Counter Bulletin Board;

         (d) the failure for any reason by the Transfer Agent to issue Purchase
Shares to the Buyer within five (5) Trading Days after the applicable Purchase
Date which the Buyer is entitled to receive;

         (e) if at any time after the Commencement Date, the "Exchange Cap" is
reached (the "Exchange Cap" shall be deemed to be reached at such time if, upon
submission of a Purchase Notice under this Agreement, the issuance of such
shares of Common Stock would exceed that number of shares of Common Stock which
the Company may issue under this Agreement without breaching the Company's
obligations under the rules or regulations of the Principal Market);

         (f) the Company breaches any representation, warranty, covenant or
other term or condition under any Transaction Document if such breach could have
a Material Adverse Effect and except, in the case of a breach of a covenant
which is reasonably curable, only if such breach continues for a period of at
least ten (10) Trading Days;

         (g) any payment default under any contract whatsoever or any
acceleration prior to maturity of any mortgage, indenture, contract or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or for money
borrowed the repayment of which is guaranteed by the Company, whether such
indebtedness or guarantee now exists or shall be created hereafter, which, with
respect to any such payment default or acceleration prior to maturity, is in
excess of $1,000,000;

         (h) if any Person commences a proceeding against the Company pursuant
to or within the meaning of any Bankruptcy Law;

         (i) if the Company pursuant to or within the meaning of any Bankruptcy
Law; (A) commences a voluntary case, (B) consents to the entry of an order for
relief against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors, (E) becomes insolvent, or
(F) is generally unable to pay its debts as the same become due; or

         (j) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (A) is for relief against the Company in an involuntary
case, (B) appoints a Custodian of the Company or for all or substantially all of
its property, or (C) orders the liquidation of the Company or any Subsidiary.

In addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof, so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, or so long as the Purchase Price is below the
Purchase Price Floor, the Buyer shall not be obligated to purchase any shares of
Common Stock under this Agreement. If pursuant to or within the meaning of any
Bankruptcy Law, the Company commences a voluntary case, or any Person commences
a proceeding against the Company, a Custodian is appointed for the Company or
for all or substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors (any of which would be an Event of
Default as described in Sections 9(h), 9(i) and 9(j) hereof) this Agreement
shall 







 




automatically terminate without any liability or payment to the Company without
further action or notice by any Person. No such termination of this Agreement
under Section 11(k)(i) shall affect the Company's or the Buyer's obligations
under this Agreement with respect to pending purchases and the Company and the
Buyer shall complete their respective obligations with respect to any pending
purchases under this Agreement.

         10.      CERTAIN DEFINED TERMS.

         For purposes of this Agreement, the following terms shall have the
following meanings:

         (a) "1933 Act" means the Securities Act of 1933, as amended.

         (b) "Available Amount" means initially Thirteen Million Dollars
($13,000,000) in the aggregate which amount shall be reduced by the Purchase
Amount each time the Buyer purchases shares of Common Stock pursuant to Section
1 hereof.

         (c) "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal
or state law for the relief of debtors.

         (d) "Closing Sale Price" means, for any security as of any date, the
last closing trade price for such security on the Principal Market as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing trade price of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg.

         (e) "Confidential Information" means any information disclosed by
either party to the other party, either directly or indirectly, in writing,
orally or by inspection of tangible objects (including, without limitation,
documents, prototypes, samples, plant and equipment), which is designated as
"Confidential," "Proprietary" or some similar designation. Information
communicated orally shall be considered Confidential Information if such
information is confirmed in writing as being Confidential Information within ten
(10) business days after the initial disclosure. Confidential Information may
also include information disclosed to a disclosing party by third parties.
Confidential Information shall not, however, include any information which (i)
was publicly known and made generally available in the public domain prior to
the time of disclosure by the disclosing party; (ii) becomes publicly known and
made generally available after disclosure by the disclosing party to the
receiving party through no action or inaction of the receiving party; (iii) is
already in the possession of the receiving party at the time of disclosure by
the disclosing party as shown by the receiving party's files and records
immediately prior to the time of disclosure; (iv) is obtained by the receiving
party from a third party without a breach of such third party's obligations of
confidentiality; (v) is independently developed by the receiving party without
use of or reference to the disclosing party's Confidential Information, as shown
by documents and other competent evidence in the receiving party's possession;
or (vi) is required by law to be disclosed by the receiving party, provided that
the receiving party gives the disclosing party prompt written notice of such
requirement prior to such disclosure and assistance in obtaining an order
protecting the information from public disclosure.

         (f) "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.







 





         (g) "Floor Price" means initially $1.00, which amount may be increased
or decreased from time to time as provided below, except that in no case shall
the Floor Price be less than $0.25. The Company may at any time give written
notice (a "Floor Price Change Notice") to the Buyer increasing or decreasing the
Floor Price. The Floor Price Change Notice shall be effective only for purchases
that have a Purchase Date later than one (1) Trading Day after receipt of the
Floor Price Change Notice by the Buyer. Any purchase by the Buyer that has a
Purchase Date on or prior to the first Trading Day after receipt of a Floor
Price Change Notice from the Company must be honored by the Company as otherwise
provided herein. The Floor Price shall be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction.

         (h) "Maturity Date" means the date that is 800 Trading Days (40 Monthly
Periods) from the Commencement Date.

         (i) "Monthly Period" means each successive 20 Trading Day period
commencing with the Commencement Date.

         (j) "Person" means an individual or entity including any limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

         (k) "Principal Market" means the American Stock Exchange; provided
however, that in the event the Company's Common Stock is ever listed or traded
on the Nasdaq National Market, the Nasdaq SmallCap Market, the Nasdaq OTC
Bulletin Board, orthe New York Stock Exchange, than the "Principal Market" shall
mean such other market or exchange on which the Company's Common Stock is then
listed or traded.

         (l) "Purchase Amount" means the portion of the Available Amount to be
purchased by the Buyer pursuant to Section 1 hereof.

         (m) "Purchase Date" means the actual date that the Buyer is to buy
Purchase Shares pursuant to Section 1 hereof.

         (n) "Purchase Price" means, as of any date of determination the lower
of the (A) the lowest Sale Price of the Common Stock on such date of
determination and (B) the arithmetic average of the three (3) lowest Closing
Sale Prices for the Common Stock during the twelve (12) consecutive Trading Days
ending on the Trading Day immediately preceding such date of determination (to
be appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction).

         (o) "Sale Price" means, for any security as of any date, any trade
price for such security on the Principal Market as reported by Bloomberg, or, if
the Principal Market is not the principal securities exchange or trading market
for such security, the trade price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported
by Bloomberg.

         (p) "SEC" means the United States Securities and Exchange Commission.

         (q) "Transfer Agent" means the transfer agent of the Company as set
forth in Section 11(f) hereof or such other person who is then serving as the
transfer agent for the Company in respect of the Common Stock.








 





         (r) "Trading Day" means any day on which the Principal Market is open
for customary trading.


         11. MISCELLANEOUS.

         (a) Governing Law; Jurisdiction; Jury Trial. The corporate laws of the
State of Delaware shall govern all issues concerning the relative rights of the
Company and its shareholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the other
Transaction Documents shall be governed by the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or under the other Transaction
Documents or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

         (b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

         (c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

         (d) Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

         (e) Entire Agreement; Amendments. With the exception of the Mutual
Nondisclosure Agreement between the parties dated as of April 18, 2003, this
Agreement supersedes all other prior oral or written agreements between the
Buyer, the Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein contain the 







 




entire understanding of the parties with respect to the matters covered herein
and therein and, except as specifically set forth herein or therein, neither the
Company nor the Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
Buyer, and no provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement is sought.

         (f) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Trading Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

         If to the Company:
                  Frontline Communications Corporation
                  One Blue Hill Plaza, 7th Floor
                  Pearl River, NY 10965
                  Telephone:        845-623-8553
                  Facsimile:        845-623-8669
                  Attention:        President

         If to the Buyer:
                  Fusion Capital Fund II, LLC
                  222 Merchandise Mart Plaza, Suite 9-112
                  Chicago, IL 60654
                  Telephone:        312-644-6644
                  Facsimile:        312-644-6244
                  Attention:        Steven G. Martin

         If to the Transfer Agent:
                  American Stock Transfer and Trust Co.
                  40 Wall Street
                  New York, NY  10005
                  Telephone:        718-921-8261
                  Facsimile:        718-921-8337
                  Attention:        Donna Ansbro

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Trading Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, and recipient facsimile number or (C) provided by a nationally recognized
overnight delivery service, shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.

         (g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
The Company shall not assign 







 




this Agreement or any rights or obligations hereunder without the prior written
consent of the Buyer, including by merger or consolidation. The Buyer may not
assign its rights or obligations under this Agreement.

         (h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

         (i) Publicity. The Buyer shall have the right to approve before
issuance any press releases or any other public disclosure (including any
filings with the SEC) with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Buyer, to make any press release or other public disclosure
(including any filings with the SEC) with respect to such transactions as is
required by applicable law and regulations (although the Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).

         (j) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

         (k) Termination. This Agreement may be terminated only as follows:

                  (i) By the Buyer any time an Event of Default exists without
         any liability or payment to the Company. However, if pursuant to or
         within the meaning of any Bankruptcy Law, the Company commences a
         voluntary case, or any Person commences a proceeding against the
         Company, a Custodian is appointed for the Company or for all or
         substantially all of its property, or the Company makes a general
         assignment for the benefit of its creditors, (any of which would be an
         Event of Default as described in Sections 9(h), 9(i) and 9(j) hereof)
         this Agreement shall automatically terminate without any liability or
         payment to the Company without further action or notice by any Person.
         No such termination of this Agreement under this Section 11(k)(i) shall
         affect the Company's or the Buyer's obligations under this Agreement
         with respect to pending purchases and the Company and the Buyer shall
         complete their respective obligations with respect to any pending
         purchases under this Agreement.

                  (ii) In the event that the Commencement shall not have
         occurred, the Company shall have the option to terminate this Agreement
         for any reason or for no reason without liability of any party to any
         other party.

                  (iii) In the event that the Commencement shall not have
         occurred on or before November 30, 2003, due to the failure to satisfy
         the conditions set forth in Sections 6 and 7 above with respect to the
         Commencement (and the nonbreaching party's failure to waive such
         unsatisfied condition(s)), the nonbreaching party shall have the option
         to terminate this Agreement at the close of business on such date or
         thereafter without liability of any party to any other party.

                  (iv) If by the Maturity Date (including any extension thereof
         by the Company pursuant to Section 10(g) hereof), for any reason or for
         no reason the full Available







 




         Amount under this Agreement has not been purchased as provided for in
         Section 1 of this Agreement, by the Buyer without any liability or
         payment to the Company.

                  (v) At any time after the Commencement Date, the Company shall
         have the option to terminate this Agreement for any reason or for no
         reason by delivering notice (a "Company Termination Notice") to the
         Buyer electing to terminate this Agreement without any liability or
         payment to the Buyer. The Company Termination Notice shall not be
         effective until one (1) Trading Day after it has been received by the
         Buyer.

                  (vi) This Agreement shall automatically terminate on the date
         that the Company sells and the Buyer purchases the full Available
         Amount as provided herein, without any action or notice on the part of
         any party.

Except as set forth in Sections 11(k)(i) (in respect of an Event of Default
under Sections 9(h), 9(i) and 9(j)) and 11(k)(vi), any termination of this
Agreement pursuant to this Section 11(k) shall be effected by written notice
from the Company to the Buyer, or the Buyer to the Company, as the case may be,
setting forth the basis for the termination hereof. The representations and
warranties of the Company and the Buyer contained in Sections 2 and 3 hereof,
the expense reimbursement provisions set forth in Section 4(h) hereof, the
indemnification provisions set forth in Section 8 hereof and the agreements and
covenants set forth in Section 11, shall survive the Commencement and any
termination of this Agreement. No termination of this Agreement shall affect the
Company's or the Buyer's obligations under this Agreement with respect to
pending purchases and the Company and the Buyer shall complete their respective
obligations with respect to any pending purchases under this Agreement.

         (l) No Financial Advisor, Placement Agent, Broker or Finder. The
Company represents and warrants to the Buyer that it has not engaged any
financial advisor, placement agent, broker or finder in connection with the
transactions contemplated hereby. The Buyer represents and warrants to the
Company that it has not engaged any financial advisor, placement agent, broker
or finder in connection with the transactions contemplated hereby. The Company
shall be responsible for the payment of any fees or commissions, if any, of any
financial advisor, placement agent, broker or finder relating to or arising out
of the transactions contemplated hereby. The Company shall pay, and hold the
Buyer harmless against, any liability, loss or expense (including, without
limitation, attorneys' fees and out of pocket expenses) arising in connection
with any such claim.

         (m) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

         (n) Remedies, Other Obligations, Breaches and Injunctive Relief. The
Buyer's remedies provided in this Agreement shall be cumulative and in addition
to all other remedies available to the Buyer under this Agreement, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), no remedy of the Buyer contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit the Buyer's right to pursue actual damages for any failure by the
Company to comply with the terms of this Agreement. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Buyer and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the Buyer shall be entitled, in addition to all other available








 




remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

         (o) Changes to the Terms of this Agreement. This Agreement and any
provision hereof may only be amended by an instrument in writing signed by the
Company and the Buyer. The term "Agreement" and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented.

         (p) Enforcement Costs. If: (i) this Agreement is placed by the Buyer in
the hands of an attorney for enforcement or is enforced by the Buyer through any
legal proceeding; or (ii) an attorney is retained to represent the Buyer in any
bankruptcy, reorganization, receivership or other proceedings affecting
creditors' rights and involving a claim under this Agreement; or (iii) an
attorney is retained to represent the Buyer in any other proceedings whatsoever
in connection with this Agreement, then the Company shall pay to the Buyer, as
incurred by the Buyer, all reasonable costs and expenses including attorneys'
fees incurred in connection therewith, in addition to all other amounts due
hereunder.

         (q) Failure or Indulgence Not Waiver. No failure or delay in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.



                                    * * * * *






 





         IN WITNESS WHEREOF, the Buyer and the Company have caused this Common
Stock Purchase Agreement to be duly executed as of the date first written above.



                              THE COMPANY:

                              FRONTLINE COMMUNICATIONS
                                CORPORATION

                              By: /s/ Stephen J. Cole-Hatchard
                              Name: Stephen J. Cole-Hatchard
                              Title: Chief Executive Officer


                              BUYER:

                              FUSION CAPITAL FUND II, LLC
                              BY: FUSION CAPITAL PARTNERS, LLC
                              BY: SGM HOLDINGS CORP.

                              By: /s/ Steven G. Martin
                              Name: Steven G. Martin
                              Title: President



 





                                                                  EXECUTION COPY

                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July 7,
2003, by and between FRONTLINE COMMUNICATIONS CORPORATION, a Delaware
corporation, (the "Company"), and FUSION CAPITAL FUND II, LLC (together with it
permitted assigns, the "Buyer"). Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Common Stock
Purchase Agreement by and between the parties hereto, dated as of the date
hereof (as amended, restated, supplemented or otherwise modified from time to
time, the "Purchase Agreement").

                                    WHEREAS:

         A. The Company has agreed, upon the terms and subject to the conditions
of the Purchase Agreement, to issue to the Buyer (i) up to Thirteen Million
Dollars ($13,000,000) of the Company's common stock, par value $0.01 per share
(the "Common Stock") (the "Purchase Shares"), and (ii) such number of shares of
Common Stock as is required pursuant to Section 4(f) of the Purchase Agreement
(the "Commitment Shares"); and

         B. To induce the Buyer to enter into the Purchase Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the "1933 Act"), and applicable state
securities laws.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:

         1. DEFINITIONS.

                  As used in this Agreement, the following terms shall have the
following meanings:

                  a. "Investor" means the Buyer, any transferee or assignee
thereof to whom a Buyer assigns its rights under this Agreement and who agrees
to become bound by the provisions of this Agreement in accordance with Section 9
and any transferee or assignee thereof to whom a transferee or assignee assigns
its rights under this Agreement and who agrees to become bound by the provisions
of this Agreement in accordance with Section 9.

                  b. "Person" means any person or entity including any
corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

                  c. "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more registration
statements of the Company in compliance with the 1933 Act and pursuant to Rule
415 under the 1933 Act or any successor rule providing for offering securities
on a continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such registration statement(s) by the United States Securities
and Exchange Commission (the "SEC").

                                       1



 





                  d. "Registrable Securities" means the Purchase Shares which
have been, or which may from time to time be, issued or issuable upon purchases
of the Available Amount under the Purchase Agreement (without regard to any
limitation or restriction on purchases) and the Commitment Shares issued or
issuable to the Investor and any shares of capital stock issued or issuable with
respect to the Purchase Shares, the Commitment Shares or the Purchase Agreement
as a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, without regard to any limitation on purchases under
the Purchase Agreement.

                  e. "Registration Statement" means the registration statement
of the Company covering the sale of the Registrable Securities.

         2. REGISTRATION.

                  a. Mandatory Registration. The Company shall file with the SEC
the Registration Statement within the period specified in Section 4(a) of the
Purchase Agreement. The Investor and its counsel shall have a reasonable
opportunity to review and comment upon such registration statement or amendment
to such registration statement and any related prospectus prior to its filing
with the SEC. Investor shall furnish all information reasonably requested by the
Company for inclusion therein. The Company shall use its best efforts to have
the Registration Statement or amendment declared effective by the SEC at the
earliest possible date. The Company shall use reasonable best efforts to keep
the Registration Statement effective pursuant to Rule 415 promulgated under the
1933 Act and available for sales of all of the Registrable Securities at all
times until the earlier of (i) the date as of which the Investor may sell all of
the Registrable Securities without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto) or (ii) the date on which
the Investor shall have sold all the Registrable Securities and no Available
Amount remains under the Purchase Agreement (the "Registration Period"). The
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading.

                  b. Rule 424 Prospectus. The Company shall, as required by
applicable securities regulations, from time to time file with the SEC, pursuant
to Rule 424 promulgated under the 1933 Act, the prospectus and prospectus
supplements, if any, to be used in connection with sales of the Registrable
Securities under the Registration Statement. The Investor and its counsel shall
have a reasonable opportunity to review and comment upon such prospectus prior
to its filing with the SEC. The Investor shall use its reasonable best efforts
to comment upon such prospectus within one (1) Trading Day from the date the
Investor receives the final version of such prospectus.

                  c. Sufficient Number of Shares Registered. In the event the
number of shares available under the Registration Statement is insufficient to
cover all of the Registrable Securities, the Company shall amend the
Registration Statement or file a new registration statement (a "New Registration
Statement"), so as to cover all of such Registrable Securities as soon as
practicable, but in any event not later than ten (10) Trading Days after the
necessity therefor arises. The Company shall use it reasonable best efforts to
cause such amendment and/or New Registration Statement to become effective as
soon as practicable following the filing thereof.

                                       2



 





         3. RELATED OBLIGATIONS.

         With respect to the Registration Statement and whenever any Registrable
Securities are to be registered pursuant to Section 2(b) including on any New
Registration Statement, the Company shall use its reasonable best efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:

                  a. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to any
registration statement and the prospectus used in connection with such
registration statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep the Registration
Statement or any New Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by the Registration Statement or any New Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such registration statement.

                  b. The Company shall permit the Investor to review and comment
upon the Registration Statement or any New Registration Statement and all
amendments and supplements thereto at least two (2) Trading Days prior to their
filing with the SEC, and not file any document in a form to which Investor
reasonably objects. The Investor shall use its reasonable best efforts to
comment upon the Registration Statement or any New Registration Statement and
any amendments or supplements thereto within two (2) Trading Days from the date
the Investor receives the final version thereof. The Company shall furnish to
the Investor, without charge, any correspondence from the SEC or the staff of
the SEC to the Company or its representatives relating to the Registration
Statement or any New Registration Statement.

                  c. Upon request of the Investor, the Company shall furnish to
the Investor, (i) promptly after the same is prepared and filed with the SEC, at
least one copy of such registration statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits, (ii) upon the effectiveness of any registration
statement, ten (10) copies of the prospectus included in such registration
statement and all amendments and supplements thereto (or such other number of
copies as the Investor may reasonably request) and (iii) such other documents,
including copies of any preliminary or final prospectus, as the Investor may
reasonably request from time to time in order to facilitate the disposition of
the Registrable Securities owned by the Investor.

                  d. The Company shall use reasonable best efforts to (i)
register and qualify the Registrable Securities covered by a registration
statement under such other securities or "blue sky" laws of such jurisdictions
in the United States as the Investor reasonably requests, (ii) prepare and file
in those jurisdictions, such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to

                                       3



 





service of process in any such jurisdiction. The Company shall promptly notify
the Investor who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or "blue sky" laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.

                  e. As promptly as practicable after becoming aware of such
event or facts, the Company shall notify the Investor in writing of the
happening of any event or existence of such facts as a result of which the
prospectus included in any registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
promptly prepare a supplement or amendment to such registration statement to
correct such untrue statement or omission, and deliver ten (10) copies of such
supplement or amendment to the Investor (or such other number of copies as the
Investor may reasonably request). The Company shall also promptly notify the
Investor in writing (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when a registration statement or
any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to the Investor by facsimile on the same day of
such effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to any registration statement or related prospectus or
related information, and (iii) of the Company's reasonable determination that a
post-effective amendment to a registration statement would be appropriate.

                  f. The Company shall use its reasonable best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of
any registration statement, or the suspension of the qualification of any
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor of the issuance of such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

                  g. The Company shall (i) cause all the Registrable Securities
to be listed on each securities exchange on which securities of the same class
or series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities on the
Principal Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section.

                  h. The Company shall cooperate with the Investor to facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant to any
registration statement and enable such certificates to be in such denominations
or amounts as the Investor may reasonably request and registered in such names
as the Investor may request.

                  i. The Company shall at all times provide a transfer agent and
registrar with respect to its Common Stock.

                  j. If reasonably requested by the Investor, the Company shall
(i) immediately incorporate in a prospectus supplement or post-effective
amendment such information as the Investor believes should be included therein
relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to

                                       4



 





the number of Registrable Securities being sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities; (ii)
make all required filings of such prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or make
amendments to any registration statement.

                  k. The Company shall use its reasonable best efforts to cause
the Registrable Securities covered by the any registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.

                  l. Within one (1) Trading Day after any registration statement
which includes the Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to the transfer agent for such Registrable Securities (with copies to the
Investor) confirmation that such registration statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.

                  m. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investor of Registrable
Securities pursuant to any registration statement.

         4. OBLIGATIONS OF THE INVESTOR.

                  a. The Company shall notify the Investor in writing of the
information the Company reasonably requires from the Investor in connection with
any registration statement hereunder. The Investor shall furnish to the Company
such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.

                  b. The Investor agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
filing of any registration statement hereunder.

                  c. The Investor agrees that, upon receipt of any notice from
the Company of the happening of any event or existence of facts of the kind
described in Section 3(f) or the first sentence of 3(e), the Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
registration statement(s) covering such Registrable Securities until the
Investor's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) or the first sentence of 3(e). Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to promptly
deliver shares of Common Stock without any restrictive legend in accordance with
the terms of the Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale prior to the Investor's receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e) and for which the Investor has not yet settled.

                                       5



 





         5. EXPENSES OF REGISTRATION.

                  All reasonable expenses, other than sales or brokerage
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company, shall be paid by the Company.



         6. INDEMNIFICATION.

                  a. To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend the Investor, each Person,
if any, who controls the Investor, the members, the directors, officers,
partners, employees, agents, representatives of the Investor and each Person, if
any, who controls the Investor within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act") (each, an
"Indemnified Person"), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "Claims") incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("Indemnified Damages"), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in the Registration
Statement, any New Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("Blue Sky Filing"), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to the Registration Statement or
any New Registration Statement or (iv) any material violation by the Company of
this Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "Violations"). The Company shall reimburse each Indemnified Person
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement, any New Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) or Section 3(e); (ii) with respect to any superceded
prospectus, shall not inure to the benefit of any such person from whom the
person asserting any such Claim purchased the Registrable Securities that are
the subject thereof (or to the benefit of any person controlling such

                                       6



 





person) if the untrue statement or omission of material fact contained in the
superceded prospectus was corrected in the revised prospectus, as then amended
or supplemented, if such revised prospectus was timely made available by the
Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior to the use
giving rise to a violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim is based
on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, if such prospectus was timely made
available by the Company pursuant to Section 3(c) or Section 3(e); and (iv)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.

                  b. In connection with the Registration Statement or any New
Registration Statement, the Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement or any New Registration Statement,
each Person, if any, who controls the Company within the meaning of the 1933 Act
or the 1934 Act (collectively and together with an Indemnified Person, an
"Indemnified Party"), against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
about the Investor set forth on Exhibit B attached hereto and furnished to the
Company by the Investor expressly for use in connection with such registration
statement; and, subject to Section 6(d), the Investor will reimburse any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
the Investor as a result of the sale of Registrable Securities pursuant to such
registration statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 9.

                  c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section
6, deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential

                                       7



 





differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

                  d. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.

                  e. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

         7. CONTRIBUTION.

                  To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

         8. REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.

                  With a view to making available to the Investor the benefits
of Rule 144 promulgated under the 1933 Act or any other similar rule or
regulation of the SEC that may at any time permit the Investor to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees, at the Company's sole expense, to:

                                       8



 





                  a. make and keep public information available, as those terms
are understood and defined in Rule 144;

                  b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and

                  c. furnish to the Investor so long as the Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting and or disclosure provisions of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
to permit the Investor to sell such securities pursuant to Rule 144 without
registration.

                  d. take such additional action as is requested by the Investor
to enable the Investor to sell the Registerable Securities pursuant to Rule 144,
including, without limitation, delivering all such legal opinions, consents,
certificates, resolutions and instructions to the Company's Transfer Agent as
may be requested from time to time by the Investor and otherwise fully cooperate
with Investor and Investor's broker to effect such sale of securities pursuant
to Rule 144.

                  The Company agrees that damages may be an inadequate remedy
for any breach of the terms and provisions of this Section 8 and that Investor
shall, whether or not it is pursuing any remedies at law, be entitled to
equitable relief in the form of a preliminary or permanent injunctions, without
having to post any bond or other security, upon any breach or threatened breach
of any such terms or provisions.

         9. ASSIGNMENT OF REGISTRATION RIGHTS.

                  The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor, except
in connection with any merger or consolidation in which the Company is not the
surviving party. The Investor may not assign its rights under this Agreement
without the written consent of the Company, other than to an affiliate of the
Investor controlled by Steven G. Martin or Joshua B. Scheinfeld.

         10. AMENDMENT OF REGISTRATION RIGHTS.

                  Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investor.

         11. MISCELLANEOUS.

                  a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.

                                       9



 





                  b. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Trading Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

         If to the Company:
                  Frontline Communications Corporation
                  One Blue Hill Plaza, 7th Floor
                  Pearl River, NY 10965
                  Telephone:        845-623-8553
                  Facsimile:        845-623-8669
                  Attention:        Chief Financial Officer

         If to the Investor:
                  Fusion Capital Fund II, LLC
                  222 Merchandise Mart Plaza, Suite 9-112
                  Chicago, IL 60654
                  Telephone:        312-644-6644
                  Facsimile:        312-644-6244
                  Attention:        Steven G.  Martin

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Trading Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

                  c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

                  d. The corporate laws of the State of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting the City of Chicago, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being

                                       10



 





served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

                  e. This Agreement, and the Purchase Agreement constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement and the Purchase Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.

                  f. Subject to the requirements of Section 9, this Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.

                  g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

                  h. This Agreement may be executed in identical counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.

                  i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

                  j. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any party.

                  k. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.


                                   * * * * * *

                                       11



 





         IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

                                          THE COMPANY:
                                          ------------

                                          FRONTLINE COMMUNICATIONS
                                          CORPORATION

                                          By: /s/ Stephen J. Cole-Hatchard
                                          Name: Stephen J. Cole-Hatchard
                                          Title: Chief Executive Officer

                                          BUYER:
                                          ------

                                          FUSION CAPITAL FUND II, LLC
                                          BY: FUSION CAPITAL PARTNERS, LLC
                                          BY: SGM HOLDINGS CORP.

                                          By: /s/ Steven G. Martin
                                          Name: Steven G. Martin
                                          Title: President

                                       12


 





                               PROXY-COMMON STOCK
                      FRONTLINE COMMUNICATIONS CORPORATION
                  SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The undersigned hereby appoints Stephen J. Cole-Hatchard and Amy
Wagner-Mele (with full power to act without the other and with power to appoint
his or her substitute) as the undersigned's proxies to vote all of the
undersigned's shares of common stock of Frontline Communications Corporation, a
Delaware corporation (the "Company"), which the undersigned would be entitled to
vote at the Annual Meeting of Stockholders of the Company (the "Annual Meeting")
to be held at 11:00 a.m. local time on August 13, 2003, at the Board Room of the
American Stock Exchange, 86 Trinity Place, New York, New York, and at any and
all adjournments thereof, as follows.

     THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL.

1. CONVERSION OF SERIES C AND SERIES D STOCK. Proposal to approve of the
issuance of shares of the Company's common stock upon the conversion of the
Company's outstanding Series C Convertible Preferred Stock and Series D
Convertible Preferred Stock.

     [_] FOR   [_] AGAINST   [_] ABSTAIN

2. CONVERSION OF SERIES B STOCK. Proposal to amend the certificate of
designations pertaining to the Company's Series B Cumulative Convertible
Redeemable Preferred Stock ("Series B Stock") to provide for the mandatory
conversion of all Series B Stock upon the election of the holders of a majority
of the Series B Stock and the election to effectuate such conversion at a
conversion ration of _____ shares of common stock for each share of Series B
Stock.

     [_] FOR   [_] AGAINST   [_] ABSTAIN

3. CHARTER AMENDMENT: Proposal to amend the Company's certificate of
incorporation to effect a two-for-three reverse split of the Company's common
stock and to increase the number of shares of authorized common stock from
25,000,000 shares to 100,000,000 shares.

     [_] FOR   [_] AGAINST   [_] ABSTAIN

4.   CHARTER AMENDMENT: Proposal to amend the Company's certificate of
     incorporation to change its name to Provo International, Inc.

     [_] FOR   [_] AGAINST   [_] ABSTAIN

5.   ELECTION OF DIRECTORS:  [_] FOR all nominees listed below (except as marked
                             to the contrary below).

                             [_] WITHOUT AUTHORITY to vote for all nominees
                                 listed below.

NOMINEES:  William A. Barron,, Stephen J. Cole-Hatchard, Nicko Feinberg, Miguel
           Madero, [Jaime Marti], Ventura Martinez del Rio, Sr., Ventura
           Martinez del Rio, Jr., [Jesus Rodriguez], and Ronald C. Signore

(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line set forth below.)

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

6. ISSUANCE OF COMMON STOCK: Proposal to enter into a common
stock purchase agreement with Fusion Capital Fund II, LLC.

     [_] FOR   [_] AGAINST   [_] ABSTAIN










7. AUDITORS: Proposal to ratify the Company's selection of BDO Hernandez Marron
y Cia, S.C. as independent auditors for the Company for the year ending December
31, 2003.

     [_] FOR   [_] AGAINST   [_] ABSTAIN

8. In their discretion, upon such other business as may properly come before the
Annual Meeting and any and all adjournments thereof.

     THE SHARES OF COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE FOREGOING INSTRUCTIONS. IN THE ABSENCE OF ANY INSTRUCTIONS,
SUCH SHARES WILL BE VOTED FOR THE ELECTION OF ALL THE NOMINEES LISTED IN ITEM 4
AND FOR THE PROPOSALS IN ITEMS 1, 2, 3, 5, 6 AND 7.

     The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders to be held on August 13, 2003 and the Proxy Statement of the
Company, each dated July 17, 2003, each of which has been enclosed herewith.

     The undersigned hereby revokes any proxy to vote shares of common stock of
the Company heretofore given by the undersigned.

Dated:                              , 2003
       -----------------------------


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

Signature


------------------------------------------
Signature, if held jointly

------------------------------------------
Title (if applicable)

     Please date, sign exactly as your name appears on this Proxy and promptly
return in the enclosed envelope. In the case of joint ownership, each joint
owner must sign. When signing as guardian, executor, administrator, attorney,
trustee, custodian, or in any other similar capacity, please give full title. If
a corporation, sign in full corporate name by president or other authorized
officer, giving title, and affix corporate seal. If a partnership, sign in
partnership name by authorized person.










                              PROXY-SERIES B STOCK
                      FRONTLINE COMMUNICATIONS CORPORATION
                  SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The undersigned hereby appoints Stephen J. Cole-Hatchard and Amy
Wagner-Mele (with full power to act without the other and with power to appoint
his or her substitute) as the undersigned's proxies to vote all of the
undersigned's shares of Series B Cumulative Convertible Redeemable Preferred
Stock ("Series B Stock") of Frontline Communications Corporation, a Delaware
corporation (the "Company"), which the undersigned would be entitled to vote at
the Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be
held at 11:00 a.m. local time on August 13, 2003, at the Board Room of the
American Stock Exchange, 86 Trinity Place, New York, New York, and at any and
all adjournments thereof, as follows.

     THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL.

1. CONVERSION OF SERIES B STOCK. Proposal to amend the certificate of
designations pertaining to the Company's Series B Stock to provide for the
mandatory conversion of all Series B Stock upon the election of the holders of a
majority of the Series B Stock and to effectuate such conversion at a conversion
ratio of six shares of common stock for each share of Series B Stock.

     [_] FOR   [_] AGAINST   [_] ABSTAIN

2. In their discretion, upon such other business as may properly come before the
Annual Meeting and any and all adjournments thereof.

     THE SHARES OF SERIES A STOCK REPRESENTED BY THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE FOREGOING INSTRUCTIONS. IN THE ABSENCE OF ANY INSTRUCTIONS,
SUCH SHARES WILL BE VOTED FOR THE PROPOSAL IN ITEM 1.

     The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders to be held on August 13, 2003 and the Proxy Statement of the
Company, each dated July 17, 2003, each of which has been enclosed herewith.

     The undersigned hereby revokes any proxy to vote shares of common stock of
the Company heretofore given by the undersigned.


Dated:                              , 2003
       -----------------------------


------------------------------------------
Signature


------------------------------------------
Signature, if held jointly

------------------------------------------
Title (if applicable)

     Please date, sign exactly as your name appears on this Proxy and promptly
return in the enclosed envelope. In the case of joint ownership, each joint
owner must sign. When signing as guardian, executor, administrator, attorney,
trustee, custodian, or in any other similar capacity, please give full title. If
a corporation, sign in full corporate name by president or other authorized
officer, giving title, and affix corporate seal. If a partnership, sign in
partnership name by authorized person.